Taking a deposit is one of the smartest habits a salon can have. It cuts no-shows, commits the client, and puts cash in the bank weeks before a big bridal day. The problem starts when that deposit is recorded as a sale on the day it arrives.
Do that and March looks like a record month, May looks empty even though the salon was flat out with weddings, and nobody can say how much money the salon is actually holding for future work. This guide shows the simple, correct way to record deposits.
Why a deposit is not a sale yet
A sale happens when you deliver the service. When a client pays a deposit for a wedding in two months, you have delivered nothing yet. If the wedding is cancelled you may have to hand the money back. Until the service happens, the deposit is money you are holding for the client.
In the books that makes it a liability, usually called Customer Deposits or Customer Advances. Accountants also call it unearned revenue. It sits on the Balance Sheet, not in the Profit & Loss, until the day you do the work.
The three moments of every booking
| Moment | What happens | Entry |
|---|---|---|
| 1. Deposit received | Client pays to secure the date | Debit cash or bank · Credit Customer Deposits |
| 2. Service delivered | The work is done and the balance is paid | Debit Customer Deposits (the deposit) and cash or bank (the balance) · Credit Sales (the full price) |
| 3. Cancelled | The booking does not go ahead | Refunded: Debit Customer Deposits · Credit cash or bank. Kept under your policy: Debit Customer Deposits · Credit Forfeited Deposits (income) |
Every deposit ends in moment 2 or moment 3. If it has done neither, it is still waiting, and it should still be sitting in Customer Deposits.
A worked example: a bridal package
A bride books a package worth 1,000 for a wedding on 20 May. She pays a 300 deposit on 10 March and the remaining 700 on the wedding day.
| Date | Event | Sales in P&L | Customer Deposits | Cash in |
|---|---|---|---|---|
| 10 March | Deposit paid | 0 | 300 | 300 |
| 20 May | Wedding done, balance paid | 1,000 | 0 | 700 |
March shows no sale, because nothing was delivered. May shows the full 1,000, because that is when the work happened. Customer Deposits went up to 300 and came back to zero, and cash received adds up to 1,000. Everything agrees.
The cash-up trap
On 10 March the salon took 300 more cash than the day’s sales. If your day-close only compares cash with sales, that day will look like a surplus, and on 20 May the day will look short by 300. Your day-close should show deposits received as a separate line, so the cash in hand equals sales plus deposits taken, minus anything paid out.
Keep a deposit register
Whatever system you use, you need one list of every deposit still being held:
| Client | Date paid | Amount | Method | Service date | Status |
|---|---|---|---|---|---|
| Client A — bridal | 10 Mar | 300 | Bank | 20 May | Held |
| Client B — colour | 2 Apr | 40 | Card | 9 Apr | Earned |
| Client C — event | 15 Apr | 150 | Cash | 1 Jun | Refunded |
The total of the rows marked held must equal the balance of Customer Deposits in your books. If it does not, a deposit has been recorded twice, earned without being moved, or refunded without a record.
The forgotten deposit
Once a month, look for deposits whose service date has already passed but which are still marked as held. Each one is one of two things:
- The service happened but the deposit was never moved to sales. Your profit for that month is understated.
- The client did not come. Follow your cancellation policy: refund it, or move it to Forfeited Deposits.
Either way, a deposit should never sit in the books for months after its date. That is the most common deposit mistake, and it is invisible unless you look for it.
Non-refundable deposits
A non-refundable deposit is still a deposit. The word only decides what happens if the client cancels. Until the service takes place, it stays in Customer Deposits. If the client cancels, it moves to Forfeited Deposits and becomes income on that day. Put your policy in writing and give it to the client when they pay.
Deposits, packages and memberships
Prepaid packages, gift vouchers and memberships follow the same idea: money received before the service is held first and earned later, as each visit is used. If you sell those, our guide to salon memberships and deferred revenue explains how to earn them over time.
A note on tax
In some countries sales tax or VAT is due when a deposit is received, even though the deposit is not yet income in your Profit & Loss. Those are two different questions: one is about when you owe tax, the other about when you earn the money. Ask your accountant which rule applies where you trade.
How TressyPOS handles deposits
In TressyPOS, an advance taken on a bridal or event booking is recorded against that booking and posts to a Customer Advances liability account, not to sales. Later advances can be added to the same booking, and the printed quote shows every payment, the amount paid and the balance still due.
On the service day the advance becomes revenue: either when the balance is settled at the POS, or, if the client paid in full up front, when you mark the service as done. A deposit paid by bank or QR transfer is also recorded on its own line in your bank account with the transaction ID, so it matches your bank statement. And the Books Health Check lists past bookings that still hold a deposit, so a forgotten deposit is found instead of sitting in the books for months.
For the bigger picture of what a salon should record every day, read our guide to salon bookkeeping.
This article describes general bookkeeping practice. It is not tax or legal advice; confirm the rules that apply to you with a qualified accountant or your local tax authority.