Software: MoneyWorks accounting system
Advance invoices are to request a payment from the customer before goods and services delivered.
Rental and loan businesses or services and maintenance businesses usually required to invoice their client in advance. These businesses include property management, property rental, equipment rental, IT service and maintenance, serviced office, etc. Following month invoice will be out and received by the client by the end of the current month to arrange payment on or before the rent period.
One of the methods is to set the invoice date as the following month; however, this method requires you to open a new period before month-end closing which some accountants may not comfortable in doing it.
Another method is to set the invoice date as the current month but charge the income to the deferred income account. Then, record a general journal on the following month debiting the deferred income account and credit sales.
You may have to set the invoice template in such that it shows the billing is for the following month’s rent or services although the invoice date is current if the deferred income method is preferred.
For example, if you want to show the invoice description as item description with a note stated as ‘For the month of FOLLOWING MONTH – YEAR’; then you can add:
“For the month of ” + Slice (PeriodToDate (Transaction.Period + 1), “2”, ” “) + ” ” + Slice (PeriodToDate (Transaction.Period + 1), “3”, ” ” )
after the item description formula.
GST realisation on both methods is different. The next month billing method realised the GST in the following month, whereas deferred income method realised the GST in the current month.
Discuss with your accountant if you are not sure which is a better method to adopt or the method allowed in your country.
Contact your MoneyWorks consultant if you need help in designing the invoice template.