is there an option for upfront payments, but the customer can pay to a 3rd party over time?

Yes, you have an option to record upfront payments in QuickBooks Online (QBO), Teresa.

When you say the customer can pay a third party over time, do you mean that your clients will make payments through a service like Affirm or Klarna? If so, you can still receive those payments directly into your bank account or use online invoicing with QuickBooks Payments and record the transactions in QBO.

Please note that when you receive an advance payment from a client, you will record it as a liability. To do this, debit the cash account and credit the liability account. Then, once the job is complete or goods are delivered, you will complete revenue recognition. This is done by debiting the liability account and crediting the revenue account.

Here's how to record an upfront payment in QBO:

Step 1: Credit the liability account

1. Go to the Chart of accounts, then create a new entry.
2. Click New account, then name the account.
3. Select Other Current Liabilities from the Account type dropdown.
4. From the Detail type drop-down, select Trust Accounts - Liabilities.
5. Once done, hit Save.

Step 2: Debit the cash account

1. Go to Sales & Get Paid, then click Product & services and a new entry.
2. Select New, then click Service.
3. Enter a name for the new product or service item.
4. From the Income account dropdown, select the liability account created in step 1.
5. Once done, click Save and close.

For steps 3 and 4, please refer to this article: Record a retainer or deposit.

Please note that income is not recognized until you have delivered the goods or completed the services.

You can also check our QuickBooks Blog to know more about how upfront payments work and how to handle them in QBO: Advanced Payments.

On the other hand, if you are the one using Affirm or Klarna, you can integrate them with QBO through a third-party app.

If you have other questions or concerns, feel free to leave a comment below.

@teresa92 

You need a 3rd party app to reconcile transactions from Affirm to QBO.

Hi, Teresa.

I’m following up to see if the solution we provided worked for you. Did it resolve the issue, or are you still experiencing difficulties?

We're happy to assist further if you need any more help.