Recurring Dates changing

21

I did not miss anything you expressed. As @Patch later wrote, what you seem not to like is rooted in the nature of accrual versus cash basis accounting. Every business in the world faces these same facts and choices. And yes, they are visible at beginning and end of accounting periods.

This is the perfect expression of your conflicting desires. If you want to send invoices or notices of amounts due before the end of the month, but not recognize income until after the first of the next month when you are paid, you have two choices:

  • Use cash basis accounting
  • Send out billing notices that are not sales invoices, then generate the actual sales invoices on the first of the month. These notices can be generated in an email or word processing program, even taking advantage of mail merge and group distribution features. They will have no accounting impact. You could also generate them in Manager as Sales Quotes, retitled as you wish. The disadvantage of that is that you cannot make them recurring and would have to create each one individually.
22

I suppose it may depend on the definition of accrual accounting you adopt. One definition is
Accrual method recognizes revenue when the services provided for the client are concluded / are recorded when a transaction occurs.
Another definition revenues are reported on the income statement when they are earned

So when providing a service to a client billed monthly, using accrual accounting the service should show as income when each billing period ends, not when an invoice is issued, invoice is due or invoice is paid. Although the contract negotiator may feel the income stream was assured when the labor contract was signed.

All of which is a problem for Manager as it doesnā€™t generally have any information on when the service was performed only when an invoice was generated, when it is due and when it is paid.

Which I suspect is the problem @restdev is encountering.

23

The definition saying income is recognized when earned is probably more widespread. Very frequently, this is when goods are delivered or services are provided, but not always. Contracts can specify a sellerā€™s entitlement to the income (the time of it being earned) on just about any basis. Insurance premiums and subscriptions, for example, are typically earned and paid in advance or the obligation to deliver is not created.

But that is all separate from when revenue is billed. And none of the discussion in this thread has yet raised the possibility of adjusting entries at the beginning and end of reporting periods to move income accruals into their correct periods. That is another possibility @restdev could consider.

24

I suppose if your ā€˜advanceā€™ monthly invoices are the same amount each period you could:

  1. Create your recurring invoice to hit a ā€˜deferred revenueā€™ (balance sheet) account;
  2. Create a recurring journal entry (or do a manual JE) to move, i.e. release revenue at month-end etc.

You would still need to manage and reconcile your deferred revenue. If this is simply billing in advance early in the month and recognizing month-end it should be simple as it should zero at the beginning of the next period. You could even use a special account to bucket the deferred revenue to a customer, a contract etc. If your different items or services need to ultimately hit different revenue accounts you will have a little more work to do.

Anyway some options for you to play with in a test company.

Revenue recognition is a huge topic.