How to account for vendor deposits and progress payments on inventory POs.

A deposit is prepaid on that PO. It is not inventory. It is not a random prepaid GL with no PO link. Thirty percent at order, forty at vessel, thirty at GRC is three cash events against one purchase. The units are not on your floor until receipt.

Keep deposits out of inventory and WAC

Do not book the deposit into inventory or into WAC. Paying 30% does not put 30% of the units on the shelf, and it does not move average cost. The prepaid sits on the PO, reduces the remaining balance, and waits. Cost moves when goods receive, for the qty that received. Each progress payment applies to that same PO. The final payment should net against what is left after deposit, mid-payment, shorts, and credits. If you pay the commercial invoice as if the earlier cash never happened, you will double-pay the factory.

Link every payment to the PO

Link every payment to the PO number. A prepaid account with a vendor name and no PO is how you lose the trail when the container slips, splits, or never books. Two open POs with the same factory will steal each other's deposits if all you have is a vendor balance. A deposit paid on PO-1048 does not clear PO-1102 just because both say the same factory.

When the container never ships

If the container never ships, the deposit is a vendor receivable or a write-off. It is not inventory you can cycle-count, and it is not a SKU you can publish to Shopify. Do not leave it in prepaid to avoid the conversation. Chase it, apply it to the next PO with a written offset, or write it off. That is a credit decision, not a costing decision. Age open prepaid by PO and by promised ship, not as one prepaid blob.

Landed cost and receipt at GRC

Freight and duty that arrive after GRC are a landed-cost true-up. They are not this deposit. The deposit is cash you sent before the units existed on your floor. Shopify will not see those units. The 3PL will not either. Your books should show prepaid, open inbound qty, and zero on-hand until GRC. When GRC posts, inventory and WAC move for what landed. Prepaid clears against that PO's remaining balance. A short at GRC does not put the missing qty into WAC just because you already paid for it. That leftover prepaid stays on the PO until a credit, a later receipt, or a write-off.

The leftover cash question is payment application: which invoice ID the final wire closes. This piece is the inventory story: cash left early, units arrive late, WAC waits for the receipt.

Prepaid on the PO. Inventory at receipt. Final cash against what remains.