There is a new tab called
Disbursements, how is it different from sales invoice?
There is a new tab called
This is part of development of a billable expenses capability. It isn’t complete. Rather than affecting accounts receivable, it posts to disbursements recoverable. We all need to wait and see the full capability. If you search the forum, you will find some other discussion of this.
If you check the latest version, you can already bill disbursements to customers or write them off.
I’m still working on it though. For example, multi-currency disbursements are not yet supported and there are a few other issues. Plus there needs to be ability to be able to create new invoice from billable time and disbursements at the same time. This should all be done by end of this week. Once done, guides will follow to explain the process.
I don’t know if this is easy or hard. In addition to being able to create a new sales invoice from both billable time and billable expenses (disbursements), it would be very nice to be able to start a sales invoice from the Sales Invoices module directly, then add both billable time and billable expense lines to it. In other words, no matter how you initiated the sales invoice, you would have all options available: new items, work in progress, or disbursements recoverable.
Latest release looks very good. Took me a minute to figure out the income (margin/markup) account until I increased the amount billed on one of the invoices. Nice. I’m playing with this in a test ‘Business’ but one thing I did notice is that all the control accounts for the Disbursement module show up in my ‘real’ company even though (as yet) I have not enabled disbursements. Found the write-off’s too.
I’ll continue to play with the module a bit more. Thank you again for all the hard work.
Disbursements continues. Additional comments:
It would be nice if the default accounts, such as
Disbursements income, did not appear in the
Disbursementsis disabled. I can’t test it now, but I don’t recall the
Work in progressaccounts showing up until I enabled
Billable time. (But my memory could be faulty.)
As noted before, it really is necessary to be able to (a) initiate a sales invoice from
Billable time, or
Sales Invoicesand (b) add lines to pick up billable time or disbursements regardless of how the invoice was created.
I don’t see the need for a default
Unrecoverable disbursementsaccount. Just as with any bad debt, you will need a journal entry and a previously defined expense account to debit for the write-off. There isn’t an automatic account for any other form of bad debt, so why have one for disbursements that must be written off? Maybe this is necessitated by some aspect of the program’s structure I don’t understand. If a disbursement becomes unrecoverable, one could logically choose to transfer it into an existing expense account rather than characterize it as some type of bad debt. An example is a travel expense that one initially assumes will be reimbursed, but final terms of a contract that do not include reimbursement are agreed to after the expense is incurred. At that point, one would simply transfer the expense to the travel expense account via journal entry. So the
Unrecoverable disbursementsaccount seems unnecessary until one decides there is a need for special characterization.
This has been fixed in the latest version (15.0.26)
What I’m trying to achieve is that
Disbursements recoverable balance on balance sheet will always equal to the sum of all uninvoiced disbursements under
Disbursements tab. When you write-off disbursement, it will be removed (credited) from
Disbursements recoverable asset account and debited to
Unrecoverable disbursements expense.
If you invoice disbursement and the invoice will be for lower amount than the original disbursement, Manager will automatically calculate the difference and post it to
Unrecoverable disbursements. So you can’t manually debit/credit this account. Unrecoverable disbursements are automatically calculated.
Similar to when you invoice disbursement and the invoice is for higher amount than the original disbursement, Manager will automatically calculate markup on disbursement and post the markup figure to
Disbursements income account.
Progress is looking good. What I can’t figure out so far is how to write off a disbursement. For example, I enter a disbursement of 9. If I invoice 10, the markup of 1 shows correctly. If I invoice 8, 1 shows as unrecoverable. If I invoice 9 and the customer pays 7, 2 remains in accounts receivable.
But if I try to make a journal entry, I don’t have access the
Disbursements unrecoverable expense account. So I can’t write off the account receivable to that expense account. Also, if I want to allocate the unpaid portion to a specific expense category, I can’t do that.
Lubos, I really hate to rain on this parade, but I’m starting to wonder if all this is worth the effort. No question, if you invoice and receive payment in amounts matching the disbursement, you save one transaction, because you only have to spend money (debiting
Disbursements recoverable), invoice, and receive money. But if anything else happens, extra journal entries may be necessary which are not currently supported. While the automatic allocations seem convenient, they may not support necessary reporting, especially for taxes. You can’t yet write things off, and if/when you can, those write-offs would not change what the money was actually spent for. A generic categorization of unrecoverable expenses will probably not satisfy the tax authority. So there will need to be an ability to recharacterize the expense.
Conceptually, I believe this started as an obvious parallel to billable time. But billable time turned out to be simpler, because the asset (an account receivable) is created by the process of invoicing. The only relevant economic activity happened within the company when an employee worked on a project. For billable expenses (or disbursements if you prefer), economic activity takes place outside the company when the disbursement is made. The action of invoicing creates an external obligation of the customer to pay, with multiple possible outcomes that can be messier than the current situation.
If there is any possibility you might rethink this module, I encourage you to do that quickly, before users start applying the module and have transactions to redo. I think so far just a few of us are exploring test cases. Of course, one nice characteristic of Manager is the ability to turn off modules that don’t fit one’s needs. The latest change to remove the unnecessary accounts make that attractive.
Please I need explanation on when to use the Disbursement tool. I totally don’t understand it. I need explanation as to what transaction can be termed as disbursement in accounting, I mean I need explanation from the basic level.
@Abeiku, I don’t believe you should use Disbursements yet. This capability is still in development and is not fully functional. The definition in accounting of disbursement is any payout of money. The idea behind the current development is to support recording and invoicing of payments made on behalf of a specific customer, which you expect to be reimbursed after invoicing.
@lubos, here is another complexity to
Disbursements that occurs to me. Some expenses are not actually paid out, but are “inferred.” Examples are per diem allowances or mileage at standard rates. No one actually spends money, but the employee may be entitled to reimbursement, a customer may be obligated to pay, and the inferred expense may be deductible for tax purposes. I handle these by entering expense claims. When I invoice, I credit
Expense claims as I create the account receivable, the same way I would credit an actual, paid expense. For
Disbursements to be complete, it would have to accomodate such inferred expenses as well as actual payments.
I can allow direct entries to
Unrecoverable disbursements account. You have presented a valid use case. For example, if you issue a credit note to customer, you could allocate those unrecoverable disbursements to proper
Unrecoverable disbursements account. I think that’s OK.
Why not? Unrecoverable disbursements expense is easily tax-deductible just like bad debts expense is. Anyway, there can be always an option to provide “write-off” expense category so the unrecoverable disbursement is posted to different expense account but that’s something I believe most businesses won’t care about as the most correct account for them will be in fact - unrecoverable disbursements. At least that is my assumption right now but if it’s to be changed, I have a plan for that.
This is too premature. I actually thought of all your edge-cases before I even wrote the first line of code. It’s good that you are bringing all that up. I wasn’t sure whether I’m not overthinking the whole concept and it turns out I’m not if these are serious concerns to at least somebody.
I know but these are not “disbursements”. We can call them
Billable costs or something like that. And this module is not difficult to add. It will work almost exactly the same as
The only issue here is that someone might complain that there are 3 different tabs for “Billable expenses” (time, disbursements & costs). So in future, once all three tabs are available, I might merge them into single tab called
Billable expenses but this is mostly UI matter as it won’t affect functionality in any way. (and now you know why I call this new tab
Disbursements and not
@lubos, thank you very much for this exchange of thoughts and the insights it provides. You are correct; I definitely see why you called the tab Disbursements. I will address your comments in order:
I’m sure when others get involved, they will come up with many cases where direct access to the accounts will be useful. The mark of a good tool is that people can use it as they need, rather than only one way.
One example of why you might need to categorize expenses more explicitly than just “unrecoverable” is that in the USA, meals and entertainment expenses are generally only deductible at 50 percent of the amount spent. The expense might be 100 percent legitimate from an accounting perspective, and should therefore be reflected in the company’s books, but the Internal Revenue Service only allows a 50 percent deduction. This stems from past abuses. Other examples might arise with various social engineering programs, where, for example, energy-saving plant improvements, job training investments, value added taxes, and so forth might end up being part of a project cost (billable to a customer) but need to be separate for tax reporting because they qualify for more, less, or special treatment. It will be easier to categorize these into appropriate accounts at the time of invoicing or write-off than to pick them out of a mass of transactions at tax filing time.
I’m very happy to discover your thinking is ahead of mine. That gives me confidence in Manager. The reason I mentioned reconsidering the
Disbursementstab is that the program does what I need very well already. If a fully functional (for all edge cases) solution turns out to be more work than what I’m doing now, I will just disable it. Please don’t interpret that as a threat, just an observation that by trying to do all things for all users, you may have created more work for yourself than it is worth.
I like the idea of
Billable costs, as you describe it. You are correct, of course; this is very analogous to
Billable time, because the obligation is created only by the invoicing process. The part I’d have to think through is whether the expense claim is still necessary in the workflow.
I really like the idea of having all capabilities merged into one tab. That obviously solves the problem of combing time, disbursements, and costs on a sales invoice. Philosophically, that sort of divides accounting activities into things you do for your company and things you do for a customer. That’s the kind of elegance that pervades the rest of the application, but which seemed to be missing from what you’ve released of
Disbursementsso far. I look forward to that!
Great discussion. Let me throw my comments on board.
Write Off’s - Couldn’t we just add another box here for ‘write-off account’ then let the user choose which expense account to write off to? e.g. bad debts or any other expense account appropriate? It may be if I can’t bill it I need to write it off to an expense account reflecting the nature of the cost incurred (rather than just unrecoverable disbursements)?
Other than being able to direct the write off (per 1 above), this is working perfectly for my current scenario. My glider club gets billed an annual membership fee from our national body which is passed on to our members and re-billed. Perfect.
Billable expenses. I don’t think that’s too far off either. Let me put on my former consultant hat where I used to have to bill expenses all the time. You currently have the ability to reimburse a payer expenses via Expense claims which works great and I see I can now choose disbursements as the account and pass those expenses over to disbursements for billing. That’s OK except I lose the nature of the expense when I do so (meals, entertainment, etc). I’d typically want to indicate what it as on the invoice. As a fix how about instead of coding the expense lines to disbursements I could just code to expense accounts (meals, entertainment etc), but you add a ‘Billable’ checkbox at the end of the line. If unchecked the expense debits the specified expense account, if checked, allow the customer to be specified, debit to the disbursements account but pass along the ‘account’ chosen as the description of the disbursement line entry so that when billing I can reflect what it is meals, entertainment etc. Anyway, something of that nature is needed to retain the nature of the expense…
Edit: I just noticed that when I rebill disbursement entries that come from an expense claim, they continue to show as unbillled and go to (Credit) Disbursements Income instead of crediting the disbursements billable account itself.
- At that point I think you could rename Disbursement to ‘Billable Costs’ or 'Billable ‘Expenditures’ (my preferred name) module that covers re-billing expenditures incurred whether from spend money, purchase invoices or from reimbursing an expense claim.
Lastly, Combined T&E (time & expense) billing. You already have ‘Sales Invoices’ but you cannot select either the Work in Progress or Disbursements account on line items. Let’s say you allowed that but restricted which lines (unbilled disbursements or unbilled time) records could be selected based upon the customer chosen on the invoice header - there’s the combined billing module - done.
i.e. If you choose disbursements account go to the existing billable disbursements screen (the one with the date and the check box) and list/filter it only to those entries for the customer selected on the header, it would then add lines for each of the records chosen and return to the invoice. If WIP is chosen go to the existing Billable time screen (the matching one with the check boxes) and do the same thing for billable time.
Again many thanks for a fantastic product and thank you for letting us participate in its development.
@lubos, I’m sure you’ve already considered this, but I’ll mention it anyway. As you think about potential write-offs of disbursements or costs, they cannot be handled the same way as billable time. When you edit status of a billable time entry to “Written-off,” you basically are eliminating the transaction at the source. In effect, you are recording the fact that the time had no value. Of course, Manager creates an adjustment entry, thus preserving the audit trail. But since no money ever changed hands, it works to wipe the receivable at the source, which was internal.
You won’t be able to do the same thing with disbursements, because money will actually have been spent externally. Nor should you do the same thing with inferred costs (per diem, etc.), because some of them might still be deductible, despite no money having changed hands.
The more one thinks about this topic, the more complex it gets.
If you put something into disbursements from an expense claim, all looks good till you bill it. When you do the result is a Dr to Receivables and Cr to Disbursements Income (should be a Cr to Disbursements itself) and when you go back into disbursements then entry continues to show as ‘Uninvoiced’.
I am following the same process for billing any disbursement and there is no mark up on any of them. Disbursements created via a source of Spend Money or Purchase invoices correctly just move from Disbursements to Receivables, but those with a source of Expense Claim hit Disbursements income every time and continue to show as Uninvoiced.
My assumption is that if an employee has an expense report item that can be rebilled to a client wed want:
Expense Report: Dr Disbursements (Billable) / Cr Expense Claims (Payable)
Invoice: Dr Receivables / Cr Disbursements [This part is not working]
This has been now fixed in the latest version (15.0.28)
Wow, thank you. This module is really getting there.
The main gap I see remaining still relates re-billing expense claims… When I enter disbursements via spend money or purchase invoices, I typically use a purchase item or enter a description which flows its way through to the un-billed disbursement and then to the invoice. However, when I enter a disbursement via an expense report (claim), I have to pick the disbursements account and customer and enter the amount but I lose the nature of the expense, meals, travel etc. There needs to be a way to categorize the expenses and flow that through so that it can be seen on the invoice what each line item is billing for…
Maybe just let us define Purchase items such as ‘Meals’, ‘Entertainment’ etc. and put a check box on the expenditure item set up (such as “use on expense claims”, the check-box field would be visible on purchase item set up only to if expense claims are enable). That would be great since (i) if it’s not a reimbursable expense it would be an easy way to drive to the correct account for the category of expense or (ii) if it is reimbursable it would get a meaningful description on the line and I’d just update the account to Disbursements and select the customer so it would work in a completely consistent manner as when creating billable disbursements from purchase invoices and spend money.
Again, many many thanks for the huge amount of time and effort you clearly put into this software.
I see many many writers, but I am very confused, do you have a manual or something like that so that I can put in disbursements as you mention. For me it is only expense whcih I have to record for my customer and I have to bill it without tax. Shortly, I get 300 euro in advance for making expenses, i make several costs like parking, driving, payment of electricty and water for may customer, I bill my customer 50 euro incl VAT for my services and the expenses I made for him, without vat of course.
Shouldn’t you type the nature of disbursement to description field? Description will flow to
Disbursement tab automatically. And then onto customer invoice.