Matching sales to future periods

We made an invoice for selling a service. We want to spread the sales to the next 12 months, As example. The invoice us 12.000,-, but we want to make one journalentry for each of the months in 2017 of 1000,- a month.
How does this work in Manager, creating the exact match between returns and costs?
We see that a journal entry contains many rules, but we can’t admit the right dates of the months
Thanks for you help.

Bert Schreuders

First, no journal entry will be involved, either for invoicing or receiving payment. See this Guide:

https://forum.manager.io/t/creating-sales-invoices/7178

Second, unless you have a contract or sales agreement that commits the customer to paying the entire 12,000 regardless of whether any work is performed, issuing a sales invoice in advance is not sound accounting. A sales invoice is a demand for payment for goods/services delivered. If you are using accrual basis accounting, you will immediately recognize 12,000 of income, on which you will have to pay taxes, without having earned anything. See this Guide:

https://forum.manager.io/t/choosing-accrual-or-cash-basis-accounting/7129

Third, Manager has no current capability for project accounting, so an “exact match between returns and costs” will not be possible on a project basis, if that is what you meant. But you can create Profit and Loss Statements for any defined period of time. See this Guide:

https://forum.manager.io/t/reports/7468

The appropriate way to do what you want is to issue a sales invoice when the first month’s worth of service has been performed. Or, if the sales agreement stipulates payment in advance to cover a month of work, you could issue it at the beginning of the month. But the point is that, before issuing a sales invoice, the obligation for the customer to pay must have been established. Otherwise, what you are asking for is a deposit, which should be done with a Sales Quote (possibly retitled as a pro forma invoice). See these Guides:

https://forum.manager.io/t/customer-deposits-and-advances/7093

https://forum.manager.io/t/creating-sales-quotes/7238

Once you have created the first month’s sales invoice, set up a recurring sales invoice. See this Guide:

That Guide explains how to set up a recurring invoice from scratch. You can also use the Copy to... function from your first sales invoice for this customer. See this Guide:

https://forum.manager.io/t/using-the-copy-to-function/7262

This is a complete misnomer which is constantly promoted but is a false representation.

Insurance companies issue invoices in advance and need to be paid before the commencement date of the service. Memberships are invoice in advance of the membership year. Many building maintenance service contracts (lift servicing) are invoiced in advance - etc, etc, etc

@Bert - the simple solution for you is when you issue the Invoice put the account allocation as a BS Liability account called - Invoiced In Advanced.

Then create a Journal dated Jan 1, which will transfer 1000 per month - Debit Invoiced In Advanced and Credit Income account. Then cloned that Journal and change the date to Feb 1 and so on.

You can do the whole years Journals at once and as Manager passes each date that Journal will be processed. You will also see this message across the top of the Summary tab.

You may want to reread the beginning of the sentence you quoted:

I was writing from the perspective of the company issuing the sales invoice, which is what @Bert asked about. You have taken more the perspective of the customer who receives the invoice and have given two excellent examples. Regardless of whose perspective you look from, the most important point I made was this one:

Memberships and insurance contracts both satisfy that condition. And in @Bert’s case, if there is an annual service contract to which the customer has committed, it can also be appropriate, which I thought I had made clear. Sorry if I was obscure on that.

Beyond questions of when to invoice, your approach of creating a balance sheet liability and cloning a series of journal entries works, of course. But it requires creating 12 journal entries versus one sales invoice that is copied to a recurring sales invoice. My approach seems more appropriate if the customer is going to be sent 12 invoices over the year. Yours works better if they are going to pay the entire 12,000 in advance.

So, @Bert, you have two different approaches that accomplish the same goal. Which you choose will depend on the exact circumstances.

Thanks a lot. I think we have the right anwers now to continue this case. To be clear: we run a online school in which students can pay in advcance for one or more years lectures. It would be a mistake if we book these invoices as income in the period we submit the invoice. That is the reason why we searched for a solution to spread the invoice to the months our students will be permitted to get their courses. .

Oops, over grabbed the intended quotation, now corrected.