Glossary
Deposit versus first instalment
The deposit is money held as security and returned; the first instalment is rent earned for the first period.
These two amounts are usually paid together and are constantly confused, which causes real accounting trouble. The deposit is security: it is held, not earned, and it goes back to the tenant when the rental ends and nothing is owed. The first instalment is rent — revenue for the first period of the contract.
The practical consequence is that they must be settled differently. Rent goes on an invoice. A deposit does not, because no sale has taken place; it belongs on a debit note. Putting a deposit on an invoice overstates revenue and creates a correction to issue later.
An example. A customer rents a 4 m² unit at €67 a month with a deposit equal to one month. They pay €134 at checkout: €67 of rent, which goes on the invoice, and €67 of deposit, which goes on a debit note and sits as a liability until the rental ends.
When the contract ends, the deposit is either returned in full or reduced by what the tenant owes — and only that reduced part ever becomes revenue.