Invoice & Bill Posting Date Issues Across Multiple Periods

[Adrien Monteleone]

> On Dec 12, 2017, at 10:50 AM, Derek Atkins <warlord at mit.edu> wrote:
> 
> Adrien Monteleone <adrien.monteleone at gmail.com> writes:
> 
>> I’ve already got the pre-paying and expensing part straight. My issue
>> isn’t the idea of a pre-paid asset, my issue is that it is increasing
>> when I post the bill, not when I pay it. I understand the difference
>> between recording events vs. actual money exchanges but this is a
>> question of ‘when is the event?’
> 
> You're asking yourself the difference of cash vs accrual.  There is a
> huge process about "revenue recognition" in terms of how/when you are
> supposed to recognize it, and different companies are required to use
> different methods.

I don’t think I’m mixing cash-accrual, but just to clear up any confusion, let’s forget when I actually pay the pre-paid expense. When do I incur it? When the bill is generated by the insurer? When I receive the bill? When I enter it in GnuCash? When it is due? (the effective date of the policy) In short, what should my posting date be? (#2 below)


> 
> When I wrote the business features I chose one that made sense to me at
> the time.  Honestly, I wrote it for me, for my own uses in my consulting
> company, but tried to make it general enough for others to use.
> 
> Patches are always welcome, but keep in mind that there are still a lot
> of invariants that would make different model "hard" to implement.  See
> https://bugzilla.gnome.org/show_bug.cgi?id=95700 for 15 years of
> discussion in this topic.
> 
>> 1. When the insurer generates the bill?
>> 2. The date I arbitrarily ‘post’ the bill in GnuCash.(usually the day
>> I enter it, or the ‘effective date’ of service.)
>> 3. The due date of the bill and thus effective date of the beginning
>> of the policy?
>> 4. The date I actually pay the bill and decrease my cash asset?
> 
> This is why there are two dates (well, three dates), an invoice/bill
> date, a post date, and then a due date.  The invoice date is #1, your
> post date is #2, the due date is #3.  And of course #4 is when you
> process the payment.
> 
> As for the date that the transaction should touch the Income/Expense
> account, that varies completely based on how you recognize revenue (and
> expenses).  The business features, as written, use #2 as that date.
> 
>> The problem is that 1&2 are happening in November and May of each
>> year, while 3&4 are usually happening in December & June
>> respectively. Thus, balance sheets for November and May are overstated
>> in the pre-paid asset category.
>> 
>> On the invoicing side of the question, I didn’t think of an
>> ‘unbilled-work’ account. Thanks. I’ll use that.
>> 
>> As for normal post-billed expenses crossing multiple periods I guess
>> the only option is correcting entries, but that sure seems like a
>> limitation of paper that computers should be able to handle more
>> easily. The data is already being entered. It just isn’t being used by
>> the software. I’ll file an enhancement request.
> 
> Don't bother -- It'll be closed as a duplicate.  Use the existing one.

I’ll wait for now. I see this as a separate issue. I'm not asking a question of cash vs. accrual for post-billed expenses, but single vs. multiple posting dates. Just under an accrual method, a multi-period bill/invoice is not recognized properly in one step. It still (like paper) requires correcting entries to accrue amounts back and forth across period boundaries. I see that the needed info is already present in the bill/invoice, just not being used.

Now, maybe making this change would help both use cases, but the cash case still depends on payment dates, and I’m not concerned with payment dates at all here, just single vs. multi-period postings.

My apologies if addressing the pre-billed/pre-paid recognition question at the same time as the single/multi-period posting question confused things. I considered separating the posts and probably should have. They are two separate issues.

Thanks for your insights,
Adrien

> 
>> Regards,
>> Adrien
> 
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> 
> -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