Allocate credit and debit notes to payment receipts, I know that some CNs & DNs are against invoices but some are not so we cannot allocate them to an invoice, we can only set them off against payments and receipts, which is not possible at the moment.
Invoice statement of accounts show invoices only, instead we should have all open and unallocated documents such as: invoices, CNs, DNs, Payments and Receipts, Journals: If it is open it should appear (As opposed to transaction statement of account which shows all transaction in sequence whether open or not). Because of this limitation the two types of statements give different figures.
My work around this issue is to create dummy invoices and include the invoice # inside the open document’s invoice reference, which is not really an invoice but this is the only way.
@lubos Can you please look into this matter and see if any of the above points can be implemented?
can you explain a practical scenario where this is used?
a credit note to supplier implies that you owe money to the supplier against any service or product received at your end. this is exactly what a purchase invoice does.
this scenario is same for customer where the effect of sales invoice is same as a debit note.
what report are you referring to? there is no such report called Invoice statement in Manager.
if you are referring to the invoices list then that is the purpose of the Sales Invoices tab, to list only the invoices.
Payments and receipts record movements of money into or out of the business. Debit and credit notes record adjustments to amounts owed by customer or to suppliers. There is no circumstance under which you would apply a credit or debit note to payment or receipt (or vice versa).
If a credit or debit note is appropriate (perhaps because of a dispute settlement or customer/supplier service resolution), but cannot be associated with a specific invoice, Manager handles that without difficulty. You just leave the Invoice field blank and the program posts the note to the customer or supplier’s subaccount, where it will be allocated automatically to unpaid invoices.
If you are referring to the two types of Customer Statement and Supplier Statement (unpaid invoices and transactions), of course they give different figures. They are supposed to, because they are reporting entirely different things.
OK, for suppliers it may not really be necessary, however, for customers, I cannot invoice them for goods or services I am not permitted by law to provide, similar to the items included after invoice subtotal: Shipping, bank charges, interest, and other recharges in general we usually debit them instead of invoice them.
Just as an example, I have a customer deposit that I use to pay for customer expenses on their behalf. I would issue them a debit note for their total account movement and I will only invoice my fees and commissions.
The report is Customer Statements (Unpaid invoices).
I was thinking about a custom theme that changes title based on balance
Actually, there is. This is why I wrote this. Some businesses have very complex relationships and transactions.
I don’t know about other countries, but in my place we are expected to give a statement of account that (a) shows the actual balance as of date and (b) contain open documents only. If this is not “Customer Statements (Unpaid invoices)” report, then I need another report that meets my criteria.
Then you need to provide an example. What I tried to express was that you cannot debit or credit the movement of money, which is what receipts and payments record. The movement occurred and was recorded. You can apply a debit or credit to a customer’s or supplier’s account, but not to the prior movement of funds.
You should use the Customer Statement - Transactions report. You get the opening balance, all transactions affecting the customer’s account, and the closing balance. The unpaid invoices statement only includes unpaid invoices, by aging category. It is not meant to show an account balance. Your assertion that you are required to display only open documents raises doubt. You cannot obtain a current balance by summarizing only open documents. You need to consider also the opening balance and all transactions.
This is an astonishing statement. If you are not legally permitted to provide and then invoice a customer for something, why do you think it would be acceptable to debit their account with a debit note? From an accounting perspective, there is no difference. And why do you say you are not permitted to invoice for shipping, bank charges, or interest? If those are allowed by the terms of your contract or agreement with the customer, you can invoice for them. Why would a customer pay you for items you have not invoiced? More importantly, why would they pay you for anything you are not permitted by law to provide?
These transactions are not applicable to any single invoice and thus cannot be applied. They must appear as open transactions in the SOA.
Customer wants to see all open transactions before he pays. This includes invoices separate from other unrelated movements such as drn/crns. He does not want to see whatever transactions that have already been applied, this is too lengthy. If I want to pay someone, I have a list of unpaid and unapplied transactions that I need to verify against a statement that contains exactly that. I do not want to see my whole register.
I am not providing the service, I am using customer deposits to get someone else to do it. I am just a middleman. It is very common where I am from, businesses use a clearing agent to do their government licensing and registrations as well as many other stuff. I am not taking the license or registration fees as “my Income;” it is the income of the government and I charge a small fee. The receipts, invoices, certificates and all documentation of the issuing party is in the name of the customer, and I need to give him that along with a DN.
Another example are court-fees, judgement-fees, execution fees which are all invoiced by the court in the name of the client, I process and pay them from their deposits. Then, I issue a DN and attach the source documents.
I cannot re-inovice the amounts myself because that would be duplicate billing. The government bills BD100 to so-and-so company and then I bill the same BD100 to the same company! That just does not make any sense.
If, as you describe, a customer has deposited funds with you to pay for expenses on their behalf, that represents a liability. That is far different from an “open” transaction, such as an unpaid invoice. Your are holding funds in trust. Special accounts are a good way to keep track of such funds. But, however you account for them, they do not represent a receipt or payment against which you would apply a debit or credit note. And that is what I asked you to furnish an example of.
The term Open has no meaning in Manager. You need to define what you mean. The most obvious definition would be Unpaid. But the amount a customer owes may be affected by transactions other than unpaid invoices.
You are mixing apples and oranges. Invoices can be unpaid. Other transactions, including debit/credit notes, receipts, and payments are never “unapplied.” They exist, and their effects are immediate. While they may not be posted against specific invoices, they immediate affect the balance of the account. So you need to choose one form of statement or the other.
Then you should look at using Billable Expenses. That capability is designed for situations exactly like this. See https://www.manager.io/guides/5503 and https://www.manager.io/guides/9652. Use of billable expenses would also be compatible with the special accounts I mentioned above.
I have already made a post on this matter, I need to create 1 control account for each type of trx which is absolutely fine. Then if I had 4 control accounts, I need to create 4 accounts for each customer which is not fine. Plus I would lose the all the perks that comes with customer/ supplier accounts.
See my other post
If open makes no sense then I referred to them as unapplied which are the same thing to me.
This is exactly my problem
You have missed the point. I would bill the expense if it was in my own name. If the 3rd party bill is already in the customer’s name; I am not double-invoicing the expense – which was never my expense to recharge. I just want to debit him with his account movement whatever it is (receivable, payable, deposits, unearned revenue … which is irrelevant for weather it is an invoice or a note)
With respect, you have missed my point. Billable expenses are meant for purchases you make, whether by purchase invoice or payment, that are not expenses of your business. In other words, they are not “in your name,” even if paid from your accounts. The process of invoicing billable expenses passes the expense through to your customer. They appear under Accounts receivable until the customer reimburses you, but they never appear as your income or expense. You are concerned about recharging, but that is not what billable expense invoicing does. It merely passes the expense through without charging again.
I don’t want to get into theory but a billable expense is a direct expense attributable to a customer, job or a project which hasn’t been invoiced. This is done for better matching of revenues to expenses because if an expense was not invoiced it should sit in “assets” rather than “expenses” where it would distort profitability.
Having said that, this is totally besides the point so let’s not go there again.
As far as the legal and economic substance of a transaction, I should not record as an expense of any kind or otherwise any purchase invoice addressed to other people since it is not mine. Also, I should not invoice other people with thing I have not done.
If I purchased the expense and a supplier addressed his invoice to me then I must record such invoice as mine and then recharge it to my clients. My invoice makes my customer liable for something he wasn’t, hence its economic substance. I “owned” whatever items/services/expenses in the invoice at least for a short period of time and hence its legal substance. I am happy, customers are happy and both our auditors are happy
The case you suggest, someone X charges my customer Z directly, I pay the invoice which is not mine using funds that I do not own, reinvoice Z with the services that he already recorded as a liability. Let’s see what’s wrong here:
The cusromer has already recorded the liability from X’s invoice to him, my invoice gives 0 rises to any new liabilities, in fact it is double billing of the same amount X has billed since the they have the same underlying items/services/expenses. No economic substance to this invoice.
I never was liable to X with any amount, legally not my expense … I still record it, then I invoice my client with items/services/expense that I never owned at any point in time. No legal substance to this invoice.
If my issued invoice has no economic or legal subatance of an invoice, why would I call it an invoice? In fact there is a name for a document that tells other people that they owe you or that you owe them less without satisfying the economic and legal requirements of an invoice, it is called “Debit Note.”
End result, I am not happy with the convoluted and excessive work flow, customer wants to know why is he billed twice and auditors are triggered at every step of the way.
I do not intend to change the business conventions in Bahrain nor do intend to change the views of my customers and auditors. I just want to raise debit notes to customers and record debit notes from suppliers and be able to apply them according to the legal agreement between us and our customers/suppliers.
@tut we wandered way off topic on this one, I never was talking about accounting treatment; my problem is with the “Documentation” part only: What title should appear in the document telling customers their accounts were debited. That is it.
Regardless of what the accounting entry is, we should never use invoices for non-sale transaction because this is what the term “Invoice” implies.
What you said about credit notes being used to reduce customer balances and invoice to make additional charge against invoice is correct, this is standard text-book definition for merchant /trader sale transactions, however, not every business is a merchant/trader and not every transaction is a sale or is sales related. There are multiple other uses for Debit and Credit Notes you know.
Yes, @Ealfardan, this discussion has wandered too far from the original subject. So here are my final comments:
I reiterate everything I have said (several times) about both debit and credit notes being applied to suppliers’ and customers’ account, not to payments and receipts. The notion of debiting or crediting a monetary transaction remains illogical.
If you are reluctant to call a demand for payment from a customer a sales invoice and want to retitle it as a debit note, you can. No change to the program is required. Just check the box and change the title. If you were able to issue debit notes to customers, the effect within Manager would be identical to a sales invoice.
Billable Expenses are perfectly suitable for the situation you describe of paying fees on behalf of your customer. Your insistence that they are not suggests you do not understand how the Billable Expenses feature works in Manager. You should experiment with a test company.
Your description of some type of statement that lists unpaid invoices, combined with receipts or payments that are “unapplied” (whatever that means), but without debit and credit notes, to come up with some sort of current balance is incomprehensible to me. It certainly does not match any customary accounting document I am aware of. So I think you are going to have to construct such statements outside of Manager, using whatever inputs you think are appropriate.
This one is the outstanding documents report, should contain everything that is unapplied, unpaid, outstanding … whatever you want to call it. Please mind the customer receivable total.
On the contrary, I’ve read all your lengthy posts very thoroughly. Nothing you have written before, and none of the three numbered points you wrote after the above quote changes the fact that no debit or credit note can be applied against a receipt or payment transaction. For the last time, they are applied against specific invoices or a supplier’s or customer’s account.
As to the two screen shots you show in your last post, they are proof of my point that you cannot have all you listed on a single statement. Wherever you got these, it has taken two statements of different types to include all the information you want. And while the customer receivables on them match, receivables are only a part of either statement. The receivables subtotal on the first matches the closing balance on the second, but only because debit memos have been included on the second, something you said you explicitly wanted to exclude.
The second screen shot of the Account Transaction History is functionally the same report as Manager’s Customer Statement - Transactions report. The first, Statement of Account, is equivalent to a drill-down on the customer’s subaccount under Accounts receivable, sorted by transaction type. This is easily exportable.
So, with two reports (one built-in and one an export), Manager can provide the same information as the other system you show does with two reports. It doesn’t matter what country you are in. Basic accounting is basic accounting
Another proof that we were never on the same page. I never requested that I have all information in a single report, when have I said this? This is getting too frustrating.
@Ealfardan, what you are describing is Trust accounting - to give a small example.
Real Estate - the contracts are between the Seller and the Purchaser. The purchaser deposits the required funds with you (a service provider) and you make the required disbursements.
There maybe a sum left over which is your fee.
My first point is this - these deposits and disbursements should be via a separate bank (trust) account, not a bank account belonging to the business. It is unclear from your comments if you are operating with separate business / trust bank accounts.
If you are operating with separate business / trust bank accounts then my suggestion would be to operate the Trust accounting via a separate Manager Business from your main business. This way you can customise the documentation so that you aren’t being conflicted with Invoice and credit/debit note terminology.
If the Trust account holds funds which are your business fees, then your business would invoice the client but be paid from the trust bank account.
An advantage of this separation is that the client receives two statements, one showing the deposits and disbursements and one showing your fees and services and their payment. Trying to have one statement combining the two would be nightmarish as you actually have two identities - the business and the trust.
However, if you are operating with only one combined bank account (yuk) then Special Accounts should be used to separate the trust transactions, but as you have noted, you won’t get the statement look, but an export into a “master” spreadsheet could achieve something similar.
Thank you, right on the nose. This is my main problem, most of my client’s request a single statement, plus we sometimes use customer deposits to offset our invoices.
I have a temporary work-around by recording all transactions of a single customer in accounts receivable only, since I find creating multiple special accounts for a single customer troublesome. I also issue negative credit notes with a custom theme that says “Debit Note” when negative, apply these credit notes to 0 value dummy invoices then I apply payments to these credit notes. Quite often find my self lost, either when processing transactions or drawing statements.
I currently use a shared bank account for all customer deposits, just because they might overdraw their deposits and I do not want to deal with the bank’s complications.
I will consider your proposal of separating bank accounts and issuing two sets of statements and see how this works, otherwise, I must find a better way to suit our work flow.
