Why are unpaid invoices showing on the Income & Expenditure Report?
This article explains why unpaid customer invoices show on your Income and Expenditure report.
Note: This article is aimed at churches and charities that account on an accruals basis.
If your accounting basis in ExpensePlus is set to accruals AND you have the setting for auto-accruals enabled, then ExpensePlus will automatically accrue for both invoice income and purchase expenditure.
This means that, within your reports, income will show based on the date you invoice the customer, rather than the date you receive the customer's payment.
Example - explanation
Below is an explanation of how this works in ExpensePlus, followed by a series of screenshots to illustrate.
If you invoice a customer for £210 in February for room hire, then this income will show in February (regardless of when the customer pays) - see screenshot 1 below.
From a 'cash' point of view, this money may still be outstanding at the end of February, in which case the £100 you are owed will show on the 'Accounts receivable' line of your balance sheet. (You can view individual items owed by opening your balance sheet and clicking the 'Accounts receivable' line in the 'Current Assets' section.) - see screenshots 2 and 3 below.
At the point the customer pays, and this incoming amount is reconciled against the invoice, the balance sheet will automatically update. The 'Accounts receivable' line of your balance sheet will reduce by £100, to reflect that this money is no longer owed to you.
Example - screenshots
Screenshot 1: Invoice created (outstanding balance £210).
Screenshot 2: £210 added to accounts receivable line of Balance sheet.
Screenshot 3: account receivable entry automatically created from invoice balance (£210).
Screenshot 4: Reversal to accounts receivable automatically created when invoice paid (-£210).
Top tip: if you have auto-accruals turned on, then it's worth checking at the end of each month that your accounts receivable balance is correct, and that the amounts showing as owed are correct.
Warning: if you wrongly match an incoming invoice payment as 'income received' rather than as an 'invoice payment', then the invoice will wrongly continue to show as 'outstanding'.
Furthermore, if you have auto-accruals enabled, the outstanding amount will also wrongly show on your balance sheet as outstanding, and the income will be wrongly double-counted as well.
To help you better understand the invoicing module as a whole, please visit the module overview page here.