Spend money via Bank Account or make a purchase order and spend money, whats the best practice to use?
Thanks
It depends on what you want to achieve.
Spending money via bank account is all that you need to actually record payment and populate the correct expense account etc.
A Purchase order is only really useful if you are planning to buy something, but not immediately, so you put the order on the system. Or your supplier needs a purchase order. When you are ready to buy, you can copy the purchase order to invoice and then spend money.
I personally prefer using a purchase invoices (if I don’t need a purchase order) instead of just spending money because I have purchase invoices for everything I buy, it makes it easier for me to do my filing as I have a paper copy of the suppliers invoice to match my invoice in accounting. If you ever get audited by the tax man, you will suddenly understand the value of purchase invoices.
So its really about what you want to achieve.
If you only want to record the expense in Manager so that you can do your basic accounts, then spend money is all that you need. You don’t actually need purchase orders or purchase invoices at all to do day to day accounting, but they both are useful in certain situations.
To be clear, you can also print receipts after using Spend Money. So @dalacor’s paper trail can be kept intact. But he neglected to mention that when you record a purchase via a purchase invoice, you can create Supplier Statements and otherwise track what you’ve bought from whom.
Having said that, much the same thing can be accomplished using the search function. For example, if you record internet service and telephone both as communication expenses, but do so via Spend Money, you can search your bank account register for the name of your telephone company and obtain a listing of phone expenses.
I’ve been using Manager for two years and have never created a purchase invoice. But I do not purchase anything on credit (except very short term use of a credit card, which is paid off monthly). I buy supplies. I pay telephone and internet bills. I spend money on reimbursable travel expenses.
As @dalacor says, it’s really about what you want to achieve. But in my mind, the overriding factor is whether you are buying on credit terms, such as having 30 or 60 days to pay after delivery.
I am curious to know where you can view receipts. I have just gone to the bank account and looked at a transaction that I was just working on now. If I go to bank account, I can see the amount, but when I open the payment, all it shows me is the name of the supplier and how much I paid - it does not show me the individual expenses which I have just been looking up to track down where I paid for an item that has never arrived or been invoiced by my supplier.
I personally feel that purchase invoices give more information about your purchases. If all you want is to know that you paid £55 for your broadband bill in September then yes the bank payment receipt is fine, but if you want to know which invoice you paid for laptop xyz on from supplier abc I think the simplest way is to go to purchase invoice tab and filter by supplier and then go through the invoices to find the laptop.
Putting aside that issue, I still remain convinced that in the event of a tax audit your life will be made so much easier to have matching invoices by supplier on paper and your Invoices in Manager.
But I appreciate that all roads lead to Rome as they say and people are used to working in different ways. I am used to the concept of purchase orders and purchase invoices and I like that workflow because I frequently need to purchase stuff, but I need confirmation on correct parts so I create a purchase order to send off to the suppliers who approve or amend my requirements or prices etc. Anway thats my two cents on the issue.
You are looking in the correct place. The usefulness of a receipt, of course, depends on how much detail you put into the description field. When you add lines for multiple items, you will see a description field for each. By default, your “main” description appears in all, but you can overwrite them individually.
I am not seeing a description field for each item. I am only seeing the summary description info that I put at the top of the payment description and the total paid. Where are you seeing description fields for each item?
Just to the right of the account field. This only appears when you add a line. The default, single-line version has only the top payment description. This is the case for both Receive Money and Spend Money.
I cant see what you are looking at, but don’t worry about it. I get the information that I need from my invoices. Anyway thanks
Thanks for the information. Last year the Tax dept conducted a Tax Audit and this was a very worrying & consuming time for me, this took 10 months, luckily I had all my receipts and a book that I have been running for years. This really woke me up so I started using Excel to record and also the old book but the work to record the expenses both in Excel and my book was time consuming. I found manager last week and I’m now trying to get my head around accounting software and the best way to setup before I commit to transferring this years financials.
Thanks
Make sure you understand double-entry accounting first. I always recommend http://www.accountingcoach.com. Remember, Manager or any other accounting software package is just a tool. You need to understand what you are using the tool to do. But there is no reason, for a small business, that you need to go beyond basic principles.
Hi Tut, I’m wondering if you could show me an example of how double-entry accounting might apply to my situation. I assume double-entry accounting is written in the Manager code?
My situation is basic, I think.
I have a sale
I make a purchase.
These all have GST of 10%
Thanks in advanced
You buy something - you debit your bank account with that amount and you credit your expenses account by that amount.
You sell that item you credit your bank account with that amount and you debit your sales account.
Manager does it all for you. All you need to do is allocate the expense account and select appropriate bank account when you spend money or use purchase invoice and you allocate income account and select appropriate bank account when you receive money.
Ignore the terms debit and credit and think in simple life terms. You go to the shop and you buy food. You are debiting your bank account and you are crediting your groceries bill.
Unfortunately, @dalacor reversed his usage of the terms debit and credit. It may seem counterintuitive, but when you spend money from a bank or cash account, you credit it. And you must simultaneously debit some other account. When you receive money, you are debiting a cash or bank account and crediting an income account.
This usage goes back to medieval times and the Latin meaning of the terms: debit meaning “on the left” and credit meaning “on the right.” Debits and credits must always equal so books are balanced. Read about it at the accountingcoach.com web site.
In your examples:
Debit: bank account 110
Credit: sales incomeaccount 100
Credit: GST payable 10
Debit: expense account 15
Debit: GST paid 1.50
Credit: bank account 16.50
@dalacor is correct that Manager takes care of this automatically, except when you make a journal entry.
whoops. wrong way around. This proves my main point. Instead of trying to understand double entry - just let Manager take care of it for you! 
Thanks Tut, I’m starting to understand but this is far from clear for me.
Could you show me an example in Manager via some screen grabs.
I have a sale:
I have an expense
Both with GST @10%
Thanks
Hi @dalacor
I buy bulk lots of beads and findings, which I then use to make my jewellery. Everything is paid for up front, either with cash/business debit card or over the internet. Would this process, with Purchase Invoices, be the most appropriate way to record the purchase of parts?
I was reading through the Guides and one seemed to suggest using Supplier Credits (or at least that’s how I read it), but now that doesn’t seem quite right.
Check this out it may answer some of your questions… http://guides.manager.io
Manager Cloud
Manager Cloud
I would not use supplier credits if you are paying upfront by debit card.
In order to answer your question about using Purchase Invoices - it depends on what exactly you want to achieve so I cannot really answer the question.
That’s going a little too far, @Othila. I really think that if you read the guides and experiment a little, you’ll understand it.
Well, thanks for the responses people. From what I can see there are are few ways of doing things in Manager and I thought that there was only one way of accounting. Tut, I’m reading the guide now and going through each example.
Thanks again