Rounding Issue: One-Cent billable expense

I am using manager desktop (16.5.54) on windows 7.

I created a Sales Invoice that included a billable expense of $0.47 USD. With other items on the invoice, the total came up to $127.16.

The customer paid half ($63.58) and paid the other half later.

Now on my Summary Page, Assets: Billable expenses has a balance of $0.01. Drilling down on the figure, it indicates that when the customer paid half, it subtracted 0.23. The same thing happened when he paid the other half. Of course, this doesn’t work. (0.47 - 0.23 - 0.23 = 0.01)

Isn’t this a bug in the rounding?

How did you generate the sales invoice? Did you do it in the Customers tab after clicking on the Uninvoiced balance and checking those billable items to include on an invoice? Or did you do it from the Sales Invoices tab and enter the figure yourself?

From the Customers tab.

I think you may have entered a typo. Once you have created a sales invoice from the Customers tab, the Billable expenses account is credited by the amount involved and Accounts receivable is debited the same amount. Whether the customer pays or not, there is never another transaction entered into Billable expenses related to that item. The fact that the your customer paid half the amount owed and the billable expense was an odd number makes no difference. No rounding was involved, because no prorating occurred. The amount you received went directly against the account receivable invoice. If there had been an error in application of payment received to the sales invoice, it would be Accounts receivable that was off, and the sales invoice would show a balance due. Or, if there was a recorded overpayment, Customer credits would show the difference.

The fact that you have $0.01 in Billable expenses can only mean a couple things:

  1. The full amount was somehow not transferred to the invoice. Perhaps you changed a transaction where money was spent and allocated to Billable expenses after the invoice was already created, in which case the change does not automatically carry forward to the sales invoice.
  2. The mistake did not occur on this invoice at all, but rather on some previous one. Drill down on the .01 balance figure to see what makes it up.

I forgot to mention that I have the accounting method set to Cash Basis. If I switch to Accrual Basis, the Summary does not show this one-cent error.

Here is what I get when I drill down on the .01 balance: It indicates that the one cent figure is for ___ Ebersol (My Customer). Here is a screenshot when I drill down on that:


This math is exactly correct. What looks wrong is that when the sales invoice was created, the entire billable expense was not included. It looks like you generated two sales invoices to match the payments you received instead of creating a single sales invoice incorporating all items owed. This impression is reinforced by the absence of invoice numbers, which are automatically generated and displayed (if present). So it looks like you manually deleted the sales invoice numbers.

In your original post, you said[quote=“RyanZim, post:1, topic:6127”]
when the customer paid half, it subtracted 0.23

implying that Manager had made an allocation from a payment. What actually happened is that you did something that resulted in only 0.23 being invoiced, and whatever you did, you did twice.

The proper approach would have been to generate a single sales invoice including all items owed by Ebersol on the particular job. Then, this drill-down would have listed -0.47 and -16.74 in red and a zero balance. The first partial payment, applied to the sales invoice, would have left a balance due. The final partial payment would have cleared that, assuming the two partial payments added up to the full amount of the sales invoice.

Is my interpretation of what you did correct? If not, can you post a screen shot of the applicable sales invoice itself? (Please black out sensitive information.)

I created only one invoice.

The first partial payment, applied to the sales invoice, would have left a balance due. The final partial payment would have cleared that, assuming the two partial payments added up to the full amount of the sales invoice.

That’s exactly how it worked.

Here is a screenshot of the invoice:

I created a new business and re-did the transactions to make sure I didn’t make a mistake. I could post it on the internet for you to download as a .manager file, if that would be helpful.

Please do not post your accounting file. I’m not the developer, just a user.

Your screen shots definitely do not match, so I cannot yet completely understand what you did. To begin with, Invoice 13 is dated 5/12/2016, but the transactions transferring billable expenses to the sales invoice (each in approximately half the actual amounts) are dated 5/31/2016 and 6/20/2016. And the Billable expenses register for Ebersol does not include a column headed “#” with the invoice number. So Manager apparently does not know these are connected. Therefore, you cannot have created Invoice 13 in the manner you described. My guess is that there was some editing and possibly re-entry of data.

Further, the absence of any entry in the Contact column of the billable expenses drill-down indicates that when you recorded the expenses, you did not indicate who the Payee was. (While that is not good accounting practice, it actually has no bearing on the problem we are trying to resolve.)

To help me figure this out, could you please go to your Billable Expenses tab, click on the Customer heading to sort the list, and post a screen shot of that portion of the list for Ebersol? Be sure to include both invoiced and uninvoiced entries.

Also, can you think back and describe exactly how you remember you got to the situation with the 0.01 balance in Expense claims? What was the sequence of steps? Be as specific as you can.

5/31/2016 and 6/20/2016 were the dates that Ebersol paid me.

I did not indicate the Payee for the expense, the Payee was myself.

Here is the Billable Expenses tab:

the situation with the 0.01 balance in Expense claims

Correction: the 0.01 balance is in Billable expenses. Here is an excerpt of my summary page:

Keep in mind I am using the cash basis of accounting.

Here is what I did:


I went to Cash Accounts & clicked Spend Money. I paid from cash. I set the Account to Assets: Billable Expenses and the Customer to Ebersol. I entered the amount for the stamp ($0.47). I did the same thing for the travel expense.

I created a New Billable Time as well.

I went to the Customers tab. Ebersol had 127.16 Uninvoiced. I clicked on that figure, selected all the items, and clicked the New Sales Invoice button at the bottom. This created invoice #13.


Ebersol paid me $63.58. I went to Sales Invoices, clicked View for #13, and then Receive Money. I filled out the receipt as shown:


Ebersol paid the other $63.58. I followed the same steps as I did on 5/31/2016. When I was done, my Summary showed this one cent leftover.

Hope this helps!

Thanks for the additional information. I think I understand the problem, but also see some other issues:

Did you actually take money from a company account to pay yourself? If so, using the Spend Money function in the appropriate cash account was the right thing to do. This would be correct, for example, if you bought the stamp from yourself. But if you transferred a personal stamp to the company without receiving money from the company, the correct way to handle it would be as an expense claim, still allocating the transaction to Billable expenses.

Likewise, if the travel expense was actually something purchased from yourself, what you described was correct. But it is difficult to imagine purchasing travel expenses from yourself. I suspect this was, instead, something like personal car mileage (31 miles at the current IRS rate). If so, the way to handle allowances that are legitimate, deductible business expenses but for which no money changes hands is as expense claims. Again, an expense claim for mileage would still be allocated to Billable expenses.

Yes, I mistyped because I was thinking about the expense claims topic I covered in the paragraph above.

Now back to the 0.01 problem:

The procedure you described for creating Invoice #13 is correct and would have generated the invoice you showed. What it would not have done is create the entries in your screen shot of the drill-down on billable expenses from the Summary. Creating the sales invoice as you described would generate two entries in the drill-down list:

  • -16.74 on 5/12/2016
  • -0.47 on 5/12/2016

Neither entry appears, but dual entries for different amounts on the dates money was received were generated instead.

The answer to your problem lies in how those entries were created. Because you are using cash basis accounting, Manager substituted those transactions for the “real” ones. The fact that if you switch to accrual the problem goes away shows that Manager remembers the correct transaction. But under cash accounting, Manager “extracted” enough of the receivable to absorb the payment and allocated the payment proportionally across all line items on the invoice, leading to rounding error. Depending on amounts involved, the same thing could have happened to billable time. In this case, it did not. Had Ebersol paid in unequal installments, you might never have seen the problem.

The procedures you described for receiving two payments from Ebersol are also correct. And they did, in fact, result in Invoice #13 being paid in full.

A lesson from all this is that cash-basis accounting cannot always show the completely correct position and performance of a company. Important control accounts, like Accounts receivable, disappear. But when partial payments are made, something has to be done, and problems like this crop up.

You could get rid of the error via a journal entry, transferring it owner’s equity or a capital account, depending on your form of organization and your chart of accounts.

Thanks for all your help. I don’t actually maintain a separate account for my business, I just keep track in my accounting how much “cash” my business has on hand (Poor practice on my part).

Isn’t this a bug that should be fixed?

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I suppose that depends on your perspective. Remember that Manager–like all real accounting applications–is an accrual-based system. That is built into its basic structure. Cash-based “accounting” is really just cash-based reporting. In an accrual-based system, when a receipt only partially covers a receivable, you can apply the exact amount paid and leave the balance. The revenue has already been recognized, and you’re only adjusting the asset. You don’t have to allocate a receipt against the various line items, because they’ve already been transferred to accounts receivable.

But in a cash-based system, you don’t have the accounts receivable account, because unpaid sales invoices are not recognized as income. So when a customer pays part of an invoice, there is no receivable containing the transferred billable expense to apply the receipt to. So you have to “invent” something, which can–depending upon the numbers involved–lead to rounding errors.

Whether you should do anything about the cent is a matter of preference. As I mentioned earlier, you can journal it to equity, which makes no difference because equity doesn’t really mean anything in cash-based accounting either. Or you can leave it, perhaps to be wiped out in the future be an opposite rounding error.

This is why no public company uses cash-based accounting. And even sole proprietorships can be prohibited from using it under some circumstances (such as, in the USA, when they carry inventory).

Personally, I doubt @lubos will be motivated to change any of this. And if he was, I don’t know how he could, because it would require accounting to far more than two decimal places, which creates a whole raft of problems.

Actually, there is an insidious problem here that could bite come tax time. The “missing” cent is missing from Billable expenses, where the payment was rounded down, but because this is double-entry accounting, the cent is of course not actually missing. It actually shows up as an extra $0.01 in the Sales revenue account (or wherever the other services were credited).

If you make lots and lots of transactions like this, the extra pennies could eventually add up enough to have an impact on cash-basis annual income. (Even though it might not be desirable in Tut’s view, some companies in the U.S. do actually use cash-basis tax accounting.)

So when you create a Journal entry to credit the extra $0.01 to the Billable expenses account, please don’t debit it to an Equity account! Instead, post the debit to your Sales account or to whichever Revenue account received the credit for the rest of the invoice. And, if the rounding error happens to go the other way – so you see a negative cent in Billable expenses – then you’ll want to do the opposite and debit the $0.01 to Billable expenses and credit it to Sales.

Interesting thoughts, @Jon. I haven’t had time to test your scenario to see if what you say is true. But it seems that under cash accounting, only the actual receipts will go to income, so the phantom pennies shouldn’t build up in a sales account. Have you verified the behavior you described?

FWIW, The phantom penny is only in the Assets section of the balance sheet. It is not anywhere on the P&L statement. The only income listed on the P&L is Billable time - invoiced.


I followed @RyanZim’s steps to re-create his scenario. After creating the invoice, here is the Summary screen in accrual basis:

And here it is in cash basis:

(Note that in my COA, I’ve renamed the Billable time - invoiced revenue account to Hourly services and the Billable expenses asset account to Reimbursable expenses.)

After posting the first payment, my accrual basis summary looked like this:

And here is the cash basis summary:

Finally, after posting the second payment, here is the summary under accrual basis:

No issues there, just as @Tut predicted earlier.

And under cash basis:

There’s the pesky penny in Reimbursable expenses (a/k/a Billable expenses), as @RyanZim reported.

As you can see, the extra penny also appears under Hourly services (a/k/a Billable time - invoiced) on the Income Statement side, and total Revenue is off by one cent. Debiting the rounding error to an Equity account won’t correct the error in total Revenue, so the Journal entry to clear this rounding error must include a debit to a revenue account:

Dr. Hourly services ..... $0.01
Cr. Reimbursable exp: Acme Ltd ..... $0.01

Here’s the rub, though. Because Billable time - invoiced (here, Hourly services) is an in-built control account, it is not available in the Journal Entry module. This is a problem. Still, the penny needs to be accounted for, so I suggest creating a Miscellaneous sales revenue account to which you can debit the penny. That way, even though the line-item Hourly services / Billable time - invoiced account will not be precise, the top-line Revenue total will be:

Final Cash basis Summary:

(Of course, if you look at the Summary now under accrual basis, the evil penny returns, and accrual basis Revenue is off by one cent:

This causes my head to spin, but it has to do with the difference between where the accumulated fractional-cent revenues are being recognized when they are earned vs when they are collected, because the rounding error is introduced in between those two points in time. Perhaps accounting gurus like @Tut and @lubos will be able to figure this one out fully, but my point is that while debiting the penny to an Equity account fixes things if you’re on a accrual basis, you’ll need to do something different if you’re on a cash basis. The problem with all this rounding stuff is that unless all rounding errors and their associated write-offs and assumptions are handled consistently across the application, they can introduce discrepancies between the two accounting basis systems, which is a problem for those of us who use accrual basis for operations reporting and cash basis for tax reporting.)

Thanks for your confidence, but this is beyond me. :confounded:

Balance sheet on cash-basis is very weird. Initially I didn’t even want to put it into Manager because I knew this can happen due to rounding.

For example, your invoice could be $100 but if it’s paid in stages, after the invoice is fully paid, the P&L on cash-basis could show $99.99 or $100.01 while on accrual-basis it would be always $100.

I think this bug can be fixed by improving how cash-basis figures are calculated. Manager will need to pay attention whether invoice has been fully paid and if it was, it should make sure to post the right amount rather than blindly rounding line item amounts and ending up with $0.01 discrepancy.

So, do not try to fix this by posting journal entries because when this issue is fixed, you will have to delete those journal entries. Not to mention, your journal entries will affect your accrual-basis figures too so you are just shifting the problem from cash-basis to accrual-basis which is not solution.


Excellent! Thank you.

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@lubos Would you mind posting here when this is fixed? I don’t keep up on the releases very well.