Reflect Customer Paid Expenses on Invoice

[Buddha Buck]

On Mon, Mar 6, 2017 at 8:19 AM Michael Kerins <MKerins at halstead.com> wrote:

> Property Management.
>
> For example:
>
> In the simplest case, I invoice Customer Alpha  $1,500 for rent.  However,
> Customer Alpha paid $200 for a plumbing repair and is taking that off this
> month's rent.   That $200 for plumbing is my expense.  What I would like to
> do is to invoice Customer Alpha for the full Rent, $1,500, then add a line
> item to the invoice which decreases the amount of the invoice by $200 and
> adds an entry in the Expenses:Property Alpha:Repairs account for $200.


This is perhaps the wrong way to think about it. Invoices are about
billable goods and services you are providing to your customers. When your
tenant is paying an expense on your behalf, that doesn't change what you
are invoicing them for, although it does change how they are paying you for
the use of your property.

So instead of invoicing them for $1500 in rent and $-200 for repairs, it
may be better to consider the $1500 as invoiceable and the $200 as a
payment towards that invoiceable amount.

I believe that while GnuCash does not allow invoice lines to come from
expense accounts, it does allow payments to come from expense accounts.


> The result would show Assets:Property Alpha:A/R $1,300, Income: Property
> Alpha:Rent $1,500, and Expenses: Property Alpha:Repairs $200.   This would
> all be correct and would balance once the invoice was paid.
>

Going with the "tenant-paid expenses are payments towards rent" scheme, the
result should end up being the same, in net.

Actually, I think there is likely to be a difference, conceptually. It has
to do with the fact that expenses are Debit accounts and incomes are Credit
accounts.

When you post an invoice, you get a transaction of the form:

1/1/2017 Rent for Unit 101 (Invoice 101001)
  Assets:Accounts Receivable Db. $1500
  Income:Rent Cr. $1500

The total of the invoice is listed as a Db. to A/R, and each line item is a
Cr. to the appropriate income account. However, if you allow an expense as
a line-item, you would instead get something like:

1/1/2017 Rent for Unit 101 (Invoice 101001)
  Assets:Accounts Receivable Db. $1300
  Income:Rent Cr. $1500
  Expense:Repairs Cr. $-200

Routine negative entries in transactions like this disturb my inner
14th-century double-entry bookkeeper. Internally, GnuCash treats Db.
entries as positive, and Cr. entries as negative, so it's likely that such
a transaction would not be distinguishable in the system from one where the
repairs were "Db. 200". But you would know, at it would gnaw on your
conscience... Ahem.

Under the "Tenant-paid expenses are payments" scheme, the transactions
generated would look like:

1/1/2017 Rent for Unit 101 (Invoice 101001)
  Assets:Accounts Receivable Db. $1500
  Income:Rent Cr. $1500

1/1/2017 Repairs on Unit 101 (Payment on invoice 101001)
  Expenses:Repairs Db. $200
  Assets:Accounts Receivable Cr. $200

Since GC does not allow me to select an Expense category when adding
> entries to an invoice, how does one correctly reflect this situation
> without extraneous manual manipulation?
>

I guess the question is, is the situation one where you are *reducing the
value of what you are giving them* by the amount of the repairs, or one
where you are *accepting the repair in lieu of rent*? I believe that the
second option most correctly represents the situation.


> Thanks!
>
>
>