In reliably identifying if a line item with a tax code is a sale or purchase, journal entries are the most difficult / likely to be wrong because they are often used for correction so the program has no real information to make the assignment. Also unlike invoices different line items may apply to different customers / supplier. In my option for journal entries it would be optimal if Manager supported a per line item selection of
- Sale / purchase
- Tax code
- Customer / supplier
A possible user interface is shown in the following thread. Note per item Sale/purchase selection could be added prior to Customer/Supplier selection capability. When Sale/purchase selection capability is added it could default to the current arrangement so all old journal entries would not be effected. For new journal entries tax code selection could be shown only after sale/purchase is selected so always clearly defined for all new journal entries.
When a business interacts with another entity as both a supplier and customer, this is handled in Manager as described in this guide Offset simultaneous sales and purchase invoices which involves
- Add the other entity to both Mangers supplier and customer database
- Create a sales invoice (with tax codes) for the sales to the entity
- Create a purchase invoice (with tax codes) for purchases from the entity
- Use a payment/receipt (without tax codes) to fulfill the invoices with a line item for “Accounts receivable” and “Accounts payable” or a journal entry (without tax codes).
An equivalent process can be done for “Cash” sales & purchased
- Create a receipt (with tax codes) for the sales with the entity
- Create a payment (with tax codes) for the purchases from the entity
The above operating method is consistent and covers a large percentage of the market manager is likely to sell to. For Manager users who frequently interact with another entity as both a supplier and customer, it could be better. How best to improve it depends on the typical use case.
Were transactions are relatively independent but the other entity interacts in different ways, unifying the address book and supporting cross transactions and reporting would work well and is generalizable. This could be done by having a single “Contacts” or “Address book” which contained a single entry for each business entity together with a check box to indicate if they appeared in the Supplier, Customers, Employees, or Expense Claimer. Then relationships such as the following could be better supported
- Suppliers and customers
- Employees and customers
- Suppliers with payment reporting requirements like employees
- Expense claim payer and any of the above
For user where one transaction frequently includes both a sales and purchase component so is a ATO Bartering and trade exchanges, it would be valuable to have the ability to specify.
- a line item on a sale document is a purchase
- or a line item purchase document is a sale
As this is the reverse of how by the vast majority of users should use these documents, it has the potential to decrease the simplicity of use for the majority to provide desirable flexibility for a minority of the Manager user base. (I’m not saying it should not be done, I’m saying it should be a second level option most users do not see).
Edit: Details of journal entry Sale/purchase & Customer/supplier selection capability added