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3 min 17 sec
0:00
Maya sends an invoice
0:18
What goes on an invoice
0:47
The entry it makes
1:12
Accounts receivable
1:31
One total, many clients
1:58
Invoices in Beeswax
2:35
Recap and quiz
Accounting 101
·
Getting paid
·
Episode 8
Invoicing and Receivables
(Money you've earned, but can't spend. Yet.)
Maya sends her first invoice to Fern and Fold. What a proper invoice needs, the entry it makes, and why money you're owed is an asset but not yet cash.
invoicing
accounts receivable
trade debtors
Transcript
0:00
May. Fern and Fold have approved the designs. Which means Maya gets to do her favourite thing in the whole business. Send an invoice.
0:09
Today: what an invoice actually does to your books, and the money it creates that you can't spend yet.
0:18
First, the paperwork. A proper invoice has a number, the date, who it's for, what they're paying for, and the total.
0:26
And, crucially, when it's due. That's the payment terms. Fourteen days, thirty days. Whatever you've agreed. Write it down, or it's due whenever they feel like it. Which is never.
0:39
Depending on where you are, there may be tax on it too. We'll get to that in the regional episodes. It deserves its own snacks.
0:47
The moment Maya issues the invoice, two things happen in the books.
0:51
Services income goes up four thousand. She's earned it. The work is done.
0:56
And trade debtors goes up four thousand. That's money Fern and Fold now owe her. Debit trade debtors. Credit services income.
1:05
Revenue: recorded. Cash: still in Fern and Fold's bank account. Hopefully.
1:12
Money owed to you has a name. Accounts receivable, or trade debtors, depending on where you learned your accounting. It's an asset. A very real one. An IOU with a due date.
1:25
But it isn't cash. You can't pay the rent with receivables. Landlords are funny like that.
1:31
As Maya gets busier, she'll have several clients owing her money at once. The ledger keeps one trade debtors account, with the grand total.
1:39
Behind it sits a list of exactly who owes what. Fern and Fold, four thousand. Harbour and Co, fifteen hundred. The Corner Cafe, twenty-two hundred. Add them up, and you get the total in the ledger. They always match. Or someone's in trouble.
1:58
In Beeswax, you create the invoice on the project. While it's a draft, you can change anything, and it doesn't touch the books at all.
2:05
Finalise it, and it gets its number and its date, and posts to the ledger. Debit trade debtors, credit income. Automatically.
2:15
Send it as a P D F, straight from Beeswax. The status updates, so you always know what's been sent, and when.
2:23
And Who Owes Me shows every unpaid invoice, across every client, in one place. It's the list behind the total. With the overdue ones in red, where you can't miss them.
2:35
So. An invoice records revenue and creates a receivable, in the same breath. The receivable is an asset. But it isn't cash, until it's paid.
2:45
Quick one. Maya invoices two and a half thousand on the first of June, on thirty day terms. When is it due? And what's the entry?
2:55
Have a think.
2:59
Due the first of July. Debit trade debtors, credit services income. Two and a half thousand, each side.
3:07
Now all she has to do is wait. Politely.
3:10
Next time: getting paid. And what to do when you don't. We'll keep it civil. Mostly.