Any business needs customers for its continued existence. Major part of the business income is generated from sales to customers. Usually when selling something, an invoice is created in order to document the details of the sale. In this post, let us look at how to add information about customers and sales invoices as well as processing related sales transactions in GnuCash.
Adding Customers
To start with, collect details about the customer, such as the name, address, phone, etc. If you have already agreed with the customer about the billing terms, it can be entered within the Billing Terms dialog box. The billing terms includes details such as within how many days after the invoice was created and service rendered, the payment has to be posted; if there is any discount allowed when payment is made within specified days, etc. The amount of sales tax which needs to be collected while making the sales transaction can also be updated through tax table.
In this example scenario, we are going to create a new fictitious customer called "Mountainside Company Inc". Our fictitious company "I.T. Softpro Consulting Inc" does software consulting work for this customer on an hourly basis and we are going to see how to create the invoice and process it.
1] Create a new liability account for keeping track of Sales tax. This is done by right clicking on the "Liabilities" top-level account and selecting "New Account" from the popup menu. Enter the name (for example, "Ontario GST/HST payable" for the business which operates from Ontario, Canada) and description as in the following screenshot :
2] Create the tax table by selecting Business -> Sales Tax Table from the top menu and then clicking on "New" button at the Tax Tables popup window. A new popup window appears. At the new GnuCash Tax Table window, enter the name of the tax table (for example, "Ontario Sales Tax (GST/HST)") and then the type (usually percentage%) and value (for example 13 for Ontario - Canada). Also select "Liability" for Account Type and the Sales Tax Account that was created in step 1 above ("Ontario GST/HST payable) for Parent Account. Then click OK button. Again click OK at the Tax Tables window to close it.
3] To add the customer, from the top menu select Business -> Customer -> New Customer
4] The "New Customer" popup window opens. Enter the details of the customer such as name, billing address, phone, email, etc. The following screenshot shows a sample for the fictitious company discussed earlier. Under Billing Information, select the currency as required based on the location. (In case the tax table is selected as None, there is still provision to select it under invoices). Under Shipping Address tab, enter the address the customer requires items shipped. It is mostly same as billing address. Click OK button after entering customer details.
5] Create a new Invoice for this customer:
a] From the top menu, click on Business -> Customer -> New Invoice, which shows the New Invoice popup window.
b] Under "Billing Information" section, click on "Select" button for selecting customer. At the "Find Customer" popup window, enter "M" at the text box and click on "Find" button which displays the line containing customer "C001 Mountainside Company..". Click on "Select" button.
c] Control is again taken back to "Invoice Information" window. Click on "Job" button to select the type of job done for which the invoice is to be charged. The "Find Job" popup window appears. As there were no jobs defined yet, click on "New Job" button at the bottom of "Find Job" window. Enter the Job details. In this the rate indicates the hourly rate in the default currency associated with the customer "Mountainside Company Inc.". Click OK once the details are entered.
d] The "New Invoice" popup window now has all the required information for opening new invoice entries. Click OK.
6] The "Edit Invoice - ..." tab opens at the main window. The Invoice information as well as Billing information are filled in already.
a]At the Entries section, enter the values of Date with the date when the work was done and Description. Click on the Action field and select "Hours" because we will calculate the amount based on the number of hours worked. At the field "Income Account" type "Income:Sales:Mountainside Company" and press Enter. This will prompt whether to create a new income account. Click Yes and it opens the window for creating new account. Enter the values as in the screenshot and click OK.
b] Select the "Edit Invoice - ...." tab. Enter the value for field "Quantity" as 40 to indicate 40 hours worked. Click the check box "Tax Table ?" to indicate sales tax will be charged. Click on "Tax Table" field and select the "Ontario sales tax (GST/HST)" which was entered previously in step 2. Press Enter which will update the Subtotal and Tax fields automatically. Then click "Save" button to save the details.
7] a]Click on "Post" button to post the invoice. A popup window appears asking "Do you really want to post the invoice?". Update the post date and the due date. Usually the due date might be 30 days from the post date. However it depends upon the customer agreement. Click OK.
b] Click on "Save" button and then "Print Invoice" button. This shows the invoice in print format.
8] At the accounts tree main window, the Sales tax (GST/HST) account indicates the amount of tax charged for the previous transaction through invoice. Also the Income account of Mountainside indicates the income processed through invoice.
Let's assume that the customer has paid for the invoice. In order to record this, we have to process the payment.
a] Select Business -> Customer -> Process Payment... This opens the Process Payment popup window.
b] Update the date in which the payment was processed and also select the account to which money is transferred (usually the Checking account). Then click OK.
The will change the status of invoice from "UNPAID" to "PAID".
Printing Invoice
Save the invoice by clicking on "Save" button and then click on "Print Invoice" button. This will display the invoice in printable format indicating payment information.
Split Transaction
Multiple transactions put together as a single transaction will appear as "--Split Transaction--" under the Transfer field.
To see an example of a split transaction, from the top-level menu, select Income -> Sales -> Mountainside Consulting Sales. Select the line which contains the text "--Split Transaction--" and click on "Split" button. This will show the individual transaction which form the combined invoice transactions.
Posted from my blog with SteemPress : https://explearn.com/using-gnucash-customers-and-sales-invoices