I searched a lot on how to maintain Security Deposits in ERPNext but i found no articles on it. Please let me know the process in ERPNext for the same.
Scenario 1 - Collect security deposit from customer
We need to collect the security deposit from customer by adding it to the invoice. Earnest Money (Current Liability) in chart of accounts should be impacted.
For this i need to create an Item named Security Deposit and the Income Account should be Earnest Money. While i create the Item, Earnest Money account doesn’t get listed in the drop-down
Quick Books allows this - Handling Upfront Deposits in QuickBooks Online - YouTube
Is there any way to perform the same in ERPNext?
Scenario 2 - Pay Security Deposit to Vendor
The reverse of the above.
Can anybody help me please?
Scenario 1 - Please make sure that you specified an Account Type for account Earnest Money. You should set this in the Chart of Accounts. If the Account Type has been set, it should be visible in the drop down list when specifying the income account for the item in the item doctype.
Scenario 2 - You should create a supplier record for the customer so you will be able to make a Purchase Invoice when you will refund the security deposit.
If i am not wrong, Earnest Money is the Security Deposit paid by the company to the vendor.
We need the process to maintain the security deposit collected by us from customers to show as liability and a process to pay back to them or offset it with some sales invoice.
By default in ERPNext, Earnest Money is set up as an Asset account under Current Assets → Securities and Deposits. It’s account type is blank, so I think this is the reason you cannot select the account when setting up an income/expense account for an Item.
In your case, the security deposit is a liability as you will, I believe, refund/return this to the customer. You should create an account (let’s say Security Deposit under Liabilities). Account type should be Payable.
You may create an Item (named Security Deposit) and setup the income account as Security Deposit (the account you created above).
To collect/receive security deposits from customers: create a sales invoice with item Security Deposit for the customer. This will record a credit transaction to the Security Deposit account.
To refund/return/pay the customer the security deposit: create a purchase invoice with item Security Deposit to the customer. (You must create a supplier record for the customer so you will be able to create a purchase invoice for the same person.) This will create a debit transaction to the Security Deposit account.
To check the security deposit balances, just generate the general ledger report of the Security Deposit account. You may group it by party to see the balance for each customer.
First part we did as you mentioned - Created a Security Deposit Account under liability with account type Income.
Created invoice and added Security Deposit Item, The above account was properly credited.
Second Part, We created a Credit Note with Security Deposit.
We achieved what we wanted. Thanks a Ton!!!