Hi Chris,
>> Reading the wikipedia page on invoices confirms my understanding of the
position of the invoice document. If you want to receive money in advance,
a proforma invoice can be used, or an order can state pre-payment is
required before shipment will take place.
>>
>> If LSMB could automatically pay invoices for pre-paid orders, that might
help, I'd say. Wouldn't it?
>>
>>
> Just to clarify the accounting here: Income is supposed to be recognized
once the product has shipped, not before. If you receive a prepayment,
that is "unearned income" which affects the balance sheet but not the
income statement. Once you have done the work and finished the project,
you get to report it as income. This is done by invoicing. Technically
you aren't supposed to realize income until right of return has lapsed
unless you estimate the portion of returned goods, according to my
recollection of FASB/IASB memos.
>
> This is a purely accounting question on this side.
Thanks for this additional explanation.
Come to think of it, we could allow invoicing in advance, if the invoice
would be posted on "Deferred income" accounts. Shipments would then cause
the income to be recognized.
However, this would require everybody to use shipping... An impractical
requirement, I'd say.
> So the point is to get to support the workflow Brian describes which is
(including accounting steps at the end):
>
> 1. Customer makes order.
> 2. Customer pays for order.
> 3. Goods get shipped
> 4. Income gets realized.
Yes, that's indeed the point. Should we start collecting requirements (in
terms of workflows) for our to-be-rewritten modules?
Bye,
Erik.
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