Best practice ques: for a long (6 months+) project, with milestone payments, how to invoice?
mrsKLB
Member Posts: 15 ✭
Hi there, We've recently taken on a contract that spans over 6 months, we submit work in milestones and get paid accordingly, which is the best way of setting this up? A large single invoice or multiple smaller invoice at the time the milestones are due. Similarly we receive future dated invoices (via PayPal) by one of our suppliers against a single project, payable over 3 months, do we enter an invoice from him for the total amount and record payments against it, or just acknowledge the new invoices as they fall due. Ultimately in both cases I want to see how much is outstanding against a new project, both for customer payments and for supplier. Cheers
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Comments
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I think the first thing to consider is whether you are on accrual for GST or cash. With accrual you are going to be paying the GST the moment you create the invoice, with cash you only pay the GST when the payments are made. Then go from ther0
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Thank you. In this case both our customer and our supplier are overseas & GST is not applied. If I were to set up individual emails is there a way to check out remaining balance on the contract?0
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If GST doesn't apply then just set up then just set up one invoice, and then how you do the emails is up to you. If you know when the payment happens then you should be right0
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Thank you Will adjust for when the Australian contracts come in later this year.0
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Hi MrsKLB
Reckon Accounts hosted will allow you to progress invoice from a quote for Sales invoices .
As for your bills if you entered the total bill & apply your smaller payments against the bill you will be able to monitor what is owing to your supplier.
Hope this helps
Kind Regards
Kay
kmlbookkeeping@bigpond.com0 -
I'm a bit of an accruals, WIP, business profitability (KPIs) focused person. At the risk of extra invoice and bill entries, I believe you can have your cake and eat it too.
1. I appreciate mrsKLB has specifically asked about how to measure the amount of cash is still to be paid or received, and that can be identified by having the whole amount of the project sales values and supplier bill costs 'in the system' and rely upon A/R and A/P.
2. But in case the "6 months' spans a financial year, and whether GST is involved or not,. surely some focus is needed on the day-to-day profit position as well.
3. I'd be entering all the invoices (as future dated if necessary) into the system, but aligned moreso to when the 'business' is taking place.
4. Either do accruals/WIP or simply push out the future dates further as each "End of Month" business period is reviewed. (IE: It is no different to putting100% in up front, but tallies better to reality of when business is occurring.)
5. If ever this 'contract's (I include this in case other readers are looking at this forum, article) incur a GST responsibility, then such GST would be paid/refunded in line with when exertion occurs.
6. Some will balance all this KPI consideration against the effort of splitting it up, I realise.
Gary Pope
An Accredited Partner- Consultant (VIC. Aust)
http://www.alchester.com.au/reckon-accounts-clarified/
"Working with Accountants/Bookkeepers PPs/APs, as an
independent IT Professional and retired FCPA Accountant"
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