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Receive Project Deposits

Updated

Article Contents

  1. Introduction
  2. Step 1: Setup (One-off)
  3. Step 2: Receiving a Deposit
  4. Step 3: Apply the Deposit to Future Work

Introduction

To improve cash flow, your business might require clients to pay an upfront deposit before starting work. Hiro allows you to manage deposits on a per-project basis using disbursements. This is particularly useful when you want to raise a deposit invoice up front and then apply that deposit against future work.

Step 1: Setup (One-off)

To begin using deposits, some initial setup is required. This can only be done by a Hiro Global Administrator.

  1. Go to Settings > Timesheet Work Types.

  2. Click New work type.

  3. For Kind, select Disbursement.

  4. For Description, enter a label such as "Deposit".

  5. Leave Disbursement costs entered as on the default setting of Currency amount.

  6. Set both Default cost tax rate and Default revenue tax rate to BAS Excluded. GST will be charged on your project invoice for completed works, not on the initial deposit.

  7. If your organisation has connected Hiro to Xero, optionally choose a Xero account to process the deposits into. We recommend setting up a liability GL account in Xero for deposits to ensure they're not treated as income. Avoid using a "Suspense" account, as it may be ambiguous or misclassified.

  8. Click Save.

Step 2: Receiving a Deposit

Once setup is complete, deposits can be recorded just like other disbursements. This can be done either before or after the actual funds are received.

  1. Go to Timesheets and create a new entry on the date the deposit was or will be received. (You can use today’s date if unsure.)

  2. Select the relevant job number.

  3. Choose the Deposit work type you created earlier.

  4. Enter the deposit amount as a positive number. Optionally, include a description (e.g., "50% deposit", or "Deposit as agreed with Fred Smith").

  5. Go to Financial > Invoices and create a new invoice for that project.

  6. Turn off all invoice lines except the deposit line.

  7. Leave the "This Invoice" settings on their defaults (i.e., "% markup" and blank amount). This will invoice the full value of the deposit.

  8. If sending this invoice to the customer, you can edit the line text to customise what appears on the invoice.

  9. Approve the invoice.

If you’re using Xero and the customer has already paid, apply the payment to this invoice in Xero—it will sync back into Hiro automatically. If not using Xero, go to Financial > Invoices, click Receive Payment, and apply the deposit manually.

Note: The deposit will now appear in the project history and financials as a positive disbursement. This ensures it can later be credited against an invoice when you're ready to bill the customer for the actual work.

Step 3: Applying the Deposit to Future Work

When you're ready to bill the customer for the completed work, the previously invoiced and paid deposit can be credited back on the new invoice.

This is done by adding a negative disbursement line, which offsets part or all of the charges being raised—effectively reducing what the customer still owes.

Since the deposit was set up as BAS Excluded, it does not attract GST. Most Hiro users raise invoices exclusive of GST, with the GST amount calculated and shown at the bottom of the invoice. When the deposit is subtracted, it reduces the total invoice amount after GST has been added. This ensures the customer receives full credit for the deposit, including against the GST-inclusive total.

The main idea: you're not invoicing the deposit again. You're deducting it from the final invoice so the customer pays only the remaining balance.

  1. On the date you wish to apply the deposit, create a new timesheet entry.

  2. Select the same job and choose the Deposit work type.

  3. Enter the amount of the deposit to be credited as a negative number. For example:

    • -2500 to apply the entire deposit.

    • -1250 to apply part of the deposit (e.g., across multiple milestone invoices).

      This negative amount cancels out part (or all) of what the customer already paid, reducing what they owe now.

  4. Create your new project invoice as usual. Include all the actual charges for work performed, and do not apply any manual discount or adjustment for the deposit at this stage. The deposit will be accounted for separately in the next step.

  5. The deposit line will appear as a negative disbursement on the invoice and will automatically reduce the total amount due. There’s no need to adjust this line—it’s doing the job of crediting the deposit already paid.

    Example

    Let’s say the work completed is worth $2,349.00 (exclusive of GST).

    • This figure represents the total of all labour and disbursements entered via timesheets.

    • GST of 10% is added on top of your consulting charges, bringing the total invoice to $2,583.90.

    • A $2,000 deposit was previously invoiced and received using a BAS Excluded disbursement. Because it's BAS Excluded, no GST applies to the deposit itself.

    When creating the invoice, Hiro will:

    • List $2,349.00 in chargeable work (exclusive of GST).

    • Add $234.90 GST (10%).

    • Include a -$2,000 line item for the deposit (with no GST).

    This results in a final amount payable by the customer of $583.90.

    The full $2,349.00 will still be recognised as revenue, and you'll still generate a GST liability of $234.90—just as you would if no deposit had been used. The deposit simply reduces the total payable, not the reported income or tax.

    This ensures the customer is credited the full $2,000 deposit against their total invoice, including GST, and only pays the remaining balance.

    This setup ensures:

    • Customers aren't charged twice

    • Your invoices clearly show what’s been paid and what’s still due

    • Deposit usage is traceable in both Hiro and Xero (if connected)

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