Scenario as follows:
Raised a Quote —> Sales Order —> Sales Invoice.
Lets Say the order has two items with a standard price:
1 - Buckets - qty10 - $10/ea +GST
2 - Spade - qty5 - $2/ea +GST
But the payment terms are 50% up front & 50% on delivery.
So the client accounts dept is demanding to see 2 x invoices that look something like this
1 - Buckets - qty10 - $5/ea +GST
2 - Spade - qty5 - $1/ea +GST
How do I generate 2x invoices to cover the 1x Sales Order?
My thought was to create the invoice from SO in full, then manually halve the unit prices (on the Sales Invoice), then repeat later for 2nd invoice to close out the SO
They want 2 invoices as if they are buying 20 buckets even though you are selling them only 10. If one of you is tracking those buckets as inventory items, you can’t do this. They are probably not tracking them as inventory items so they don’t care.
Normally you issue single invoice and state the terms how much is due on which days. Or you can issue them pro-forma invoice for the full amount stating invoice will be issued upon delivery.
You don’t have to repeat it. You can just clone the first invoice.
Not inventory item, custom manufactured goods to order.
Lets change the example a bit …
They order 10 custom manufactured equipment’s, with a unit price of $10k / ea
so Quote = $100k (good); Sales Order = $100k (good), BUT when it comes to Sales Invoice and/or payment the deal is … pay 50% ( or $50k ) up front before work commences, and the balance 50% ( of $50k ) is payable when the equipment is completed ready for shipment.
so is there a way to keep the Quote and SO in tact with proper prices, yet somehow split the payment into lots of 50/50 or 30/70, etc?
The actual SO I need to split 50% partial Invoice for has about 26 line items of random qty & prices, so it’s a dogs breakfast to do manually
I don’t see how it can be proper accounting to pay an invoice for goods which you have not received - sounds like funny accounting to me. Maybe you should ask the multinational to get a better accountant!
It’s not uncommon for this arrangement where it’s B2B, and goods are being custom manufactured for the client.
The 30% or 50% up front gives the manufacturer some working capital to pay for materials, etc and ensures if the client tries to exit the deal, there is ‘skin in the game’, and they would forfeit the upfront.
The remainder is payable upon completion and client inspection, but before collection.
You may see some parallels with civil/construction progress payments.
The only way to do it is to manually adjust unit prices on copied invoice. There is an older feature request to allow entering formulas into number fields. That way instead of removing original unit price and inserting back new one, you could simply add /2 to unit price and Manager would divide price by 2 and override it with result. I think that will be added at some point so eventually it will be easier.
I’m reminded of a large manufacturer whose principals went to jail for exactly what you described after claiming tax for goods not delivered. Don’t become an accessory to someone else’s shady practices.
Sales Invoices are a Demand for Payment and don’t necessary related to the actual deliver of the goods or the services - the extract below while focusing on services, equally applies to goods…
Insurance companies, membership organisations etc all issue “sales invoices” dated prior to the service being provided and also expect that payment be received prior to the service commencing date.
Noting that Sales Invoices can also be referred to as Premium Notice, Membership Renewal etc
Conference / Seminar centres take bookings & issue Sales Invoices for payment sometimes years in advance. Cruising and airline travel are all invoiced and paid for prior to the service being received.
The Sales Invoice is only a “demand for payment” document based on the terms of the Service (contract). The term Sales Invoice doesn’t automatically imply current revenue. It could just be a demand for an advance / deposit.
The Sales Invoice will receive the accounting treatment as appropriate to the service and organisation. In the case of insurance companies, their Sales Invoices (demands for payment) get posted to a BS “Unearned Premiums” account and then the “revenue” is recognised and apportioned over the service period.
Travel companies frequently use trust accounts to hold the Sales Invoices demand for payment and are reallocate once the service has commenced, which in the case of Cruising could be two years later as booking are opened that far in advance.
However, In the majority of situations the timing of goods/service delivery and Sales Invoice is much more in sync. If the customer on receiving the Sales Invoice (demand for payment) is satisfied with the Demand, then they will settle that demand for payment by making a payment.
@generalegend I think you answered my core question, Raise an Invoice from the SO, then halve the unit values for the 1st installment, then either repeat from the same SO or clone the Invoice … both Invoices = the 1 SO all good.
@lubos I don’t know if hidden formula in price fields is a good thing, especially if your trying to track down an annoying rounding error … speaking of which …
My real life scenario has odd numbers in both qty and in the unit price (yes odd cents $ ###.#1 & $ ###.#3) which totally frustrated me to the point I called the customer and they allowed me to change the cents to even numbers.
Lesson learned, never ever ever ever put an odd number in the cents unit field ever again
@Tut Thanks for the concern, fortunately in 35+ years I’ve never given or received kick-backs or other in kind, I think the difference in your example would have to involve some intent to defraud.
We all pay in advance for goods online, pre-order games, book flights & hotels where the goods or service may not be delivered for some time despite paying now.
My company is still below the threshold for mandatory reporting by accrual method, so cash method is much easier for startup business.
