USA Future-dating invoices

[TLMurray]

I'm not an accountant -- I'm just a computer guy doing some technical work for a nonprofit organization.

This organization future-dates invoices in QuickBooks. The invoices are dated for future speaking engagements, sometimes two years in advance. Clients get an invoice for the full amount with an invoice date of the speaking date and pay installments. When the payment arrives, they process it using the "receive payment" function. And finally, I don't know if they have set up their QuickBooks company as cash or accrual.

Someone told me that SAP software won't even let you future-date invoices (but that could be wrong), so that was a second trigger that caused me to ask, is that a legitimate practice?

 

[kirby]

Similar to buying something on a layaway plan. You say I want to to buy that. Store says OK . You say I don't have the money so keep it for me and I'll pay in installments until its all paid for then i can take it. So what's happening there and in the case you speak of - there is no sale (income) recognized - but there is a DEPOSIT being billed until the sale. It's legit. And as for certain "do it my way or the highway" software companies of course they only have one way (unless you hire a programmer to customize)

 

[timpgoetz]

This is a revenue recognition question, which in QB, completely depends on 'cash v accrual'. You'll need to know if its cash v accrual to know if you are doing this properly. As kirby alluded, it can be correct, but depends on when the income is recognized. If you are cash in QB, then when the deposit is made, the income is recorded.. if you are accrual, then the income is recorded as soon as the invoice date is hit. So, really the key to knowing the answer is determining when the income is actually 'earned' and also knowing how QB is handling the entry into your income account. For more on this topic, you can search for 'revenue recognition'.
- Tim Goetz