So when I did my way, the liabilities account is reduced by the invoice doesn’t;t show the payment. Grr.
So you’re suggesting leaving the credit n the AR account, which is held as a liability? But then how to I pay future invoices from it? > On Jun 28, 2019, at 12:32 PM, Adrien Monteleone > <adrien.montele...@lusfiber.net> wrote: > > That’s one way to do it. > > Or, the simpler way is leave the credit note outstanding and use it to offset > an invoice when needed. > > Regards, > Adrien > >> On Jun 28, 2019, at 1:58 PM, Eric Rathhaus (general) >> <rathhaus_...@yahoo.com> wrote: >> >> Thanks. >> >> I followed your instructions but the credit note when printed appears as an >> invoice to my client with the credit showing as an amount owed. In my >> accounts it does appear as a “payment” in my AR account. >> >> I’m a little confused as to steps 2 and 3 now. If I understand you, I will >> proceed to process a payment of the AR account to the liabilities account >> for the entire amount of the credit. Then, I begin to process payments >> against new invoices thru the liabilities account until it reaches zero. >> Correct? >> >>> On Jun 27, 2019, at 11:29 PM, Adrien Monteleone >>> <adrien.montele...@lusfiber.net> wrote: >>> >>> Nope. >>> >>> 1. Create the credit note and assign the line items either back to the same >>> original income account(s) used, or to a new one along the lines of >>> “Returns & Allowances” or “Refunds” or something similar if you want to >>> keep track of this separately. (this is considered a ‘contra account’ >>> because its normal balance is opposite of what is expected) >>> >>> 1a. Post the credit note. (should default to be assigned to AR) >>> >>> 2. Then ‘pay’ it with the liability account you created. >>> >>> This will affect your books at each step like so: >>> >>> 1a. Income is debited either directly or via the contra account >>> 1a. AR is credited for the amount of the credit note >>> 2. AR is debited for the amount of the credit note >>> 2. The Liabilities:Credit Payments account is credited (your now tracking a >>> pre-payment liability owed to the client) >>> >>> The only step that should be different in this process than what you were >>> doing before is step 2. Instead of paying with the checking account and >>> printing a check, you’re transferring the customer’s AR balance to a >>> liability account. >>> >>> Step 1 - the credit note itself, should be the same as before. >>> >>> There will then be a new step 3 - which is where you ‘pay’ a future invoice >>> with all or part of the balance in the new liability account. >>> >>> ----- >>> >>> *NOTE* >>> >>> If you don’t need to keep track of the pre-payment as a liability (not >>> necessary unless a CPA advised it) then just skip creating that special >>> account and don’t use it. >>> >>> Simply leave the credit note (still created as always) outstanding till it >>> is needed to offset a future invoice. You don’t even have to send it to the >>> client if they don’t need it. >>> >>> When you need to offset a future invoice, process a payment, choose BOTH >>> the credit note and the invoice being offset. Enter any additional payment >>> being made and assign that to the appropriate asset account. Complete the >>> payment. >>> >>> Mind you, this is probably the best route to take. It will allow you to >>> still see the overpayment/pre-payment in their account report, and you can >>> send them a statement that reflects this. The option with the liability >>> account makes this very difficult. >>> >>> Sorry if I created any confusion. With the original limited info, I was >>> just offering all the options I could think of. Which route you take is up >>> to you as it best meets your needs and requirements. >>> >>> Regards, >>> Adrien >>> >>> >>> >>>> On Jun 28, 2019, at 12:39 AM, Eric Rathhaus (general) >>>> <rathhaus_...@yahoo.com> wrote: >>>> >>>> Something didn’t;t work. I created a credit note for the client and >>>> created a new account “Credit Prepayments) under Liabilities. When >>>> creating the note, instead of selecting an income account, I selected the >>>> new liabilities account and then posted the note. I then tried to process >>>> a payment for an outstanding invoice using the credit note but nothing >>>> happened. Where did I go wrong? >>>> >>>>> On Jun 26, 2019, at 9:09 PM, Eric Rathhaus (general) >>>>> <rathhaus_...@yahoo.com> wrote: >>>>> >>>>> Thanks! >>>>> >>>>>> On Jun 26, 2019, at 7:41 PM, Adrien Monteleone >>>>>> <adrien.montele...@lusfiber.net> wrote: >>>>>> >>>>>> In that case, certainly, you need to use credit notes. >>>>>> >>>>>> I don’t see any reason why this ‘wouldn’t work from an accounting >>>>>> standpoint’ but if you find a problem, instead of cutting a check to the >>>>>> customer as payment for the credit note, combine this with option #2 I >>>>>> listed, and this time, use that Liabilities:Customer Deposits account to >>>>>> ‘pay’ the credit note. This will show you have a liability to them and >>>>>> then you can decrease it by using it to later pay for future work. The >>>>>> credit note is cleared out instantly and you still track the money, >>>>>> however, any Aging Report or Customer Report will no longer reflect this >>>>>> deposit liability as a credit to them. You’d have to handle that part >>>>>> manually in an outside spreadsheet. (you could export the Customer/Aging >>>>>> Report to one sheet tab, export an Account or Transaction Report to >>>>>> another in the same workbook, and then devise a 3rd tab with references >>>>>> to those two to create the proper consolidated report) >>>>>> >>>>>> Note that doing it this way really isn’t necessary as GnuCash will track >>>>>> your overall AR and the balance for each customer if you just leave the >>>>>> Credit Notes hanging around until applied as future payments. >>>>>> >>>>>> I’d say you should speak to a local CPA, and then if you still have >>>>>> options, which one you go with would be a matter of personal preference. >>>>>> >>>>>> Regards, >>>>>> Adrien >>>>>> >>>>>>> On Jun 26, 2019, at 8:51 PM, Eric Rathhaus (general) via gnucash-user >>>>>>> <gnucash-user@gnucash.org> wrote: >>>>>>> >>>>>>> Hi Geert - >>>>>>> >>>>>>> I already issued the invoices and processed my clients payments against >>>>>>> the invoices. These payments are for filing fees to the US government >>>>>>> for which I subsequently cut checks. I created a job for this client >>>>>>> that I use to invoice these fees alone. The size of the filing fees is >>>>>>> too high for me to provide my client short-term loans to cover and then >>>>>>> invoice later. My client, in turn, won’t issue a payment without an >>>>>>> invoice. So I issue an invoice to my customer to get the prepayment. >>>>>>> There are some complicated legal reasons why once per year some of the >>>>>>> filing fees won’t be cashed by the government. The rest of the year >>>>>>> everything is fine as I just ensure the client paid all the invoices >>>>>>> for the special job and then bill for my work and other expenses on >>>>>>> invoices for each specific job. This year I have over $12k of funds I >>>>>>> need to return to the client somehow. In the past I created a credit >>>>>>> note under the special job and sent my client a check. This year they >>>>>>> want me to use the credit to offset invoices for subsequent work. I >>>>>>> like the idea of creating a credit note under the special filing fee >>>>>>> job I use for these payments and then applying the credit against other >>>>>>> invoices I issue but I’m not sure if it will work from an accounting >>>>>>> standpoint. >>>>>>> >>>>>>>> On Jun 26, 2019, at 1:29 PM, Geert Janssens >>>>>>>> <geert.gnuc...@kobaltwit.be> wrote: >>>>>>>> >>>>>>>> The way I understand your scenario I believe you can model what the >>>>>>>> customer >>>>>>>> does almost one to one into gnucash actions. >>>>>>>> >>>>>>>> 1. Customer prepays for expenses -> Create a payment for that customer >>>>>>>> using >>>>>>>> Business->Customer->Process Payment >>>>>>>> You can choose to map this payment to outstanding invoices or not. If >>>>>>>> you >>>>>>>> don't, it will simply register a prepayment for the customer. >>>>>>>> >>>>>>>> 2. At some point you send an invoice to the user -> Create this >>>>>>>> invoice using >>>>>>>> Business->Customer->New Invoice... and post it. >>>>>>>> >>>>>>>> 3. Now you can choose - does your invoice have (some of) the prepaid >>>>>>>> expenses >>>>>>>> ? If so, apply (part of) that prepayment to your invoice using >>>>>>>> Business- >>>>>>>>> Customer->Process Payment >>>>>>>> After this there may be an outstanding balance the customer still has >>>>>>>> to pay. >>>>>>>> >>>>>>>> 4. If the customer pays that outstanding balance, create the payment >>>>>>>> via >>>>>>>> Business->Customer->Process payment. >>>>>>>> >>>>>>>> Then repeat for the next cycle/invoice. >>>>>>>> >>>>>>>> If you are importing your payments instead of manually entering them, >>>>>>>> you can >>>>>>>> also select the payment in the respective account, right-click and >>>>>>>> choose >>>>>>>> "Assign as payment..." instead of the above mentioned "Process Payment" >>>>>>>> >>>>>>>> As Adrien also suggests at any time you could look at the Receivables >>>>>>>> Aging or >>>>>>>> Customer report to see what's the customer's current balance. >>>>>>>> >>>>>>>> Regards, >>>>>>>> >>>>>>>> Geert >>>>>>>> >>>>>>>> Op woensdag 26 juni 2019 21:52:43 CEST schreef Adrien Monteleone: >>>>>>>>> You have at least 2 options I can think of at the moment: >>>>>>>>> >>>>>>>>> #1 - continue to issue credit notes in your system, but don’t send >>>>>>>>> them out >>>>>>>>> or pay them with a check. When you have the next positive invoice, >>>>>>>>> ‘pay’ a >>>>>>>>> portion (or all) of that invoice with the credit note. Simply process >>>>>>>>> a >>>>>>>>> payment, select the credit note line and an invoice line you want to >>>>>>>>> apply >>>>>>>>> it to in the top part of the window. GnuCash will offset the invoice >>>>>>>>> with >>>>>>>>> the credit note for you. If the credit note is more than the invoice, >>>>>>>>> it >>>>>>>>> will retain the left over as remaining AR credit to be used on >>>>>>>>> subsequent >>>>>>>>> invoices. You can see the customer’s balance any time either by >>>>>>>>> looking at >>>>>>>>> an AR aging report, or a Customer Report. Outstanding credit notes >>>>>>>>> appear >>>>>>>>> in the Invoices Due Reminder window. >>>>>>>>> >>>>>>>>> #2 - If your client regularly pays in advance based on an estimate >>>>>>>>> and you >>>>>>>>> invoice later, instead of applying the payment to an invoice, apply >>>>>>>>> it to a >>>>>>>>> Liabilities:Customer Deposits account. Then when you create and post >>>>>>>>> the >>>>>>>>> final invoice, process a payment for it from this account. You could >>>>>>>>> keep a >>>>>>>>> separate deposit account for each customer but that might get >>>>>>>>> tedious. You >>>>>>>>> can run a report on the account sorted by payee to show that info and >>>>>>>>> even >>>>>>>>> keep that report open in a tab if desired, choosing to refresh it as >>>>>>>>> needed. If this might only happen for pre-paid expenses, then you can >>>>>>>>> still >>>>>>>>> use this method, but only for the pre-paid expense part, which you >>>>>>>>> could >>>>>>>>> (or not) choose to invoice separately. >>>>>>>>> >>>>>>>>> Regards, >>>>>>>>> Adrien >>>>>>>>> >>>>>>>>>> On Jun 26, 2019, at 1:46 PM, Eric Rathhaus office <e...@ewrlaw.com> >>>>>>>>>> wrote: >>>>>>>>>> >>>>>>>>>> Hi - I have a client for whom I have many jobs. On some of these >>>>>>>>>> jobs, >>>>>>>>>> the client prepaid expenses that I did not use. In the past, I’ve >>>>>>>>>> always >>>>>>>>>> created a credit note for a refund and sent the client a check. >>>>>>>>>> However, >>>>>>>>>> my client prefers instead that I credit this amount towards future >>>>>>>>>> work. >>>>>>>>>> I’m not sure how to accomplish this cleanly. I could keep a running >>>>>>>>>> total of the amount and discount from the total prepayment until it’s >>>>>>>>>> used up. But this seems clunky and maybe not the best practice. Any >>>>>>>>>> other suggestions on how to account for the refund against future >>>>>>>>>> work? >>>>>>>>>> >>>>>>>>>> Kind regards, >>>>>>>>>> >>>>>>>>>> Eric W. 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