Service contracts / banked hours
Let me preface by saying that I'm not a schooled accountant, so terminology may be off.
We have clients contracted to pay for say 1 hour of service per month. If they don't use the full hour, time can be used at a later date.
I will invoice the clients monthly for their contracted amount.
When we receive their payments, I'll apply it to the contract invoice.
Our techs will enter their time into separate invoices for the client.
I will apply credit from contract payments to these invoices and keep track of time available per client.
I'm thinking of keeping two accounts for each customer: one to track the monthly contracted amount and payments, the second to represent actual support time used and money available on account.
Initial thoughts:
The monthly contract invoice would credit a revenue account "Contract" (or "contract clearing" or "contract deposits"), and debit A/R.
The customer's check would credit A/R and debit the bank.
Our technicians' entries of support given would credit a revenue account "Service", and debit ___________ ?
To apply monthly payments to the actual time used, I would debit the revenue account "Contract", and credit ____________?
Is this on the right track?
Any easier way?
Appreciate any help / thoughts...