Performance Bond/final insurance in sales invoice


looking for your advice about best practices for the following case:

in many cases, when we raise a sales invoice for a customer. the customer pays us the invoice amount less 5 to 10% deducted as a performance guarantee/bond and to be returned back to us after the warranty period or performance test. How can we record such transactions in erpnext???

Currently, we create a payment against the subject sales invoice and record the actual customer paid amount and the difference we adjust against an asset account called a performance bond. but later when the customer returns the amount, what shall we do? Or do you have another better way to process such transactions? kindly advise.

@Abdelrahman_Aly Why just dont receive the properly amount eg:

  • Invoice: 1000
  • Guarantee: 100
  • Payment: 900

And let the invoice with 100 outstanding?
Also, add 2 fields on the invoice

  • Guaratee End Period
  • Notes : eg Under Guaratee

And add those 2 fields on the Accounts Receivable?

When the customer approach to make the payment you will see the pending amount, and will apply to the correspondent invoice.

The comments and date, prevent inquires from people that are checking AR reports.

Sorry if I dont understood your issue!

Your case is like Earnest Money Deposit:

for EMD:

  1. In COA=.Assets=>Current Assets=>Security & Deposits. Select type of Earnest Money as Income A/C.

2.Create an item name: Security Deposit and link the above account in accounting tab.

  1. Create a new naming series for sales invoice with ACC-SINV-EMD-.YYYY.-
  2. Create an invoice and select item Security Deposit and submit.
  3. Create a Journal Entry: Chose Earnest Money A/C and Bank and copy reference from sales invoice.
  4. After the due period at maturity: Reverse the journal entry and create a credit note against SI.

Hope … this helps you. Thanks

@Naveed1 , him can’t recognize revenew if him did not had any revenew on that!

Simplistic scenario!

End of Fiscal Year, more than 1000 customers with balances, around 200 each, under “Earnest Money A/C” with revenue recognized him will pay taxes for a revenew him did not had!

Do you mean to divide the invoice into two invoices? one with payment and another one doe due guarantee???

@Abdelrahman_Aly I refferd a scenario for EMD. In my case we submit (EMD 5%) advance cheque to the customer as a security. After maturity, customer returns same cheque or refund money to our bank account. This is similar case like you. (But, Your case is more similar as tax witholding category) Only difference is this we create EMD invoice separately and you have 1 invoice and customers deducts 5% as performance bond/guarantee in that.I suggest it’s better for you to generate 2 invoices. 1 for performance guarantee and 1 for actual sales.

There is also another simplest thing , you can create a field of performance guarantee in actual sales invoice. And set notification against that when 5% remaining amount is due for. In this way the status of invoice would remain partial until complete amount is received from customer against that invoice.

But, Actually the companies consider them to view total sales and recivables separately.