Income recorded in P&L
I'm hoping to be as clear as possible.
I offer payment plans to clients. When I set up an invoice in QB, I've noticed on P&L that it records it as income according to when the invoice was billed verses when it was paid.
I bill Jamie Smith $1200. She has three payment plans. I set up the invoice according to the date I invoiced her, which is 10/29/17. She makes one payment on 11/5/17, another on 12/5/17 and the last on 1/6/18. As of 1/6/18, her invoice is now paid in full. However, in QB it shows the income for the invoice as of the date I invoiced her, which is 10/29/17 before any payments were even made.
Is there a setting that I can change? I'm confused as to why it would record income in this way when I was paid across three different months? If I can't change it, any suggestions on how to "credit" the account so I can record each month I'm paid?
Re: Income recorded in P&L
What you are experiencing is standard accrual basis accounting. Income or expense happens when service is provided - even if no payments are ever made. You will see the exact same thing if you enter a vendor Bill to pay later - your expense posts as of bill date not payment date.
Changing what you see is as simple as changing your reporting to Cash and viewing reports as Cash basis.
But hold that thought and look at your past tax returns and how you have already declared whether you are cash or accrual since you cannot just switch when convenient.
One more nugget. Since you offer terms you would never be pure Cash basis but would be Hybrid (which is recognized by the irs) or Accrual and as accrual you recognize income when you provide service - not when you get paid