Reflect Customer Paid Expenses on Invoice

[Michael Kerins]

Thanks for this - I have no problem at all looking at the issue from the perspective you suggest.  However, I’m not clear on what you mean that GC does allow payments to come from expense accounts.  When I “Pay Invoice”, all I can do is assign the payment to an invoice.

Do you mean by creating a Bill and posting it to A/P, in addition to creating the invoice?   If so, then how does one tie this together with the invoice for rent and create a single statement/bill/invoice to send to the customer that lists the rent, the rent deductions, and the total invoice amount due?

I currently use an Invoice for this purpose, with negative values for the expenses.   I need to be able to generate something to the effect of:

Invoice 101001
Customer Name
Customer Address

3/3/2016                                                          Rent        $1,500
3/3/2016           Water                  $66
3/3/2016           Electricity            $100
3/3/2016           Repairs                $144
               Total                                                                     $1,200


If what you are suggesting does accomplish this, please enlighten me, as I don’t see how to get from where I’m at to where I need to be.

Thanks.


From: Buddha Buck [mailto:blaisepascal at gmail.com]
Sent: Monday, March 6, 2017 11:24 AM
To: Michael Kerins <MKerins at Halstead.com>; gnucash-user at gnucash.org
Subject: Re: Reflect Customer Paid Expenses on Invoice

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

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