It would be very helpful if the cash payment and receipt forms were improved to include several features:
Linkage to customer/supplier subaccounts. Established customers don’t always buy on credit, making a sales invoice unnecessary. Likewise, businesses often pay cash to established suppliers, so purchase invoices are not needed. This linkage would eliminate separate invoice and spend/receive transactions. And it would allow the complete history of a customer/supplier in a statement, not just the history for credit sales/purchases. Obviously, the entry process would need to include a method for distinguishing random cash customer/suppliers from those with the same names defined under the Customers and Suppliers tabs.
Address fields for payers/payees. These would be optional for occasional payers/payees, but would prefill for defined customers/suppliers.
Tut, receiving income money from (invoiced) Customers in advance/excess of the amount invoiced seems to be recorded as:
Dr Cash at bank xxx
Cr Accounts Receivable xxx [both Balance Sheet accounts]
Two Questions for you please:
In Accrual Accounting system: Why isn’t the overpayment/excess recorded as a Credit to ‘Income in Advance’ Liability and also offset against Customers?
When the P&L Statement is reported on a CASH basis, the money received from customers paying in advance (eg Subscriptions not yet invoiced) should be included as Income of that period but Manager does not. The Cash-basis P&L Statement is therefore not correct and misleading to users and we cannot reconcile monies received in CASH-Based P&L Stmt against Cheque Account without manually adding the Credit balance in Accounts Receivable. Very messy and novice users would have no idea how to do this.
In double-entry accounting, the sum of debits must equal the sum of credits. You are correct that the excess or advance is debited to the cash account. Cash accounts are assets and are increased by debits. So the account balance goes up to match what happens at the bank: you have more money. The offsetting credit goes to Accounts receivable as a contra entry, that is, as an entry reversed from what normally goes into the account.
It would also be correct to instead credit a liability account named something like Customer credits. Some people like that approach better. In fact, until about a year ago, that’s what Manager did. But things were simplified so all transactions could go to a single customer subaccount and be processed the same way. By coincidence, there is another post on this subject on the forum today: Handling Advance Payments Better.
But what cannot happen is to do both as you suggest. That would result in an unbalanced entry.
That’s one of the shortcomings of cash basis accounting. If you are taking deposits, you need an income account for them. If you later earn the money, you would need to transfer to Accounts receivable by journal entry to pay off a sales invoice. At its core, Manager is an accrual basis accounting system, with optional cash basis reporting. But if you are going to use it that way, you need to set it up that way. In the end, it’s more work. That’s one reason most accountants dislike cash basis accounting.
In its regular operation, Manager does not show Accounts receivable under cash basis accounting. But if there are negative balances (customers have overpaid or made deposits), it will be shown. This is really a reminder that you are not accounting correctly for things with the choice you have made on basis.
yes, I agree with you about cash accounting and I understand your explanation. Thanks so much.
I think I will use accruals so that monies received in advance are reported in the P&L as Income and in the B/S as Liability. But, if the Customers are assigned to use the Accounts Receivable control account, the credit balance will show as a negative. I can cope with this and explain to clients.
Thanks Tut, you have convinced me to revert to Accruals!!
this is a MUST HAVE, i was deluded when i saw that i cant use cash sales for existing consumers.
invoice and spend/receive is not time efficient.
Please try to implement it as soon as possible
We would also very much like to see this. I’m primarily interested in the link between customers and payments. I have implemented a custom template that allows us to use the Payment form to print checks. It works great, except for the fact that the Payment doesn’t have the recipient’s address! I would be happy to share my check template if anyone is interested, but it isn’t fully usable without the ability to print the address.
That’s creative, @bwil. Did you know you can use HTML as a workaround to get the address into the Payee field? For example,
John Doe<br>1234 Main Street<br>Anytown
produces:
John Doe 1234 Main Street Anytown
It’s not nearly what is being asked for in this subject, but since all you are doing is printing a special version of a payment form, it will work for your situation.
@bwil, the ability to print cheques directly from payment is really something unheard of. I’m very interested, it will be appreciated if you care to share with me how to print cheque directly from payment.
Sure, here is my template. It is just a hack but it works for our purposes, except for the address issue. We just set the default theme for payment forms to this theme and it works well enough. Note that it doesn’t work using the built-in PDF generation, but it works fine printing directly out of Chrome. I haven’t taken the time to try and figure out why.
This would speed up entry remarkably and allow simplification of the P&L. For instance, I could use ‘Utilities’ as an Expense account but then, as needed, look to see the total paid for electric, gas, water, phone. I generally don’t need to see them on a regular basis in financials but the need to see them individually does come up if we’re comparing amounts with potential new providers. (i.e. Phone service).
PLEASE CONSIDER DOING THIS!!
@KrisK, It is not at all clear what you are referring to. This topic began as a suggestion for improving receipt and payment forms. It has since digressed onto other topics. Now you seem to be referring to multi tiered charts of accounts.
I see no way in Payments/Receipts to attach a specific supplier or customer to the payment/receipt, only an account. So - I w3as referencing the very first poet:
Linkage to customer/supplier subaccounts. Established customers don’t always buy on credit, making a sales invoice unnecessary. Likewise, businesses often pay cash to established suppliers, so purchase invoices are not needed. This linkage would eliminate separate invoice and spend/receive transactions. And it would allow the complete history of a customer/supplier in a statement, not just the history for credit sales/purchases
