Something isn’t adding up correctly, but I cannot figure it out. I am using billable expenses for projects. When a receipt is entered after billable expenses are invoiced, accounts receivable accurately reflect the payment. However, when I look at the project tab, it isn’t showing the amount received as income, therefore the project is in the red.
If I try receiving the payment as revenue, the income vs expenses is correct and puts the project back in black, but then my accounts receivable still shows as being owed for the project.
Billable expenses are passed through to the customer. They do not affect your profitability (or project profitability) unless you mark up expenses. Then, the markup would be pure profit.
You should create a purchase invoice and then assign a payment to the supplier. You are talking about receiving income but paying suppliers is an expense. You receive income from customers through sales invoices and receipts.
In essence billable expense income is received from a customer for billable expense payments you made on behalf of a customer. You thus make expenses and pay suppliers on behalf of your customers (you pay funds). These customers have to pay you for this (you receive funds). Therefore you must record both the payment and the receipt.
@BFE, you seem confused about the overall workflow for using billable expenses. Let me summarize the relevant Guides:
You buy something on behalf of your customer. This can be done with a purchase invoice, followed by a payment, although the payment does not enter into the billable expense accounting. Or, you can simply enter a payment. Regardless of which path you choose, the line item on the purchase transaction is posted to Billable expenses for the specific customer. This is the point where the project would be selected.
Next, invoice the customer from the Customers tab, selecting the relevant, uninvoiced billable expenses. The sales invoice is what posts income to the appropriate income account. This is where you again choose the project. Note, however, that the automatic invoice generation does not select the project; so you must edit the sales invoice as soon as it is created to select the project.
Now you have both the income and expense recorded against the project, resulting in no effect on net profitability. In this example, I have added a billable expense of 400 and invoiced it:
The process you explained is the process I am using.
I am using the payment option instead of the purchase invoice. I use billable expenses in the line item followed by the project selection. Then I go under the customer tab to create the invoice. What seems to be happening is Manager is placing the billable expenses into accounts receivable. Is it supposed to? It doesn’t seem to me that account is the correct for a billable expense.
Yes, that is what is supposed to happen. Accounts receivable includes everything for which you have invoiced the customer. That is what they owe you. A receipt will later settle their debt to you. But that is completely disconnected from project accounting. The project accounting in your situation occurs only when you make a payment and issue a sales invoice.
If we go back to your initial post, you said that after a receipt is entered, the Projects tab does not show the amount received as income. That isn’t when the income is supposed to show up. If the income is not listed, that is because you did not select the project on the line item of the sales invoice. As I already wrote, it’s the sales invoice that records the income, not the receipt. The receipt just settles the debt created by the sales invoice.
Post a screen shot of the Edit screen of the sales invoice where you invoiced billable expenses.
I think I have finally figured it out. When I select the invoice through the customer tab and then select receive new payment, I need to change the account from accounts receivable to billable expenses - invoiced. That changed everything and now it looks correctly under projects and summary.
First of all, you don’t select “receive new payment.” In fact, there is no such option anywhere in the program. After the sales invoice has been created in the Customers tab and sent to the customer, and after you receive their money, View the receipt in the Sales Invoices tab and click New Receipt.
Second, you do not change any account. The receipt created as described above correctly posts the receipt to Accounts receivable. Otherwise, your records will continue to show the customer still owes you money. Do not ruin the rest of your accounting by trying to make your project accounting show what you think it should. If you do things correctly, both will be correct.
Third, I am not sure I follow exactly what you say you did. But if I understand correctly, you entered a receipt that reversed your original invoice without actually settling it.
Please provide the screen shot of the Edit screen of the sales invoice as I requested earlier. If that is incorrect in the way I suspect, based on what you have written, everything else you’ve done is also incorrect.
