Simplifying Invoicing Payments for NPOs

Invoicing payments for NPOs

hey everybody josh for popular today we're going to look at something that trips folks up a little bit from time to time we're going to look at the accounting that goes on behind invoices and payments don't worry it's going to be easy sometimes users look at an invoice that has a number of different charges there and then they see payments applied and they have questions like well how do i know which of these charges has been paid off by these payments the truth is that's not how the behind the scenes accounting of those transactions works people get confused and think that those charges are just cells in an ice cube tray but um they're just not hopefully that'll become clear in a minute we're going to dig into invoice charges and payments as transactions and see how each of those hits your general ledger in a particular way and what i'd like you to do now is hit that subscribe button in a particular way and then you can also hit the notifications bell that pops up ding ding ding and that will make sure that you don't miss any videos that we post what is this what a car does when it's parked on san francisco's famous knob hill without the e-brake clicked on because we're talking rolls to invoice charges on student profiles and record payments you'll need either the financial admin or the student billing role let's look at a student profile real quick and then create a charge there i'm going to this student's profile and then on to the financial tab and then from the dashboard i'll move to by term right there and then we can see that we have no charges currently there so i'm going to come to the charges sill click add and then i'm going to select a fee here i'm going to adjust an amount the description there is optional i'm not going to put anything in there currently and then we'll save now that charge has become a pending charge it's nice and lightweight it's real easy if you don't want it to just click it away we can click there on the pencil icon and then click delete and it's gone that charge actually hasn't affected anything yet the student doesn't owe that money until it's been invoiced so it's kind of like a placeholder right now for our example here i'm going to add a couple more fees so now that we've created those fees we have pending charges pending charge is a status where the fee hasn't actually affected anything yet it hasn't become a transaction so none of the behind the scenes accounting has actually happened the student doesn't really owe this money as far as popular is concerned the next step to make that real to make those charges real will be to click on invoice pending up here at the top when we do that we can enter the correct due date post a date if we need to adjust those at all and then we could choose not to include these charges on an invoice altogether if we wanted once we have that set up we can then click save so now you can see over here that we have an invoice let's look at what's actually happened now this invoice has changed the student's balance so now the student actually owes money for these charges as you can see here they're listed right there if we want to actually dig in and see what's happened in the accounting behind the scenes we can do that by coming over to the transaction number over here and then clicking into that and then once we're there we've got some details we want to get even more detailed we're about to get very advanced so let's click on detail there now you can see that these charges have affected several different accounts here for each of these charges you'll see that they're associated with an income account there so those are just the accounts that those charges are pointed at but then we also have asset accounts listed as well so what's happened is when we executed this transaction invoiced those charges we credited income accounts and then the asset account there that's the accounts receivable account is debited the credit to the income account increases that account and then the debit to the asset account also increases that asset account and that's just how double entry accounting works every transaction must match a debit to one account with a credit to another if there are multiple fees or charges linked to various accounts you're going to see for each of those charges different transactions occurring there this is part of what can make this stuff a little bit complicated you might expect that when you have those income accounts they're showing the money that's actually been paid but that's not what they're showing they're showing the money that's been charged against those accounts so assuming that this invoice is never voided we've already seen everything happen to those income accounts with this transaction that we're going to see that transaction is over now people can tend to think of these charges on an invoice like cells on an ice cube tray so you take the ice cube tray you put one cell under the faucet and you start filling that up and after that cell fills up overflows into the other cells then the other cells of the ice cube tray are filled with water but that's not how it works as far as payments go an invoice is not an ice cube tray it's just a bucket and that bucket can be empty that means no payments have been applied it can be filled up partially i mean some payments have been applied against it or it can be completely filled up which would be the total balance of that invoice has been satisfied by applied payments so those payments do not interact with each individual charge on the invoice they only affect the total balance of the invoice hopefully our little demonstration there helps that idea click and stick okay so now let's see what happens when you're actually working with payments when you record a payment and then that becomes a transaction so if we come back to this student to financial and then here you'll see the option to record a payment we're going to click that and then i can add whatever posted date i need to the amount of the payment and then you can see over here that that's automatically applied to that invoice that we created that's the amount that we're going to apply so that's great we're going to mark this as paid by the student we're going to say it's a check that came in we can input a reference number there and then we can also choose the asset account that we want to affect here so that would be any of those asset accounts listed the standard one would be cash in bank that's where we're going to record this to and once we've done all that we can hit save so now that payment has been received down here and we can go into the reference number of that payment and then look at the transaction view those details there so that we can actually see what's happened here's what we've recorded remember we had debited accounts receivable when we made those charges but now with this payment we have paid down accounts receivable so a credit to that account decreases it then we've also made a debit on the cash in bank asset account also an asset account so that debiting there ends up increasing the amount of cash in bank on the accounting side the end result of adding a charge that's invoiced and then recording a payment that resolves it is this each income account shows how much money you were owed for those charges the accounts receivable transactions showed that the student owed money so the accounts receivable was debited and it rose meaning the student's debt went up and then when they paid that was credited back down and that shows that they now owe less money due to that payment and then the asset account cash and bank in this situation shows that now you have that money that money is all yours and now make this channel all yours by clicking subscribe you can also hit that notifications bell when that comes up ding ding ding that'll make sure you don't miss any videos we post and you might as well click the like button why not it doesn't hurt anybody also check us out on social media you'll find the links below in the description i've been joshua populi you've been great thanks for watching [Music] you