We run a small social club. I use manager to keep track of our accounts. I am not an accountant I’m just trying to keep some simple books. We have cash receipts which get paid into our bank account. I created a cash receipts account and record our cash receipts against categorised items such as room hire on a weekly basis. To show the cash going out of the cash receipts account the balance gets transferred in to a transaction clearing account. See the image below.
Once the cash is in the bank and cleared and the bank statement is imported and the relevant suspense paid in item is reconciled to the transaction clearing account.
Our bank account reflects the cash paid in and our summary showed the categorised room hire total.
This has worked fine up to now as no one has asked for an invoice when paying cash. I created an invoice but I don’t have a corresponding entry to clear it. I have tried using the entry in the cash receipts to clear the invoice but then I have no record in my summary to show for room hire.
I’m sure I’m missing something very simple but any help would be much appreciated.
This is a general accounting question and I’m not sure how exactly your normal work goes. Specifically:
Do you normally skip creating invoices?
Are you using receipts as your source documents for recording sales?
What is the classification of this Room Hire > Salsa class account? Is it revenue or something else?
All of these questions would affect how you should create your invoices.
The normal sales cycle goes like this:
Customer request quote → Sales Quote is issued
Customer places order → Sales Order is issued
Product/Service delivered to customer → Sales Invoice is issued. An optional Delivery Note could also be issued at this stage as well
Invoiced amount needs to be reduced → Credit Note is issued
Customer pays invoice → Receipt is issued.
Depending on your specific business requirements, some of these steps could be skipped or additional steps could be added.
Assuming you are only recording sales at receipt stage, but you need to issue an invoice for a single customer after the fact, that would normally be double counting.
The simplist way to correct for this double counting is to completely offset this invoice using Copy to > New Credit Note.
This will completely offset any effects this invoice has on your records while still giving you something to show to your customer.
Be warned, though, that for tax purposes, some countries require each invoice is issued separately; in this case, you cannot continue to record your sales at receipt stage, or at least create one receipt per customer and retitle that to something like “Cash Tax Invoice/Receipt”.
Otherwise, you can adequately cross reference your invoice to your main receipt and your credit note to your invoice and provide adequate narrations in your Description fields just to make sure that it is clear for any tax auditor that this unconventional accounting treatment is not fraudulent.
Thank you for your comprehensive reply. Unfortunately much of the terminology goes above my head.
We are not normally asked for invoices unless from a company hiring our rooms. Most people are running small groups, pay cash for the room hire and don’t request an invoice.
I don’t understand your second point. How do we get receipts for sales or do you mean we are giving receipts for sales?
The room hire is classified as income in manager so I assume that is revenue.
Regarding your sales cycle we don’t issue quotes or create sales orders. We have raised a sales invoice via the sales invoice tab in Manager which is why I have created this post. We don’t issue delivery notes or issue credit notes. When when we’ve managed to reconcile the cash payment to the generated invoice Manager marks the invoice as paid in full which we send to the person asking for the invoice/receipt so in that sense we issue a receipt. But as I say there is that no record in our summary screen of the room hire when we use this method.
When viewing the invoice in Manager there is no option for copy to - new credit note
Ok, so it’s not about receipts. Please ignore my previous reply then.
However, regarding this:
That’s good to know and please excuse my deviation from software terminology.
So just to confirm that I understand your case:
You issue invoices to record your income, but not necessarily share with customers unless they specifically request it. But an invoice is always issued for each sale.
You copy your sales invoice to a new receipt to mark it paid
You are not facing any problems with your customer balances
You are not facing any problems with your bank
Your only problem is the income is not shown under Salsa classes account
Thanks for your reply. We don’t raise an invoice for every sale/transaction. I’ll try to explain a little clearer what we currently do.
With our cash receipts I enter a new receipt on the receipts tab and record the amount against the relevant income category (in this case Salsa Room Hire) this is allocated to our cash receipts account which appears in our Bank and cash accounts tab. All cash receipts are then paid in to bank account. I initially tried to use the inter account transfer to show the cash receipts paid into the bank but this didn’t work so found the transfer clearing option which transfers the cash receipts from the cash receipts account into transfer clearing and then when the amount paid in appears in the imported bank statement that transaction is reconciled to the transfer clearing which then creates a zero balance on transfer clearing. Our cash receipts account shows a zero balance and our bank account shows the cash paid in. In our summary tab we have an income category for salsa room hire which shows the total income we have received for that item.
When someone wants an invoice/receipt, for room hire in this case, I use the sales invoice tab to create an invoice. If they use cash to pay the invoice the cash is recorded in the cash receipts account via the new receipts button in the receipts tab. If in the new receipts screen I assign this to the salsa room hire category under the account heading then it shows up on the summary tab but the invoice shows as unpaid. If I assign to accounts receivable instead and then add the customer and invoice ref then the invoice shows as paid in full but the salsa room hire income item in my summary tab no longer shows.
Likewise moneys paid direct in our bank account when trying to reconcile them from suspense to an income category I get the same result - either I allocate to the income category and the invoice shows as unpaid but the income category appears in my summary tab or I go via accounts receivable, clear the invoice but lose the income item in my summary tab.
I’m obviously missing a stage somewhere that will record in my salsa room hire income category and then also allow to to clear the invoice as paid.
I hope this gives a clearer understanding of what I’m doing and the problem I have. As I said I’m no expert I’m a volunteer trying to put together a simple set of accounts so please excuse my ignorance.
When you create an Invoice this is where the income will be allocated to the Income account (Salsa Room Hire). So when you receipt against this invoice you do not want it to allocate to the Income account as this would result in doubling up and distorting the income figures.
Many thanks for your reply. I’ve realised what I’ve been doing wrong. When I created the invoice the default setting under the account heading is retained earnings. I assumed this what the norm for creating the invoice so I didn’t change it to Salsa Room Hire. I’ve now done that and I get the balance in my summary and the invoice saying paid in full.
As you say, most are happy to not get an invoice. So why not just type up an invoices in Word or excel as being the invoice. No need to enter it into Manager as such. Just enter the receipt as you normally would.
Keep a copy of the Invoice created outside of Manager, just in case.
