Understanding the Retainer Invoice Example for Life Sciences

Retainer invoice example for Life Sciences

simon welcome back how are you today good it feels like i i just spoke with you yesterday yes okay so this week i know that you plan to talk about the forms and the modules but if possible we got lots of requests from people asking about the basics so all the left side of the books just to run over it the difference between an invoice retainer invoice when to use it what is a bill or expense just something for you know something very basic if possible yeah absolutely it's funny that people are asking about this stuff because it's it's so important to know the system that you're using right yes if you're just a blind monkey if you just want to jump in and just try to use it all you have to understand what is the purpose of each one sure yeah so i think that every business owner must know his accounting system in my case i'm not the one who is doing the accounting but i know everything that's happening there so i think that even if you don't want to do it which i think most business owners will give you know like company like yours or other companies do the books for me but you need to know what's going on you need to know how to look at the report to understand because this is your cockpit you're flying you know 1000 kilometers per hour without seeing anything and that's scary so you need to know what's going on in your accounting absolutely yeah let's let's dive right in okay right from the get-go this is the system on its own right when you log in you have the dashboard okay um we're going to go through the left-hand side so this area yes and we're mostly going to talk about uh the ones that are really important to the business owner okay we're going to dive into the other ones but they're not as important we could talk about it in another segment maybe let's do just the the if possible items sales purchases done okay that's a good idea simple beautiful let's skip the account accountants are boring so why the hell do we need to go in there right exactly we don't like accountants screw those guys okay so under items uh this is obviously uh a section that's built for all your services and all your goods now the interesting piece here is inventory adjustments is only going to be available if you add the inventory function yeah exactly so with the items pretty straightforward you add all of them here you code them to the accounts that they're relative to right so the sales or another type of sales and just just one one thing if you have your items or products in those crm it will be synced automatically once you enable the integration with books yeah so back and forth same database just you know yeah yeah you're right exactly um and that's pretty much it so you can put like a nice photo here you can enable the tracking of the inventory if you want but again this is why this area is available typically you will only have one and two so that's pretty much it very straightforward on the left side i will have how much the product or service cost on the right side if i need to i will have a checkbox on purchase information which means how much i spent on it yeah and pretty much the only reason why you have the purchase checkbox marked is when you do a purchase a bill or a po you can enter the sku or the item code and then the price would then pop up and everything would be coded for you so this is really the only reason why you would have this here honest goods or service without inventory tracking and the reason that they have canadian dollars on the top is because my own currency is canadian dollar but you can sell in any currency yeah yeah and and the currency is determined by the customer so when you open the customer when you add and you start populating the invoice everything gets adjusted into the currency of the customer that's right and if you created a customer with the currency let's say canadian dollars you created your first invoice from that moment on your locked on canadian dollars you cannot change it to usd or something else yeah yeah and this is a good like control tool to make sure that business owners don't make mistakes and you know toggle between currencies currencies is a very very finicky thing with accounting software so you have to run it properly just it's very very very complex okay so items is pretty straightforward now the beautiful thing is when you're in this window you can then start to report and have different views of these items can you just go one second again to create a new item sure so one thing that i saw lots of mistakes in the account section right now you assign it for example for sales yeah but let's say that your item is uh crm course yeah it's it's the name of the of this uh product i see lots of people creating accounts and they just use the out of the box instead of creating an account name courses and courses will be under sales yeah and then in the reporting you can actually see how much money you're making from you know the category courses yeah exactly and by the way this ties into the previous video that we filmed about tag reporting because you can have the account as courses and then with the associated tags you can have the court you can have a course tag that talks about if it's a crm one right you know or another platform so yeah absolutely it's an incredible idea okay so it's it's good to have some professional advice about how to construct the accounts in their structure right yeah we we like to see accounts here but the most important thing is to make sure that they're done professionally uh custom chart of accounts is a really really important thing for the business owner because it sets you from day one until whenever right the idea is that you can build on it and also if one day you want to sell or or dilute your position and bring more people on board this is where they're looking for the reports and if it doesn't look good and make sense so probably there will be a no after viewing it yeah exactly it's it's such a value add to have a nice chart of accounts and it just allows you to report really nicely and then actually understand your business better right so sales you have it's broken out and it's really straightforward you have your accounts receivable as sales and your accounts payable is purchases the sales money coming in yeah purchase money going out exactly very nice and easy by the way so we have the customers and this is the master data so it's the customer master data database customers customers on the top you can have views right you can exactly you can okay like zoro crm same thing yeah same thing it's a zoho crm is a little bit more uh obviously complicated and complex in terms of you can do so much more with it but here you can create custom views with some rules and it's it's quite nice actually and you can edit the patterns too it's pretty incredible yeah okay so again we're going to talk about this so this is the layout for creating a new customer i don't think we need to really dive into it it's pretty straightforward all across the board with different systems you have your custom fields reporting tags which again we talked about the other video and then you got your customer marks so everything here is straightforward we'll dive into it at some point i think we'll we'll do another video on this okay estimates again this is the interesting piece so now we're going to talk about a what makes a financial impact because it's really important a lot of business owners they ask us you know what marks the dollars on the p l at which point do i see the dollars come to the profit loss so off the bat i can tell you one thing estimates don't impact the financials at all in fact it's just a document generated and it's the same thing with sales orders so these two identical the conversion process goes from estimate to sales order to invoice okay so um it's kind of like why do i need to use a sales order estimate i understand i gave you a price i will log it in the system yeah if you say yes i convert to an invoice simple yeah why do i need to have a sales order it's a good question so with a sales order you're essentially committing certain services or products so when you're doing an estimate this has no impact at all in terms of uh any financial impact dollar or inventory exactly when you're doing sales orders you're actually committing the service now if you're a service company like this one's a accounting company you know it's a sample they there's no like inventory on hand but if you're a company that sells a product as soon as you create the sales order your inventory goes from available to committed so it gets shifted and now you can't sell as much or you know commit to as much sales and you can know this right that's the important piece so that would be a commitment from the business when the estimate is approved yeah i'm generating a sales order yeah exactly and it's also good to send this to customers right because the customer might have a purchase order on their end that they want to fulfill and commit to right so they could say yeah question for you and that's about taxation when i'm creating a sales order i am committing to provide you a certain service but you didn't pay me yet yeah when i'm producing an invoice so let's say that now you need to pay means three three months if i will produce an invoice right now i'm paying taxes immediately but getting paid in three months so it's better for me to do the sales order commit with everything but no money was exchanged and no taxation is impacted is it correct a hundred percent and it's all about when the revenue is supposed to hit right when is the service provided and when is the product transferred to the client right yeah so the other piece is the flip side is let's just say you need to collect some money now as a deposit right because you could say oh well i'm not going to finish the service until three months from now right but we need some sort of uh confirmation in terms of money consideration to actually commit and say okay well this deal is closed so this is where your retainer invoice section is really really interesting so that's you can create a retainer for a customer and this will be applied against let's just use amazing business results as an example and this way again this has financial impact right because this this retainer invoice holds the money on the balance sheet so it doesn't create the sale there's no tax that is involved but it's prepared to receive some money against the services in the future yep i'm a big fan of retainer invoices yeah lawyers love this stuff everybody loves money right yeah but i like it because i don't need to to pay taxes when i'm getting a retainer invoice only when i'm allocating it to an invoice and also the way that zoho zoo created the the retainer invoice is a breeze because when i have an invoice and i need to collect money from the retainer invoice and the retainer invoice for me it's like a small bank account that's waiting for me exactly yeah i just click on allocate funds and you can show them right now how to do it yeah and it takes a second and it's beautiful and you can always see how much is remaining in the retainer invoice yeah exactly so any of these transactions at all as soon as they're marked sent and there you see the little banner over here you can always scroll down and see if there's any financial impact and you see right here at this point there's nothing hey just record the payment for example yeah let's just record the payment let's just say the customer paid right away it went into undeposited funds they paid with cash okay so now this customer paid okay so this amount was paid now there's the payment posting okay so you can always toggle here at the top it's pretty much association and now with the payment posting you can always scroll down and see there is the journal okay now you can see how it went exactly unearned revenue is not anywhere on the p l under revenue is actually a liability okay and undeposited funds is the asset this is the bank account that it goes into again i'm not going to bore you with the accounting stuff because the hell with that thank you now let's create an invoice for the same client for thousand dollars so it's part one of the job okay let's just say we did some automation work the rate was a thousand done okay save as draft now take this in right away when you click save as draft there's no journal okay because it's in draft mode we're gonna click mark ascent and it's exactly what you said you see at the top it says retainers available okay and you can click apply now to clear off this invoice and you can say okay well i want to leave some of the retainer for later and i want the customer to pay percent of this invoice so you can apply portions it's so convenient so click click on apply retainer yeah and let's let's click close the entire invoice let's make thousand dollars yeah sure done perfect so now it's paid and now if you will have a second invoice you will see that your retainer is now 1500. yeah that's correct we can actually let's just do this quickly we can clone this one to skip a couple of buttons we can do this so that's like the second milestone a month after and now you can just apply exactly and finish it now any any blue buttons are clickable buttons which is really convenient so we can toggle between you know the modules here by simply clicking on the blue so from here we jump right into the customer area and we can have like a high-level little dashboard for the customer okay and i want to show you something cool if you go to transactions yeah so here you can see all the invoices that were sent their status if they're overdue paid and so on estimates retainer invoice balances it's all here incredible yeah it's amazing yeah and you know from from the front page you can obviously just click on any of the stuff and even on the unused credits if you click on this you can see that the retainer has a balance of 1500 and you can click apply to invoice it's so convenient every single area has a button that can lead you or take you somewhere else to resolve a problem and ed the entirety of it is it's going to save you time bottom line right right so it's amazing i love i love the way that they work here yeah and the payments received pretty self-explanatory this ties into all the other processes here recurring invoices is a beautiful one but i think we're going to talk about it maybe in another video because it can get pretty complex yep and just one comment about recurring invoices there is another product from zoho and that says though subscription so subscription is basically doing recurring the only thing is that those subscription is much more complicated so i always try to push people to zoho books recurring invoices instead of using the best of those subscriptions until now most of the cases it actually works fine i had only actually one client that had to use those subscription because of some features but recurring invoices phenomenal very good yeah and we'll we'll dive into it all i like that every single piece here you know there's a life cycle they have little segments and little you know photos it's so nice for the user to understand what the process is like and yeah it's it's a very nice um credit notes invoice just one one thing for the recurring invoice you get you have few options when the invoice is being created every month or week whatever you decide it can or send the invoice to the client or create the invoice as draft or send build the credit card and send a receipt so yeah that's not talking about anymore it's it's honestly such a great tool and i don't think there's too many software out there that can actually do the same thing in terms of billing the actual customer posting the payment entirely but we'll definitely dive into that in another it's also sending reminders and if there is a bounce the client is getting an email hey your card bounce maybe fix it it's doing everything for you yeah wonderful system i would say that the majority of our clients that are on the zoho platform and because we service all the platforms it's really you know i'm just going to talk about the zoho one but they love this section this entire sales section is like a huge hit because they have everything at the push of a button right you know the system pretty good you need to create the course no we're building a zoho books course um it's actually still in the making we're almost done so it's going to be live hopefully in the next little while it's um it's a beast of a course very cool okay yeah it's it's absolutely phenomenal but we'll talk i'm your first student done good okay so we talked about sales let's talk about purchases wait the credit notes what is a credit note oh yeah okay so credit notes is just a kind of uh a reversal of an invoice it's a refund it's a courtesy uh i write off 70 000 invoice i guide paid for it the client giving me our time i want to give him your money don't call me again yeah is that the credit note yeah you have to create a credit note and then you have to allocate a refund against it and let's go ahead and do that so there are a couple ways of doing that you can click here and click amazing business results and type it manually in now the important piece here is you want to make sure you're you're putting the credit note to the same item that you invoiced right so that the income on the p l is offset properly okay so you can do it this way the other way that you could do it is obviously you can go to the actual invoice that's paid that's easier yeah and if it's paid you can create a credit note right here ah so it's saving you all the clicks so many clicks now if it's unpaid you can do the exact same thing create credit note and it's going to apply the credit note against this unpaid invoice so then the customer will do nothing got it wait so if it's un unpaid i just sent it over email yeah 1500 is it much easier just to void it well it's always a good idea to keep track of all the documentation right if you've sent an invoice to a client you don't ever want to be in the position six months later that the client says oh well this one you know we need a refund for this well you can't trace anything if it's deleted i you don't know if it was paid not so you create a credit note against the sent invoice yeah and then in your profit and loss basically you're even but here you have a track of what happened that's correct so when we create this credit note you see it says paid but you see it says credits applied and you can put some notes here customer decline service didn't want to pay for it something like that okay perfect the other option is for us to do a credit note and then you know post it this is for an invoice that's already paid okay and when you go in there under transactions we're doing the exact same thing credit note you see it's in draft you can then go to the credit note this is the example that you said you know if the customer's already paid it and they're now asking for the money back then you can create the credit note and then instead you can click refund okay and this does the posting to pay it back got it and from account you say where you gave the money from exactly okay i see and in my system that they have stripe credit card processing services will i have stripe there as one of the accounts or yeah you can click stripe but the thing is i it depends on the integration with the payment processing company because some of them can allow you to process a refund from the system but i'm not sure if all of them can yes it depends on integration okay so now we talked about sales let's talk about purchases okay now if you think about these two things it's legitimately just the flip reverse of the exact same thing so from the top you have your vendors which are identical same exact type of layout so vendor will be someone i'm paying to yeah and on the other side on the sales side the customers so the customers will be the vendors just flipped exactly exactly and the expenses we're going to talk about the difference between expensive and and bills in a second but before we do that purchase orders are your sales orders for the sales side of things okay so it's the exact same thing no financial impact based off of purchase orders purchase orders will be like sales orders when we checked it on the sale exactly it's allocating inventory or i know i supposed to get inventory because it's from the vendor but i did not pay anything for it yet yeah and and you can pay against like uh like uh if a customer provides you like an uh they like what is it called it's like a an invoice that's a performer the customer can send you a performer invoice you pay it fine that's a deposit against a purchase order so that can be done as well now okay let's talk about the differences between expense and bills because we don't have this option in sales okay expenses and bills the main difference is that one is cod and one hits your accounts payable okay so expense will be paying for something right now yeah i just bought from you an iphone you got twelve hundred dollars this is an expense money out of my account exactly yeah bill will be an expense that i'm next month i'm going to release the money exactly yeah okay typically invoices if you get an invoice goes into bills if you have a receipt or you paid something with your credit card or debit card it'll go into expenses it's much easier to process it this way got it so an invoice that is a net 30 will be a bill exactly got it so that's an obligation for me to pay exactly yeah and this way it's on the on the p on the balance sheet as well right because that's going to be what's my next question how how do i see it okay yeah exactly so it's going to be in your balance sheet it's going to be under accounts payable and then you can pay it when you need it and you can set up some reporting automations to trigger you know net 30 when some things have been you know are overdue now the layout and design between expenses and bills is pretty much you know the same idea it just looks a little different with expense it's very simplified because we don't need as much information about the expense it's pretty straightforward same type of idea the account the amount and what bank you paid enough you know the credit card exactly now if i if i'm i'm [Music] if i will have let's say the bank fees so that was a session field from few weeks ago if i will have the bank feeds and i click on any on one of the bank feeds and i match it to an account it will create an expense right because this is a cod okay if you're doing match it typically matches against a bill or an expense it could be either so how the system knows when it's a bill when it's an expense so when you're adding directly from the bank when you're just clicking add yeah i'll show you when you're in this area here and when you process the expense here this is you see the categories so it's asking you if an expense so when you're when you're coding it it's legitimately the exact same window that we were just at but if you're matching it right so if you're matching it against this this would be either an expense or a bill it could be both okay now in the bills it looks the exact same as the customer invoice it's just the flip side it's the payable side of things so you're selecting a vendor you're selecting a bill number and it's the exact same thing and you can put in the item details you can pick an item right whatever you want or you can simply just type okay paid for consulting okay and you can choose the account here consultant expense got it okay same exact idea can you assign tags also in bills yeah absolutely and that's the entire idea so we talked about this in the other video the whole point of tag reporting is that you can do it with the sales and the purchases so that you can report off of both so here you click show additional and there's the reporting tags mm-hmm i see okay so it's all ties together this entire system basically you can go from you know one path or a different path but it all connects eventually yeah it's it's it's an ecosystem and if you treat the ecosystem right it's going to spit out some nice reports that can give you a little bit more insight on the business the vendor credits are the same thing as the sales credit notes or credit memos identical processors yeah and again a lot of these do the exact same thing but for two different segments right ar or ap um but bottom line this is the area that is most commonly used in the system because this is what develops your profit and loss and your balance sheet and your record keeping and recurring a bill would be like uh let's say i have my internet bill every month fifty nine dollars bank bank bank exactly yeah exactly we can do also the same as a rule right from the bank feeds you can do a rule on raw ent 59 create an expense automatically and categorize it yeah and the bank rules can really take you to the next level and when you're doing bank rules these are all expenses they're not bills it sounds like you're more you prefer to do it from the bank versus the recurring bills right yeah what people typically who use the expense section end up using it from the banking directly you don't have too many people posting expenses here and then clicking match the expense in the bank most of the time two steps yeah double the work most of the time it's either through rules or through just manually coding and adding it in so eventually when you have proper rules in the system the amount of time that you need to spend on the bookkeeping is going down dramatically right yeah significantly it'll save so much time and it depends on the way that you're doing backup which we'll talk about in another video on the documentation but it depends on how you're doing backup as well because for many companies and countries you have to use backup and supply backup and keep backup you don't want to get hit by the irs right nope we don't want that nope okay very good simon thank you very much i'm learning every day more and more so it's for me for sure it's a it's a good adventure so thank you very much for being with me and uh what do you plan for next week yeah i think next week we'll talk about the recurring invoices and bills i think that would be really really nice for people to understand how to use those functions absolutely let's do that okay done okay fantastic thank you thank you very much simon see you next time it's my pleasure you