Track a contractor deposit through the final flip invoice

A contractor deposit leaves the bank before the investor has a final invoice or a completed scope of work. The bookkeeping file should therefore connect the payment to one property, the approved scope and each later invoice without pretending those events happened on the same day.

Use one deposit record from authorization through closeout. Keep the signed proposal, proof of payment, progress support and final invoice linked under a stable reference. The responsible accountant decides the accounting treatment; the bookkeeper preserves the evidence and prevents the same cash payment from being recorded again when the invoice arrives.

Open a deposit record before money moves

Give the deposit a reference such as FL-231-CD-04, where FL-231 is the property ID. Record the contractor, approved scope, proposal date, agreed contract amount, requested deposit, approving person and expected next document.

The IRS recordkeeping guidance explains that supporting documents for purchases and expenses should identify the payee, amount, proof of payment, date and what was purchased or received. A bank line alone shows cash movement, but it may not show which property, scope or invoice the payment supports.

Keep these items together:

• Approved proposal, contract or work order.
• Property and contractor IDs.
• Deposit request and approval evidence.
• Check, card or electronic-payment confirmation.
• Later invoices, change records and credits.
• Current status, open amount and next review date.

Do not label the deposit “final” merely because it cleared the bank.

Separate five events that are easy to collapse

Track each event on its actual date:

1. Scope approved: the investor authorizes defined work and price.
2. Deposit requested: the contractor asks for an advance payment.
3. Deposit paid: cash leaves the investor’s account.
4. Invoice or progress support received: the contractor documents billed or completed work under the agreement.
5. Closeout approved: final support, credits and remaining payment reach their approved state.

The exact bookkeeping entries depend on the accounting basis, contract facts and the accountant’s direction. This control schedule does not decide when a cost is recognized. It shows what evidence exists and which cash payment has already occurred.

Worked example: one $18,000 renovation scope

Illustrative example. A contractor is approved for $18,000 of flooring and interior work on FL-231. The agreement requests a $5,400 deposit.

The schedule shows an $18,000 supported contract value, $18,000 of invoices and $9,000 of cash paid after the final invoice arrives. It does not add the original $5,400 deposit as a new payment when progress invoice 01 is entered.

If the contractor’s invoice applies the deposit differently, retain the invoice and update the schedule from that evidence. Do not force the example’s pattern onto the actual contract.

Match the invoice to the existing payment trail

Intuit distinguishes bills from immediately paid checks or expenses based on when the business pays. The chosen transaction workflow should follow the investor’s approved setup. When a later invoice appears, first search the property, contractor, amount and payment reference before creating another cash-side record.

Run four controls:

• The contractor deposit record points to the bank or card transaction already recorded.
• Every invoice carries the same property and scope reference.
• Cash paid to date agrees with actual cleared payments, not the invoice total.
• The supported contract amount, approved changes, invoices and credits can be explained without double counting.

QuickBooks Projects can assign bills, checks and expenses to a project, depending on the subscription and setup. Another approved method can work, provided the property identity and source links remain stable.

Close the deposit record deliberately

Close the record only after the investor’s process has addressed the final invoice, approved changes, retained amounts, refunds or credits and remaining payment. A completed job with missing paperwork remains an open bookkeeping item even when the crew has left the property.

Keep unresolved facts specific: document missing, amount affected, responsible person and next review date. The flip project folder guide provides a place for the source trail, while the bank-feed project context guide explains why the cleared payment alone cannot answer the property question.

Project-aware bookkeeping lets the investor see what was authorized, what was supported and what was paid. That distinction makes the contractor file useful throughout the renovation instead of only after the flip closes.