Could someone please explain the difference between “Billable expenses - cost” vs “Billable expenses - invoiced” and how to use each?
Thanks
Thank you for the reply, Tony. My next question then is: Why are both items under the ‘Expenses’ category? Shouldn’t the “Billable expenses - invoiced” then fall under the ‘Income’ category? This is why I am confused. Thank you.
When you make a payment for billable expenses they should be allocated to the Billable Expenses account and assigned to a customer. This allocates the expense to an asset account.
When you invoice the customer from the Customers tab and select the billable expenses it moves that cost from the asset account to the expense and income account. The overall net effect is nil because you recover the cost from the customer. If you markup the billable expenses when it is invoiced it will be reflected in the profit & loss statement.
Beautiful. Thank you for the explanation. This was very helpful. One last question:
Regarding this last response:
“If you markup the billable expenses when it is invoiced it will be reflected in the profit & loss statement.” …but where? Under “Billable expenses - invoiced” in the ‘Less expenses’ section?
The markup on the billable expenses—should this be considered income and labeled as a separate line item or still labeled as “Billable expenses - invoiced” to fall under the ‘Less Expenses’ category to be shown as a negative expense? I’m just trying to understand if the markup percentage falls under Income or Expenses.
Thank you so much. [moderator removed part as soliiciting is against the forum guidelines] I have a lot to learn and I trust this community.
Thanks again!
I moderated your post, meanwhile in reply to your post:
The markup is income, not an expense.
If a billable expense is invoiced for more than its cost, the full amount invoiced is recorded under “Billable expenses - invoiced” as income, while the original cost is recorded under “Billable expenses - cost” as an expense.
The difference between those two amounts is the margin earned on the billable expense and contributes to profit.
I’m using Purchase Invoices to create billable expenses for the cost of specialised packaging and freight out for my sales of antiques and collectables. Every item in my inventory is unique, as are the packaging requirements. And I do not normally determine the packaging requirements and freight cost until I have a customer who expresses interest in buying an item.
When I raise a Purchase Invoice for freight out, I determine the cost based on a carrier’s quote, using estimates for the packaged item’s size and weight.
According to Manager’s standard workflow, after I create a Purchase Invoice for a billable expense, I have to go to the Customers Tab, scroll down to find my customer, and click on the Uninvoiced amount (in blue). That then opens the Uninvoiced window for my customer, where the uninvoiced billable expense is listed with a checkbox and an Edit button.
After selecting the checkbox, I click on the New Sales Invoice button. However, that action does not take me to a New Sales Invoice. It just clears the Uninvoiced window for my customer.
So then I click on the Sales Invoices tab from the main menu, and find that a new sales invoice has been created, with the Balance Due equal to the billable expense amount. Then I click on the Edit button for the new Sales Invoice.
The first item on the new Sales Invoice is the billable expense, and the “Billable expenses - invoiced” account is already selected.
If, at this stage, I realise I have another billable expense to add, and create another Purchase Invoice for it, I can’t find a way to add this new billable expense to the the Sales Invoice I just created. And if I try to delete the Sales Invoice and start again, it won’t allow that, because it is already linked to the Purchase Invoice for the freight billable expense.
So I now have to go back to the original Purchase Invoice and clear the Invoice field, which shows the Sales Invoice number and date. That now allows me to delete the Sales Invoice and start again from the Customers tab.
Assuming I now have ALL my billable expenses added to the new Sales Invoice, I can now edit it further by adding inventory items, and finally I can create a pdf of the invoice to send to the customer.
Once the customer agrees to pay the invoice, I go ahead and prepare the packaging, and on receipt of payment, I make a booking with the freight company. At this stage however, the actual freight cost may differ from the estimated amount used for the billable expense on the Purchase Invoice and the Sales Invoice.
To record the actual payment for freight out, I have to go back to the Purchase Invoices view and click on the amount shown (in blue), in the “Balance due” column. That action opens the Purchase Invoice - Transactions window, which shows the transaction for the billable expense, and a New Payment button.
Clicking on the New Payment button opens the Payment window for the Purchase Invoice. Here I have to check if the actual cost is different to the Purchase Invoice amount (the billable expense). The amount shown here has to be changed to the actual payment amount. And if the actual payment amount is lower than the Purchase Invoice amount, it will result in an outstanding balance due on the Purchase Invoice. If the actual payment amount is greater than the Purchase Invoice amount, it will result in an overpayment of the Purchase Invoice.
Now I have to work out how to deal with either an outstanding balance due or an overpayment of the Purchase Invoice.