Give each order a complete history
Use one order reference across the quotation, customer receipt, supplier purchase and delivery confirmation. Record amendments without replacing the original terms. Staff should be able to see whether a changed quantity affects a refund, an additional collection or an available credit.
Include a status for orders that are reserved, partly delivered, completed or cancelled. This makes the list useful to purchasing and customer service as well as bookkeeping. It also helps the owner distinguish inventory spoken for by customers from stock available for new sales.
Worked example: two partial deliveries
A hypothetical Saskatoon input supplier accepts $8,000 toward a $20,000 order, before applicable taxes. The first delivery is $9,000. Under the agreed allocation, $3,600 of the advance is applied and $5,400 is collected. The unapplied advance is now $4,400.
The second delivery is the remaining $11,000. Applying that $4,400 leaves $6,600 to collect. Total customer payments are $8,000 plus $5,400 plus $6,600, or $20,000. The register proves that both deliveries and the original advance have been fully settled.
Do not use the deposit label as a tax rule
Whether a receipt is a genuine deposit or an advance payment affects the tax analysis; the label in the banking description is insufficient. Keep the contract terms and billing dates so your adviser can determine the proper GST and PST treatment. The management example above does not set a tax reporting date.
Agricultural products also require product-level review. Saskatchewan’s farm provisions have specific qualifying goods and uses, with certification required for some purchases. A customer advance does not turn an otherwise taxable product into an exempt one.
Make the open-order review practical
Each week, compare unapplied customer balances with undelivered orders and expected supplier arrivals. Ask staff to explain credits that have no remaining order and completed orders with balances still attached. Agree who approves refunds and retain evidence that the customer received them.
At month end, reconcile the customer-advance account to the order register. Use the result alongside supplier commitments in the cash forecast. A large bank balance may include money needed to fulfil orders, so purchasing decisions should start from that obligation as well as the cash total.
Put this into practice
Sources and current guidance
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