Customer Deposit - Receipt from New Customer or Credit Risk Customer
Recording a security deposit received from a new utility customer or an existing customer with poor credit history, maintained as a liability until returned or applied to outstanding balances.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash & Cash Equivalents | Asset (+) | 850.00 | - |
| Customer Deposit Liability | Liability (+) | - | 850.00 |
💡 Accountant's Note
Regulated utilities typically require security deposits from customers who fail a credit screening (no established credit, prior collection history, or large industrial customers with significant credit exposure). The deposit amount is set by tariff (often 1–2 months of estimated billing) and must earn interest (as required by most state PUC regulations) at a rate specified in the tariff. Customer deposits are liabilities until returned when service is discontinued (net of any outstanding charges) or when the customer establishes satisfactory payment history. State PUC rules specify maximum holding periods.
Practitioner & Systems Framework
💻 ERP Architecture
Customer deposit tracking in the billing system is essential — deposits must be refunded with interest upon service termination. Many utilities hold deposits for extended periods without tracking interest accrual, which is a regulatory compliance violation. The aggregate customer deposit liability is disclosed in financial statements — it can be hundreds of millions for large utilities.
⚠️ Audit Flags
Auditors test that interest is accrued on all customer deposits at the tariff-approved rate. The aging of customer deposits (deposits held longer than the maximum period specified in the tariff without refund) is a compliance finding. Deposits applied to outstanding balances upon service termination must be properly accounted for.
📄 Required Documentation
Customer deposit tariff rate and maximum holding period, deposit register by customer, interest accrual calculation, PUC compliance with deposit refund requirements, aggregate deposit balance reconciliation to billing system.
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