Accounting for credits in Accounting Systems

[yggdrasil]

9 minutes ago, WHMCS ChrisD said:

Hey Everyone,

I'm going to check in and see if this is the expected behaviour, just to confirm what you are seeing when using Mass Payments your client area notification shows 3 invoices overdue being the ones covered by the Mass Payment & the 2 outstanding invoices, thus showing the incorrect amount outstanding in the notifications.

The mass payment functions in much the same way as "Add Funds" does, where the user can add $X credit to their account and an invoice is raised for them, this sits in the credit manager.   With Mass Payment, it also uses the Credit System so the invoice is raised for both the outstanding invoices, once it's paid it add the amounts as a credit onto the initial invoices, I'll ask if we have plans to change this in the future

3

Yes, I know how it works and trust me, it has caused me problems with balances as well as no accounting software is prepared for this and how WHMCS calculates profits/invoices, etc.

[WHMCS ChrisD]

15 minutes ago, yggdrasil said:

Yes, I know how it works and trust me, it has caused me problems with balances as well as no accounting software is prepared for this and how WHMCS calculates profits/invoices, etc.

You'd need to confirm with your financial advisor the best way to handle this but using Xero as an example, you would create a Pre-Payment https://help.xero.com/us/BankAccounts_Details_Prepayment

[yggdrasil]

5 minutes ago, WHMCS ChrisD said:

You'd need to confirm with your financial advisor the best way to handle this but using Xero as an example, you would create a Pre-Payment https://help.xero.com/us/BankAccounts_Details_Prepayment

 

With Quickbooks Online I still didn't found a solution that is satisfying for me so balances match when it comes to payments done with credits. I would assume with Xero this is no different. Sure, you now added the credits as prepayments with the option you mentioned above and then the invoice paid (credit invoice) is also marked as paid on Xero and you have a double balance on the customer account which would lead to incorrect income unless you are doing other tricks like not accounting that invoice (which leads to missing invoices) or refund/reverse balances...Yes it can be done but with some tricks.

[WHMCS ChrisD]

Just now, yggdrasil said:

With Quickbooks Online I still didn't found a solution that is satisfying for me so balances match when it comes to payments done with credits.

Let me figure out a solution for you on this I have a QBO Account I can test with, are you using an addon to push this to QBO? 

1 minute ago, yggdrasil said:

Sure, you now added the credits as prepayments with the option you mentioned above and then the invoice paid (credit invoice) is also marked as paid on Xero and you have a double balance on the customer account which would lead to incorrect income.

 

That's not completely correct, think of the mass pay as creating a credit note, which is effectively what it is, this credit would then be applied to the original invoices

[yggdrasil]

I had the Modules Garden Module for a few months (which didn't handle credits either) and was buggy so I switched to the one from My Works Design which doesn't handle credits either but works very well. At least last time I checked the developer was not able to find a quick solution for this. It if it was for me I would have gone with Xero (much better) but most US banks rarely support them and my CPA is a Quickbooks guy (like most of them in the US).

[WHMCS ChrisD]

23 minutes ago, yggdrasil said:

I had the Modules Garden Module for a few months (which didn't handle credits either) and was buggy so I switched to the one from My Works Design which doesn't handle credits either but works very well. At least last time I checked the developer was not able to find a quick solution for this. It if it was for me I would have gone with Xero (much better) but most US banks rarely support them and my CPA is a Quickbooks guy (like most of them in the US).

Thanks @yggdrasil so all three invoices appear in your QBO account?

24 minutes ago, yggdrasil said:

my CPA is a Quickbooks guy (like most of them in the US).

That's slowly changing

[yggdrasil]

Yes. All invoices are transferred and the customer balance and total income do not match. I fix this with a manual journal entry but its particularly more tricky with partial credits applied from the balance to invoices. That is even more of a problem with Quickbooks Online as you actually have to add the balance as positive credits before deducting an invoice.

My CPA didn't have a problem with Xero, he told me to use whatever I want, but my bank didn't support Xero for transactions sync. I'm actually considering moving to Quickbooks Offline as I don't like the online version, Xero is much better.

[WHMCS ChrisD]

On 02/10/2017 at 2:06 PM, yggdrasil said:

Yes. All invoices are transferred and the customer balance and total income do not match. I fix this with a manual journal entry but its particularly more tricky with partial credits applied from the balance to invoices. That is even more of a problem with Quickbooks Online as you actually have to add the balance as positive credits before deducting an invoice.

My CPA didn't have a problem with Xero, he told me to use whatever I want, but my bank didn't support Xero for transactions sync. I'm actually considering moving to Quickbooks Offline as I don't like the online version, Xero is much better.

 

Hey yggdrasil,

So here's, what i've come up with.

In QBO

1. Use Receive Payment
2. Select the Client
3. Pop in the amount received
4. If the invoices are imported assign them in there otherwise leave it unapplied
5. Apply the credit to the invoices

Does that sound like a good workaround

 

 

[yggdrasil]

I'm not sure why I didn't use that option, but there was a problem because I just checked my accounting notes and this is what I found on how I do it (after testing multiple ways for months):

**************My personal notes****************

Credits on Customers Accounts and applying to invoices

Quickbooks will automatically apply any credits created to open invoices. The credits are not counted as income on the statements, just like with WHMCS they are not counted towards the customer's income.

Go go Customer, click on New transaction and select Credit Memo.

Open invoices will be paid partially or fully. Remaining credits are on the account until used.

ON WHMCS: DO NOT add credits without an invoice. Otherwise will it not show as income on WHMCS or the customer account when using those credits on invoices. This feature seems to be for cases when giving direct credits like for SLA, discounts, or downtime, these are direct credits and it will not show as income on customers balance.

Note: Quickbooks will leave remaining credits as open on the customer account. This makes sense because it’s a liability, money you owe the customer.

**************My personal notes end****************

I can't remember exactly the problem right now but it was something relating to dates and applying payments when WHMCS used credit automatically on new generated invoices. As a credit invoice has a past date vs a new invoice (if customers uploaded credits after he has open invoices), Quickbooks didn't let you apply the payment. I'm not sure, but it messed up the balance on Quickbooks for that customer account. This is why I used credit memos. It is not perfect because if a customer has even $1 credit left, it will be open forever on that customer account on Quickbooks (you can't close the fiscal year). Also, with that solution, you assume invoices are not transferred to Quickbooks. The problem is that a credit invoice is marked as paid on Quickbooks and yet, it is not income. This means I would have to cancel or remove it. This has to be built into to the module to threat credit invoices differently. The reason I know there was a problem is that WHMCS total balances for a year have to match your Quickbooks balance and I had to do plenty of manual fixes related to invoices that used credits.

But this not so simple because when you clear bank balances, the credit invoice is actually related to a payment transaction. You can't just remove it. The undeposited funds' balance on Quickbooks should always be zero. (something tons of people using QuickBooks are not even aware). When you are using invoices on Quickbooks, they have to be related to payments and transactions, this means selecting them while using the Receive Payment options.

Edited October 3, 2017 by yggdrasil

[yggdrasil]

I case someone is wondering. I actually saw other people complaining in past years about how WHMCS handles mass payments, add funds and credits. The problem is really that WHMCS does this against all correct accounting methods. Does it work? Yes, but its just horrible accounting. This is why so many people have problems with it. The worse is that WHMCS does not have proper hooks or API's to try to get the data. QuickBooks is just one example, but you will hit this problem with any proper accounting software. Since I use credits a lot, as they are popular for prepaid services, this is a real nightmare for me.

You can read more about the problems here:

https://docs.myworks.software/whmcs-quickbooks-sync-module/advanced-topics/credit-handling-compatibility

https://docs.myworks.software/whmcs-quickbooks-sync-module/advanced-topics/incompatibility-with-whmcs-add-funds-functionality

That above page is for a WHMCS QuickBooks module, but regardless of that, it actually explains why it is so messy and complicated.