The purpose of this help file is to provide instructions on how to enter bills (tracking aged payable) and bill payments.

The reason why a business would want to track their bills (or aged payable) may be a matter of cash flow.  The key in maintaining good cash flow is to get paid as soon as possible and pay the bills as late as possible.  Often times when a business receives an invoice from another business, it becomes a bill.

Clarity Accounting Enter Bill View

Required data entry fields

Date: When did you receive the invoice / bill?
Vendor: Who sent you the invoice / bill?
Invoice #: What was the invoice number on the invoice you have received?
Terms or Payment Account: Is there a payment due date on the bill / invoice (an unpaid bill)? Is this a bill that is coming out of your Visa or Bank Account (a bill that has already been paid)?
Once you have selected a terms of payment, the due date will be automatically entered for you.
Expense Account: Every expense / bill is associated with an expense account / category for tax deduction purposes.
Description: This is an optional field for you to enter the description of the bill / expense.
Price: How much is the bill?
Sales Tax: Did the bill come with sales taxes included?
Currency: If you are receiving an invoice from other countries or if you are expected to pay in other currencies, you can use this tab to enter multi-currency transactions.

Case Study

ABC company is based in the US.  It hired Habitsoft, Inc to do some custom development work for them.  Habitsoft billed ABC company for 40 hours of work at $100 / hour.  The invoice date is October 21, 2008 and the terms of the invoice is for the invoice to be paid in full within 30 days (term 30).  Since Habitsoft is a Canadian company, they would like to be paid in Canadian dollars.

As you can see from the sample data entry fields above, by filling in the exchange rate, our online accounting software automatically does the calculation that shows the total bill amount to be $4000 CDN — which works out to be $3200 USD on October 21, 2008.  You can get daily updated currency exchange rates on XE.com.

Recording Bill Payments

Once a bill has been paid, then you can go into the “Pay Bill” tab to enter a bill payment.  Alternatively, you can also find this bill in your list of bills/ expenses and enter a bill payment through the summary page.

Using the same case study we have been using in this help file, we will record a payment for Habitsoft Inc.

Please note: It is important for you to select the Vendor and the correct “currency” in order for an outstanding invoice to show up on the “pay bill” section.

When you record a bill payment, please enter the date you paid the bill and which bank / credit card account it is coming out of.  In this case, Habitsoft, Inc was paid $4000 CDN on October 23, 2008 with Paypal.

More Questions?

If you have any questions regarding how to enter bill and bill payment records, please do not hesitate to contact us.

There is a well known saying that “you got to spend money to make money”.  This may be true for many businesses who are in operation today.  It is certainly true for our online accounting software.  Luckily, most governments and jurisdictions allow businesses to submit expenses as “deductions” to the total revenue before filing taxes.

Keeping track of expenses is one of the most important bookkeeping activities a business will do.  Not only does this allow a business to write off tax deductible expenses, it also allows a business to keep track of their spending.  This is where many small businesses often run into trouble, they do not realize how much money they were spending in comparison to their income until it is too late.

Keeping track of expenses in Clarity Accounting is easy.  The purpose of this help file is to provide some clear instructions on how to enter expenses into Clarity Accounting.

There are 2 places to enter expenses within Clarity Accounting:

1. Directly from the Dashboard
2. In the “Expense” section
   

Clarity Accounting Enter Expense View

There are 4 different “Tabs” on the Enter Expense data entry box:

1. Enter Expense: for straight forward expenses
2. Enter Bill: for bills with a due date to be tracked as an Aged Payable; also for multi-currency support
3. Pay Bill: for recording bill payments when a bill has been paid
4. Detailed: a section for users to record all expense & bill related transactions

Data Entry Fields

Date: when did you purchase an item or received a bill?
Vendor: where did you buy the expense item from or who sent you a bill?
Invoice number: a transaction number that is automatically generated unless you have received an invoice with a specific invoice number.
Expense Account: what is the expense category? For example, buying coffee for a client meeting at Starbucks would be considered a “meals and entertainment” expense.  You are welcome to add as many expense accounts as you wish.
Description: Optional field for you to enter notes to yourself about a bill or expense.
Quantity: how many of the same item did you purchase? This field always default to a quantity of one.
Price: what is the actual cost / price of your expense item?
Sales Taxes: If you are tracking sales taxes you can get back from the government with your business related expenses, you can enter the tax here and Clarity Accounting will keep track of how much sales taxes the government owes you.

Sample Case Study

A small business owner ran out of black printer ink cartridges for his printer and he went to a local stationary supply store called Staples and spent $29.99 + 5% sales taxes on ink cartridges.  He went on October 23, 2008 and used his business Visa card to make the purchase.  Ink cartridges are considered to be a office expense since it is something that is consumable (by the printer, not the business owner of course).  Equipments such as computers and monitors cannot be considered an office supply expense.

Information being tracked on Clarity Accounting

Based on this specific expense data, Clarity Accounting tracks how much a business spends on a particular vendor, how much money was spent using the Visa (or deducted from other bank accounts), the total amount spent on each “expense account” (for tax preparation purposes), the amount of sales taxes paid for business related expenses, as well as how much the business is spending in total (this can be found in the “Profit and Loss” report).

How is this information useful?

Recently a client told me that she had no idea she spent so much money on networking.  While networking is a valid form of marketing, different networking groups yield different results.  This allowed her to focus her time on only one networking group that yielded the most results for her so far.

A business can also look at how much money they are spending on advertising and marketing in comparison to their income in a given period of time shortly after a campaign to assess the effectiveness of a marketing or advertising campaign.  We allow clients to choose a date range when viewing their profit and loss statements to see their income and expenses in a given period of time.

Need more help?

If you require more help with figuring out how to enter expenses in Clarity Accounting, please do not hesitate to contact us.  We will always respond within 1 business day or sooner.