Invoice & Bill Posting Date Issues Across Multiple Periods

[Adrien Monteleone]

Thank you Derek,

The inefficiency I referenced was in respect to having to make many accrual entries at the end and beginning of each month simply to shift the recognition of parts of invoices and bills to their proper periods that otherwise would not have to be done if the posting process allowed for using the line-item dates. As it stands, using a single posting date for a bill/invoice that either crosses periods or contains multiple periods results in incorrect recognition. This is what I mean by a carryover limitation of paper ledgers. That practice was necessary with paper. It is not with computers. (at least I don’t see that it is, of course, if you *want* to make all those entries manually, by all means… )

I’m not asking for the business features to work on a cash basis. I’m wanting them to not cause me to have to make multiple correcting entries for proper expense and revenue recognition. I’m not concerned with recognizing bills/invoices when the money changes hands. I’m concerned with recognizing them when the expense is incurred or the work performed. This works perfectly if everything is tidy in one period. It’s a mess if the ‘document' is not.

Perhaps I’m misunderstanding something that you or someone else could help clear up for me. Let’s take a simpler example of a single period bill:

I receive local telephone service in October. The phone company generates a bill for that October service on November 7th. It arrives (postmarked) November 12th. I enter it in GnuCash the same day. The due date is November 27th.

What should my posting date be?

1) November 7th?
2) November 12th?
2) November 27th?
3) some date in October? (31st perhaps)
4) something else?

What should the ‘opening date’ be?

1) November 7th?
2) November 12th?
3) something else?
4) If I enter the bill on November 13th, is *that* the opening date?

I guess I’m thinking the ‘opening date’ must preceded the posting date, but I suppose that doesn’t matter. (maybe that’s me carrying over from paper here)

Now, let’s complicate things:

I also receive long-distance telephone service from the same phone company and they bill me on one bill for everything. That November 7th bill is for long-distance calls made in September AND October. All other dates remain the same.

What should my posting date be?

1) same as above?
2) same as above and then I have to accrue September’s charges back and forth from the above date?
3) some date in September and then accrue October’s charges back and forth?
4) something else?

What should the ‘opening date be?

1) same as above?
2) some date in September?
3) something else?

(Thankfully, I don’t have to deal with customer charge-backs using the business features in this scenario as not only is there a limitation of one customer & job per bill, there is the added limitation of one period. But it would be nice to see how much expense a particular customer is ‘costing' me.)

Derek, thank you very much for your time and effort and thank you for writing the business features in the first place! Long ago I was sold on GnuCash over other options precisely because I found this mailing list and found that developers are active on it. I can’t express enough how valuable that is and how much it is appreciated. I shudder to think of the cold, faceless brick wall I would encounter (and have) with other software. GnuCash and its developer team deserve FOSS awards for sure.

Please don’t take anything I say here as any form of criticism or complaint. I’m merely trying to understand how this is supposed to work. (furthering my understanding of accounting in the process) I appreciate that you wrote these features based on your own needs and experience.
 
Regards,
Adrien

> On Dec 12, 2017, at 10:32 AM, Derek Atkins <warlord at mit.edu> wrote:
> 
> Hi,
> 
> Adrien Monteleone <adrien.monteleone at gmail.com> writes:
> 
>> I noticed something about the business features that isn’t working as
>> expected, or at least not optimally.
>> 
>> When entering a bill or invoice, each line item allows you to put a date.
>> 
>> When posting that bill or invoice, only the posting date is used - not
>> the individual line-item dates.
>> 
>> While I can see that this behavior might make sense to most people, it
>> seems to me to be a carry-over from the days of paper ledgers that is
>> very inefficient.
> 
> Not at all.  All the invoice data (inluding line-item date, description,
> etc) is all "metadata" in terms of your Chart of Accounts.  When you
> post the invoice, GnuCash totals up the amount and posts the invoice
> totals into your CoA.  Of course this happens at the "Post Date" --
> that's exactly what it's supposed to do.
> 
> There is a "newer" feature that tells the posting not the accumulate
> splits.  This will map each line-item into a single split (instead of
> accumulating all line-items that go to the same account into a single
> split).  However, because a transaction only has one date associated
> with it, that date is the post date.
> 
> I don't see how this is inefficient.
> 
> [snip]
>> The same is possible for invoicing your customers. It is entirely
>> possible to invoice a customer for work done in a previous period (or
>> multiple previous periods - such as job-based billing) and not receive
>> payment for it till much later.
> 
> This is true.  This is the difference between accrual and cash
> accounting.  The Business Features are 100% accrual.
> 
>> GnuCash has no issue with letting you post bills and invoices
>> independent of actual money exchange. (the whole purpose of the
>> business features) But it seems it does not allow you to recognize
>> revenue and expenses in their proper periods.
> 
> This is true.  See https://bugzilla.gnome.org/show_bug.cgi?id=95700
> 
>> Am I missing something?
> 
> 15 years of history.  ;)
> 
>> Regards,
>> Adrien
> 
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
> 
> -derek
> -- 
>       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
>       Member, MIT Student Information Processing Board  (SIPB)
>       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>       warlord at MIT.EDU                        PGP key available