How are prepaid vendor deposits reconciled?

Short answer

Prepaid vendor deposits are reconciled by matching the GL balance to each vendor's open deposits and clearing each one when it's applied to an invoice or refunded.

A vendor deposit is cash paid up front that you expect back as goods, services, or a refund. It sits on the balance sheet as an asset until it is applied. This is different from prepaid expenses that amortize over time, such as annual software or insurance.

What to check each month

Deposit detail: List every open deposit by vendor, amount, payment date, and the purchase order or contract it relates to. The total should agree to the GL balance.
Vendor confirmation: Compare each open deposit to the vendor's statement or confirmation. Differences usually mean a deposit was applied on the vendor side and not in your books, or the reverse.
Applied deposits: When the final invoice arrives, confirm the deposit was netted against it and the deposit account was relieved, so the expense or asset isn't overstated.
Refunds: Match refunds received to the original deposit and confirm the deposit account was cleared, not recorded as income.

Aging and follow-up

Age open deposits from the payment date. Deposits past the expected delivery or refund date need a reason documented, such as a delayed order, a disputed balance, or a deposit that should be written off. Long-dated balances are a common audit question because they can hide lost cash.

How Ramp Stack handles vendor deposit reconciliations

A Ramp Stack agent builds a workbook of open, applied, and refunded deposits with aging, matched against the vendor statements or invoices you provide. Because Stack doesn't edit existing QuickBooks Online transactions, applying or clearing a deposit is done through a new journal entry rather than a change to the original payment.

Nothing posts until an accountant approves it.