Using Customer Accounts

When you sell something, you don't need to create a customer account first. Instead, you could just add a transaction between your bank account and an income account to keep track of the money coming in from the sale.

But here are a few good reasons why creating a customer record might be a good idea.

  • You want to send them an invoice,
  • They pay you some time (before or) after the sale, or
  • You want to monitor your best customers and all their purchases from you.

About sales and payments

A sale links a customer account with an income account, and records the point at which you charge a customer for goods or services. The balance in your income account(s) increases throughout the year until you consolidate your financial year.

A payment links a customer account with a bank account, and represents only the transfer of money from the customer to your bank. Usually this happens after you've created a sales invoice and they pay you for it. It reduces the balance in the customer account, and increases the balance of your bank account.

After entering both these two transactions, you should find you've recorded an increase in your bank balance and and increase in your income account.

How to handle payment up front

Sometimes a customer might pay before you send them an invoice. It could be that you take a deposit for work you'll complete later, or perhaps you require your customers to have pre-paid for services you'll invoice them for later.

In Easy Books, it's possible to enter the payment before the sales invoice. This represents money you owe back to your customer until you "claim" it in the form of a sales invoice.

To enter a payment transaction like this, start from the Customer account.

  • Add a transaction and set the date.
  • Change Transaction Type to "Credit Note".
  • Set Account to the bank account you're receiving the money into.
  • Fill in the rest of the details and save the transaction.

Note: The Transaction Type field changes to "Payment" when you select Account 2 as a bank account. If you choose an income account instead, this is a credit note, which is simply a reversal of a previous sale.

After these steps, you should notice your bank balance has increased (because you received some money) and your customer balance shows a negative figure. Positive customer balances show the amount owed to you, and negative amounts show money owed by you.

When you create a sale, this affects the balance of the customer's account and your income account.

How to enter a payment for a single invoice

Your customer may pay the full invoice, or just a partial payment. In either case, the best way to enter this in Easy Books is to find the original sale. Then use the Receive Payment option and fill in the details of the payment received. For partial payments, edit the amount to match. If you use a payment company such as PayPal who take off fees, add a split to the payment. In the second line, choose an appropriate expense account (eg Payment Fees) and enter the fee amount. The amount in line 1 is reduced accordingly.

More partial payments can be added as they are received.

If full payment is received, there is a quick method on iOS to enter it for the current day. Tap and hold Receive Payment... to fill in all payment details automatically.

How to handle payment for more than one invoice

If a customer pays you a single amount to cover more than one invoice, you will notice some sales remain unticked if you use Receive Payment to add the full payment. Simply select the other invoices and use the option Add a tick if you use the ticks to track which invoices are paid.

The ticks can be useful to track which invoices have been paid, but financially, Easy Books applies payments to pay off the oldest debt first. Report such as cash based Profit & Loss will show a list of unpaid invoices which won't necessarily match the invoices ticked because of this.

Adding a tick has no financial effect, it is purely for your own use.

An alternative method for adding a large payment is to follow the same steps as described for adding a payment up front. This results in no sales being ticked. You could then (optionally) select each sale and add a tick.

How to handle bank fees in the amount received

Some banks and payment companies charge a fee on each income transaction. This means you receive less than the amount the customer paid to settle the invoice.

If there are any fees that you would pay as a result of receiving the payment (for example PayPal fees), you can account for it using a new expense account. If you haven't already added an expense account to track the fees, add one under Direct Expenses. Name the account something like "PayPal fees".

When you receive the money, find the original sale transaction and use it to enter a new payment. The process is slightly different on iOS and Mac, but in both cases you're using the sale to create a new linked payment. The app defaults the amount to the full sale amount. Leave the amount alone for now and just Add a new split. In the split choose the expense account you added for fees. Set the amount equal to the discount amount (or fee). You should notice the amount in the first split (going into your bank account) reduces automatically.

Use the Customers screen to check the customer balance, which should now be zero. That is, unless they also owe you money for other invoices. You can also check the expense account, which should show an increased balance due to the discount amount.

Statements

You might find it useful to send your customer a statement of their account. To do this in Easy Books, use the Statements screen to create a statement and move each item onto it. You can send a customer statement in PDF format.