If you’ve ever had to juggle supplier deposits, progress payments, and credits, you’ll know how fast things can go sideways. One dodgy entry, and suddenly your books don’t line up with your bank. For builders, tradies, and subcontractors all over Australia, this stuff’s just part of the job but if you don’t keep an eye on it, it’ll mess with your accounts quicker than you can say “where’d that payment go?”
Good bookkeeping isn’t about ticking boxes. It’s about keeping your cash flow steady, your jobs running smoothly, and your stress levels low when tax time rolls around.
Let’s break it down the Aussie way; straight up, no jargon
Why Deposits and Credits Turn Complicated
In construction, suppliers often ask for prepayments before delivering materials. You might:
- Pay a deposit to lock in a custom order.
- Send progress payments as work moves along.
- Get credits for returns, damaged goods, or price changes.
Sounds easy, right? Until you’re trying to sort it out months down the track and can’t tell which invoice belongs where. Without tracking, deposits look like expenses when they’re not, and credits vanish into thin air. Then your profit margins get wonky, your BAS is off, and the ATO starts breathing down your neck.
Handling Supplier Deposits the Right Way
When you pay a deposit, it’s not an expense yet. It’s an asset, money given for something you haven’t received.
Here’s how to treat it:
- Record the payment as a supplier deposit or prepaid expense.
- When the final invoice arrives, apply the deposit to it.
- Only then should the full amount appear in your Profit & Loss.
This keeps your books true to what’s spent, what’s owed, and what’s still on the way.
Pro tip: If you’re using software like Xero or MYOB, link each deposit to a specific job. It makes life heaps easier when you’re checking project profits later on.
Managing Progress Payments
Big jobs mean progress payments, that’s just how it goes. You’ll make a few payments before materials turn up or the job’s finished
To stay on track:
- Ask for itemised invoices at each milestone.
- Match every payment to the right invoice or PO.
- Don’t send lump sums without paperwork, you’ll regret it later.
Every dollar should have a paper trail. At Tall Books, we see heaps of progress payments sitting as random expenses, which makes projects look more expensive than they really are. Match ’em properly, and your reports will actually make sense.
Getting Supplier Credits Right
Supplier credits come from mix-ups, returns, or price drops. They help, but only if they’re recorded right.
Here’s what to do:
- Enter the credit note under the supplier’s account.
- Apply the credit to the next invoice you receive.
- If they refund the money instead, record it as a bank transaction tied to that supplier.
This keeps your payable balance real, not padded with old credits you already used.
Mistakes That Cost You Time (and Money)
Even experienced builders trip up here. The most common slip-ups we see:
- Deposits logged as expenses instead of assets.
- Credits never applied, leaving overstated balances.
- No regular reconciliation with supplier statements.
- Confusion around GST on prepayments.
If this sounds familiar, don’t stress, a bit of structure can clean it all up.
Building a System That Works
Construction thrives on order. Your books should too. Start with a few simple habits:
- Make separate accounts for deposits and supplier credits.
- Label transactions clearly, like “Deposit – Reece Plumbing – Project A.”
- Reconcile supplier statements every month.
- Confirm payment terms before you send money.
- Automate what you can: bank feeds, invoice syncing, reminders.
Do this early, and you’ll spend more time building and less time chasing missing receipts.
Why It Matters
Accurate tracking isn’t just about compliance; it helps you see what’s really happening in your business. With clean books, you’ll have:
- Clearer cash flow visibility.
- Better insight into job profitability.
- Fewer surprises during BAS or EOFY.
And most importantly, peace of mind that your numbers actually tell the truth.
When to Call in the Experts
Handling deposits and credits can feel small, but it’s the small stuff that builds strong books. If you’re too busy on site to keep up, get help from someone who knows construction inside out.
At Tall Books, our team helps Australian builders and tradies stay on top of their accounts, from supplier prepayments to project costs and payroll. We’ll:
- Set up your accounting software properly.
- Streamline your payment and credit workflows.
- Keep your GST, BAS, and reconciliations spotless.
Whether you’re running multi-stage builds or a small local crew, we’ll make sure your accounts work as hard as you do.
Ready to Build Better Books?
If you’re done guessing where your deposits and credits went, get in touch with us at Tall Books today.