Quick guide to best sales ledger practices and to the importance of entry dates
Each month the financial management faces a period when most of the questions are related to changes in the sales ledger. This applies also to CSI Lawyer users. Such changes can be made in multiple ways, and sometimes it may be hard to see which way is the most optimal and matching with good accounting practices.
When looking for the best way for each situation, it helps if one understands the meaning of the entry dates and how changes made to the sales ledger are reflected in the bookkeeping reports.
All starts with the entry date
The Invoice Date specifies the accounting period for which the invoice belongs. For example, if the invoice date is 5.1.2022, the invoice is displayed as January sales in the bookkeeping reports. Correspondingly, any changes made to the invoice lead e.g. to credit notes getting their own specific dates. Ideally, a need for a change is identified very quickly after creating the invoice so the credit invoice can be dated to the same accounting period as the original invoice. By using exactly the same date as in the original invoice, the correction will be nicely displayed in the bookkeeping reports.
At the end of the accounting period, all transactions of that period are sent to the bookkeeping in the form of reports. Sometimes the need for a change in an invoice may not occur until the accounting period has expired and all the reports have already been transferred to the bookkeeping. In that case, you have to decide for which accounting period to make the correction. If you want to make it for an accounting period that has already expired, you will have to resend all the reports of that period to the bookkeeping. Therefore, sometimes it makes more sense to register the correction for the current accounting period. In uncertain cases, it is advisable to consult your accountant.
Before sending the bookkeeping reports, it is good to verify that all the transactions and expenses for the period have been invoiced and all payments either allocated or adjusted. This ensures that there is no need to change bookkeeping reports of that period afterwards. Once the reports have been sent, the closed accounting period can also be closed in CSI Lawyer, to prevent further changes to it. This practice is highly recommended as it makes management of sales ledger systematic.
Changes in the sales ledger reflected in the accounting reports
For accounting purposes, CSI Lawyer offers a number of reports.
The Sales Journal report, according to its name, is a daily sample of sales ledger records. It consists of sales invoices and credit notes for the accounting period, displaying the sales and VAT of the period. In CSI Lawyer, sales journal records can be viewed at any point during the accounting period. When you make changes to your sales ledger, the period of the sales journal can be limited to the dates covering the change, to easily check how the change will be displayed in the accounting.
The Open Invoices by Business Unit report collects unpaid or unmanaged invoices by the given date. It does not specify payments and credits, but includes them in open amounts.
The Payment List shows to which invoices the payments received during the accounting period have been adjusted. Besides the regular payments, the Payment List also covers advance payments and refunds, credit losses, and payment refunds.
By utilizing the Open Invoices by Business Unit report and the Payment List together, you can check what the change made means from an accounting point of view and whether all the steps required, such as cancellation of an unadjusted payment, are made. An extra payment may easily be created when a payment adjustment is cancelled and a new payment then registered by directly using the Adjust Payment action in the invoice. Thus, the payment whose adjustment was earlier cancelled may remain as pending in the software. Therefore, it is always advisable to readjust the original payment to the invoice through the payment window.
The Open Advances report collects the advances paid during the accounting period, but only to the extent that they have not been fully used for invoices. When the customer pays the advance invoice, the advance payment is displayed in the Payment List report only. Just when the software generates an invoice to which the advance payment is adjusted, the advance will appear in the Sales Journal report.
The Monthly Foreign Sales report complements these reports if a company has foreign sales. It summarizes the amount of VAT on the company’s sales.
Utilize the bookkeeping reports also for reconciliation
Whenever the accounting period changes, these reports are worth using for reconciliation even before transferring them to the bookkeeping. For example, when you take the amount of the Open Invoices report from the previous accounting period, add to it the sales of the current accounting period and subtract from the sum the adjusted payments of the current accounting period, the end result should match with the Open Invoices report taken until the last day of the current accounting period. If the amount does not match, it is advisable to check whether the sales ledger transactions during the period have been correctly registered . The reason for the mismatch maya simply be the fact that some of the payments have not been adjusted to invoices.
CSI Helsinki, Account Manager
Believes that financial management always offers new things to learn, and those can be learnt by anyone having enthusiasm.