Hi all. Now have a customer that needs to have billable expenses. Was able to make this function correctly using sales invoicing, but we haven’t had the need for invoices and would like to avoid them, if possible.
Windows Desktop edition 23.8.1.930 is in use.
Set up a test business that somewhat emulates the basic account structure that is in use:
The receipt gave me the income side that I wanted but the expense Debit failed and went to suspense.
Is this correctable? I really don’t want to implement Sales Invoicing if it can be avoided.
Thank you for your help
You cannot use billable expenses without sales invoices. A sales invoice is what converts the asset of a billable expense to a receivable. And that really is inconsistent with cash basis accounting.
It would not go to suspense if you assigned the right account. Check the suspense entry and correct it to the right account. Take not of this so next time you will assign it in the Sale Invoice to that account.
@eko, the whole point of this thread is that we don’t use sales invoices. The “Billable Expense - Invoices” side posted properly from the receipt. but not the cost side. Our invoicing consists of:
Customer (face to face) “how much do I owe you?”
Us “$x.xxx” and walk away with a check or cash.
I think it is still fair that we should be able to post expenses for which we should be reimbursement regardless if we choose not to use the formal invoicing system in manager.
@Scott.E you should test the issuing of Receipts to your customers that include a description of the service and quantities. It is possible this will be sufficient to avoid creating sales invoices.
@Scott.E, you are overlooking the underlying philosophy of billable expenses. The point of the feature is to allow recording of expenditures that will later be invoiced to customers. If you want to bypass invoices, you should also bypass the use of billable expenses. But what are the effects of each approach?
When using billable expenses, the expense is temporarily stored as an asset. The asset is converted to a receivable, with corresponding revenue and balancing costs. The receivable is settled with a receipt that increases a cash or bank account. The billable expense revenue and cost offset, so there is no net effect from the billable expense. (The original reduction in the cash or bank account is replenished by the receipt.)
Without an invoice, the end result is the same. But you avoid all the intermediate automated accounting. The purchase of the billable item just shows up in a suitable expense account. You include that cost on the receipt, so it shows up in revenue, resulting in an offset of the expense and, thus, no net effect in profit.
Without using billable expenses, you actually have more latitude in which income and expense accounts the billable expenses end up in. When using billable expenses, processed through sales invoices, they end up in Billable expenses - invoiced and Billable expenses - cost.
@Tut , Thank you for a nice detailed explanation. Of course it can be done this way (and we have) as we have had these events in the past, but I was just looking for a way to formalize the process within manager with this going to be a more common occurrence. I will marked this solved, although I still think that if an account is presented in a drop down list in the receipt distribution, it should post to the account and not suspense.
Best.
Edit: Also, my tax accountant files schedule C sole proprietor form with the offsetting income and expense for these costs, so was also looking to segregate them in the COA. Will continue to do so manually.
Edit 2: One last thought. If this is in fact only to be used with Sales Invoices, perhaps the enabling of the B.E. feature should be tied to it.
Nothing in our discussion addressed the question of why your transaction(s) ended up in Suspense. There could be many reasons. @eko pointed out that you need to correct the error or omission that caused the transaction to post to Suspense. You have never shown the Edit screen of such a transaction, so none of us have any idea why it happened.
You can absolutely do that by designing the COA accordingly and posting purchases and receipt line items to the correct accounts. That was my point when I wrote, “Without using billable expenses, you actually have more latitude in which income and expense accounts the billable expenses end up in.”
@tut Actually, the suspense issue was the impetus for this post and those screens were in the original post. The last 2 screenshots show the receipt edit screen and the result on the summary page, which shows the debit to undeposited checks, the credit offset to Billable expenses asset, the credit to the built in "Invoiced account, but the debit to the liability account (lowest line detail in the receipt) hits suspense. Again, I am satisfied with the help you gave. Thank you.
OK, I didn’t closely examine all your original screen shots once I determined you were trying to use billable expenses without sales invoices. Now I’ve looked more carefully.
The receipt in your 7th screen shot, posted to Billable expenses for the customer, had the effect of clearing that account. In other words, the purchase cost that you “parked” there was completely offset. That actually is not a bad approach if you want to use billable expenses, tagged for a specific customer, but not use sales invoices. The end result is that the expense has been passed through without ever hitting your profit and loss statement. That is actually how the billable expenses tab used to work, justified on the basis of billable expenses not being expenses of your business. The problem was that money was passing through the business without showing on the books, which some tax authorities would not like (including the IRS in the USA). So you had to manually determine how much had passed through in order to properly complete your tax return.
Now, the Billable expenses - invoiced and Billable expenses - cost accounts cancel out, but the money passing through your business is visible. The tax man is happy.
Your problem was that you were trying to get the billable expense to show up on your P&L. But you used the automatic accounts to do so. In other words, you hijacked features meant for a different purpose. With the approach you showed in your experimental receipt in the 9th screen shot, you zeroed out the “parking account” where you had stored the expense. Then you introduced the two automatic accounts, which I believe the program interpreted as mistakes, because you had simultaneously zeroed out the Billable expenses balance for the customer. The program tried to make automatic transfers and found nothing there. So it dumped the debit into Suspense. I suspect that if the order of execution had been different, it might have dumped the credit into Suspense, or the original billable expense. You could test that theory by changing the order of the line items on your experimental receipt.
The bottom line, as I’ve said before, is that you can do what you want. But you need to establish ordinary income and expense accounts for the purpose rather than misuse the automatic accounts.
