Go to Sales, then Retainer Invoices, and click New Retainer Invoice. Select the customer, enter the advance amount, apply the applicable GST rate, and save. Zoho Books posts the amount to a “Customer Advances” liability account (or your configured equivalent), not to an income account, because the revenue has not yet been earned. When the customer pays, it records a Retainer Payment against the retainer invoice.
When you complete the work and raise the final invoice, Zoho Books shows any outstanding retainer balance for that customer. Click Apply Retainer, select the retainer payment, and the system deducts it from the invoice total. The accounting entries transfer the advance from the liability account to the income account and clear the customer’s receivable for the net amount due.
Under GST, advance payments received for services are subject to GST even before the service is delivered. Zoho Books calculates and posts GST on retainer invoices. When the final invoice is raised, it adjusts for the GST already paid on the advance, so the government does not receive double tax. This requires careful handling in your GSTR-1 filings, and Zoho Books tracks the advance and adjustment in the correct GST return sections.
A retainer invoice in Zoho Books is a billing document that collects an advance payment from a customer before work begins or goods are delivered. The advance is held as a liability and applied against future invoices when the work is completed.
When raising the final invoice in Zoho Books, click Apply Retainer and select the relevant retainer payment. Zoho Books deducts the retainer amount from the invoice total, showing the customer only the balance due.
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