Reflect Customer Paid Expenses on Invoice

[Buddha Buck]

On Mon, Mar 6, 2017 at 5:42 PM Michael Kerins <MKerins at halstead.com> wrote:

> 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.
>

You can also specify a "transfer account" that the payment goes to.
Normally this would be the checking account the payment would be deposited
in, but it doesn't have to be.

However, it appears to be a deliberate design decision to not allow it to
be directly an income/expense account. This is mentioned in the
documentation where it describes how to write off an invoice as "bad debt":
you have to go through a second account, then edit it. That's what you say
you don't want to do.

But it occurs to me: how do you know that the tenant has performed
reimbursable repairs? Presumably they give you receipts or other
documentation attesting to their payment?

In which case, that  should be recorded, too. And the best way to do that
would be as recording the expense at that time, with the credit side of the
transaction being a liability:

12/15/16 Tenant repairs to Unit 101
  Expenses:Unit 101:Repairs Db. $200
  Liabilities:Tenant Repairs Cr. $200

1/1/17 Rent for Unit 101 (Invoice 101001)
  Assets:A/R Db. $1500
  Income:Rent Cr. $1500

1/1/17 Repair Reimbursement (Payment on Invoice 101001)
  Liabilities:Tenant Repairs Db. $200
  Assets:A/R Cr. $200

The last would be entered as a payment against the invoice with the
transfer account the liability account.


>
>
> 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?
>

GnuCash treats customers and vendors separately, so there is no way to have
a single entity as both customer and vendor. So there's no way to comingle
invoices and bills to a single tenant in your situation. That's why I
didn't mean creating a Bill and posting it to A/P.


> 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*
>
>
You can generate a statement which will list invoices and payments, as well
as the total value. The standard statement report includes a description
line for each invoice/payment. So in your example, I wouldn't do that as a
single invoice, I would do that as an invoice and 3 payments, each with a
description/note which describes what it's for for the statement.



>
>
>
>
> 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>
> 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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