15 April 2019

Invoicing and payment related questions have been part of my daily work for years; formerly when managing a sales ledger in a law firm and currently as instructing CSI clients on software use.

Each month there is a period when most of the questions are related to changes in the sales ledger. 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.

In my blog text series, I’ll aim at sharing common good practices for managing the sales ledger in CSI Lawyer. In this article, I focus on the significance of correct dates and on how changes to the sales ledger are reflected in bookkeeping reports.

However, please keep in mind that there might be country-based exceptions to these best practices. Which do not necessarily apply outside Finland. So if required, please check with your accountant.

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 5.1.2019, 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 specific dates. Ideally, a need for a change is identified very quickly 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 located in the bookkeeping 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. However, sometimes it makes more sense to register the correction for the current accounting period. In uncertain cases, it is advisable to consult your accountant.

At the end of the accounting period, all transactions of that period are sent to the bookkeeping in the form of reports. A closed accounting period can also be closed in the CSI software, to prevent further changes to it. This practice is highly recommended as it makes management of sales ledger systematic. Before closing the accounting period, it is possible to verify that all the transactions and expenses for the period have been invoiced and all payments have been allocated or adjusted. This ensures that there is no need to change accounting reports of that period afterwards.

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 separate 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.

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. And when the software generates an invoice to which the advance payment is adjusted, the advance will appear in the Sales Journal report.

In addition, if a company has foreign sales, these reports are complemented by the Monthly Foreign Sales report, summarizing the amount of VAT on the company's sales.

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 in the CSI software (for example, whether all the payments have been adjusted to invoices).

Did this post give you useful information?

I hope that my blog post clarified the use of the dates and the use of accounting reports.

In my next post, I’ll share some best practices concerning changes made to the sales ledger at different stages of a sales invoice. The post will be published in a couple of weeks, well before the summer days.

Jenni Nordman

CSI Helsinki, Customer Relationship Manager

Believes that financial management alway offers new things to learn, and those can be learnt by anyone having enthusiasm.