Elizabeth, Correct me if I am wrong, but it seems to me you either 1) receive a retainer, like a lawyer (I read all Perry Masons), or 2) have sold a standby contract, from which the customer gets the right to call you for xx hours of consulting.
In case 1, I suggest you book it as an advance payment in A/R, and INVOICE it via A/R as well, as a sold product 'Retainer' or 'Advance for Future Services'. Then when the actual work (project, lawsuit, courtcase) is done, you can Invoice the actual costs and hours, crediting (deducting) the previously invoiced retainer, and have both you're A/R and your turnover of invoiced hours correct. In case 2, one question seems critical to me: If the customer never actually calls you, do you have to repay? If not, you could handle it by invoicing xx hours of consulting, for the full amount. You might even route them via stock if needed, by creating an article hours customer x. Then per hour or number of hours you can invoice those hours at price zero (income was invoiced allready), and transfer the sold hours to stock (in stead of shipping them to the customer) and 'ship' them when used. That way your inventory of hours customer x shows the maximum number of hours you are in theory required to deliver. If you want to fancy up your monthly reporting, you could then correct the turnover account (invoiced total of hours) with an unearned income liability account, based on the stock of hours 'due' times hourly rate. Doing that once a year seems more than enough, but if it is the major part of your business you might want to do it monthly. Personally, I use quick and dirty and make a spreadsheet stating contract number, start and end date, total contract value and value the prepaid part per balance sheet date that way in stead of looking at hours. (BTW: I remember from when I did software and helpdesk service contracts administration, most customers only pay and NEVER call in. In fact it is a lot like paying insurance premiums for the customer: he pays for the rest of mind and the idea that IF the worst happens, he is covered. If nothing happens, the insurance company will not return premiums paid, nor is the service contract holder normally speaking..) Hope this helps, Paul -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] On Behalf Of Elizabeth Ziph Sent: donderdag 20 juni 2002 3:55 To: [EMAIL PROTECTED] Cc: Thomas Serlin; Matthew W. Benjamin Subject: [SL] unearned income How does one handle prepaid contracts? we have been 1) debiting the checking account and crediting an unearned income liability account. then 2) as we do the work and we credit the consulting revenue account and debit the unearned income liability account,using the a/r system for invoicing. we end up showing more a/r revenue for the particular customer than we actually got from the customer. what we really need is the ability to generate statements to the customer reporting work against the prepaid contract. Any suggestions on how to deal with this? thanks a bunch elizabeth -- elizabeth ziph 734.761.4689 www.linuxbox.nu ------------------------------------------------------- Bringing you mounds of caffeinated joy >>> http://thinkgeek.com/sf <<< _______________________________________________ sub/unsub https://lists.sourceforge.net/lists/listinfo/sql-ledger-users Archive http://www.mail-archive.com/[email protected]/ ------------------------------------------------------- Sponsored by: ThinkGeek at http://www.ThinkGeek.com/ _______________________________________________ sub/unsub https://lists.sourceforge.net/lists/listinfo/sql-ledger-users Archive http://www.mail-archive.com/[email protected]/
