How to split Invoice/Payment across two months

Anonymous · ‎April 03, 2020

I am a consultant and bill my clients for hours worked. One of my clients recently asked me to start invoicing him every two weeks rather than twice-monthly. This means that some invoices will cross a month-end boundary and include hours worked for two different months.

As I am using accrual-based accounting, I would like the Invoice & Payment to be split so that the proper amount of sales are recorded for the correct months. I have been using the weekly timesheets and when I add the time entries to my Invoice I have been combining all like entries into a single Invoice Line Item. I provide weekly timesheets separately and that detail doesn't need to be included in the invoice.

How do I need to go about creating the Invoice and applying the single Payment so that it is split across the two calendar months?

Thanks,

Daniel

smallbiznumbers · ‎April 04, 2020

Hi @Anonymous,

As of now, there’s no way to create an invoice that separates income into different periods. There is a workaround, but it involves an extra step at the end of each month. More specifically, you will create a month-end zero-balance invoice under this customer; this will accrue any uninvoiced services performed by the end of the month as unbilled receivables.

Initial Setup

Create an Other Current Asset account for Unbilled Receivables.
Create a new Non-inventory or Service item for Unbilled Receivables. Under “Income account”, select the newly created current asset account

Month-End Procedures

Create an invoice for customer (NOTE: This invoice will not be sent to the client)
Date invoice for the end of the month
Add all billable time and expenses as of month-end to the invoice.
On a separate line below all the other billable time/expenses, select the Unbilled Receivables item.
In the Amount column, enter the subtotal of the invoice as a negative. This will zero out the invoice balance.
You will notice the month-end income is now reflected on the income statement, and the month-end total to be included on subsequent invoice is reflected on the balance sheet as Unbilled Receivables.

Actual subsequent invoice

Create invoice as normal. Enter all remaining billable time/expenses for the bi-weekly period.
On a separate line below all the other billable time/expenses, select the Unbilled Receivables item.
In the Amount column, enter the balance of the Unbilled Receivables for the client, but as a positive. The invoice will now include all amounts to be invoiced for the bi-weekly period.
Unbilled Revenues on the balance sheet should now have no balance since the amounts have now been properly invoiced. On the income statement, bi-weekly services performed after month-end is reflected in the subsequent month.
Apply the payment to this invoice as you normally would.

Hope this helps!

View solution in original post

AlcaeusF · ‎April 04, 2020

Welcome to the QuickBooks family, @Anonymous.

I can share what I know about entering sales transactions in QuickBooks Online. Right now, splitting a single invoice and payment into two different months is currently unavailable.

The only way I can think of to separate them is by receiving the payment twice with different dates. It would also be best to seek expert advice from an accountant about what's the best way to handle this type of situation.

We take your ideas as a guide on which area of the product we should enhance. I’ll send feedback on your behalf about this feature for consideration in future updates.

To keep you in the loop about the latest features being rolled out, visit the QuickBooks Blog page.

I've also included an article you can use to handle invoices, like how to record partial payments, as well as finding the remaining balance: Record invoice payments in QuickBooks Online.

Please know that I'm just a post away if you have any other questions. Have a great day ahead.

smallbiznumbers · ‎April 04, 2020

Hi @Anonymous,

As of now, there’s no way to create an invoice that separates income into different periods. There is a workaround, but it involves an extra step at the end of each month. More specifically, you will create a month-end zero-balance invoice under this customer; this will accrue any uninvoiced services performed by the end of the month as unbilled receivables.

Initial Setup

Create an Other Current Asset account for Unbilled Receivables.
Create a new Non-inventory or Service item for Unbilled Receivables. Under “Income account”, select the newly created current asset account

Month-End Procedures

Create an invoice for customer (NOTE: This invoice will not be sent to the client)
Date invoice for the end of the month
Add all billable time and expenses as of month-end to the invoice.
On a separate line below all the other billable time/expenses, select the Unbilled Receivables item.
In the Amount column, enter the subtotal of the invoice as a negative. This will zero out the invoice balance.
You will notice the month-end income is now reflected on the income statement, and the month-end total to be included on subsequent invoice is reflected on the balance sheet as Unbilled Receivables.

Actual subsequent invoice

Create invoice as normal. Enter all remaining billable time/expenses for the bi-weekly period.
On a separate line below all the other billable time/expenses, select the Unbilled Receivables item.
In the Amount column, enter the balance of the Unbilled Receivables for the client, but as a positive. The invoice will now include all amounts to be invoiced for the bi-weekly period.
Unbilled Revenues on the balance sheet should now have no balance since the amounts have now been properly invoiced. On the income statement, bi-weekly services performed after month-end is reflected in the subsequent month.
Apply the payment to this invoice as you normally would.

Hope this helps!

Anonymous · ‎April 04, 2020

Thank you @smallbiznumbers ! This procedure makes sense to me and will be very helpful in keeping my accounting correct until such time as QBO provides the ability to split invoice allocations to the relevant service months.

Appreciate the suggestion and the detailed procedure!

Daniel

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