You start the year with say 10 unpaid invoices (General Sales) amounting to £1000.00.
These have been declared as income in the previous year’s accounts.
You would enter the opening balance as £1000 credit to the Debtors control account
But in what account would you enter the debit?
And as the payments come in would you tag them as unallocated credits to the individual customer’s account? Or can you tag them directly to the Debtors control account?
Thanks
When you’re starting on QuickFile coming from another accounts package the best way to handle this kind of situation depends on various factors, most notably whether you’re VAT registered and if so, whether you’re on cash or accrual accounting, and also on whether you expect your customers to pay each invoice in a separate payment or if they might make one payment covering two invoices, one from last year and one from this year.
The most correct approach is not to set an opening balance on debtors control but instead create the unpaid invoices on their original dates as invoices in QuickFile. You would also need to reduce your “retained profit” opening balance by the same amount so that everything lines up when you have created the outstanding invoices and then run the QuickFile year end process for the previous year.
With this in place you should be able to log “payment from a customer” for the previous year invoices exactly as you do for this year’s invoices that originated in QuickFile.
If you are VAT registered then the next question is do your VAT quarters line up with your financial year? In other words did you do a complete VAT return in your old software and will your first QuickFile return be entirely made up of invoices from QuickFile, or will you need to merge one month of one system with two months of the other?
Thanks for this. I am not registered for VAT.
When I started I only had these unpaid invoices and a bank balance.
I have already created these invoices on their issued dates and tagged them as the payments have come in but I haven’t done any of the other things you prescribe and I’m having some problems with my profit and loss statements.
If I create a new journal and enter a deficit in the retained profit field I will need to enter a credit - should that be in the debtors control?
Previously I’ve used a spreadsheet
The act of creating the invoices in QuickFile on their original dates will have put the debits on the debtors control account, so you don’t need an opening balance there - you either include an opening debit balance on the debtors control account or create the past invoices in QuickFile, not both.
And yes, I do mean debit. When you raise an invoice that is a credit on the sales code and a debit on debtors control, and when you are paid that is a credit on debtors control and a debit on the bank account that received the payment. For bank accounts money in is debit and money out is credit, which is the reverse of what you’re used to seeing on your bank statements because those show “you” from the perspective of the bank whereas QuickFile shows the bank from the perspective of your business.
So when you made the invoices on the (previous year) dates that will have done credit general sales and debit debtors control. Those invoices won’t show on a P&L report for the current year (because they are dated before the year start) but the “profit and loss” line on your balance sheet will include them as well as this year’s income. To fix that you need to run the year end tool for the previous year, which makes a journal to zero out all the P&L codes at the year end date and move the balance to “retained profit” in the capital section.
Thank you for your assistance. I’m working on this!
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