# Invoices and bills An invoice bills a customer: it posts Dr Accounts Receivable and Cr the revenue its lines name. A bill is a vendor's invoice to us: it posts Dr the expense or asset its lines name, and Cr Accounts Payable. A document's own figures are read from the ledger lines tagged with it, never kept on the document: a reversed payment, a void or a write-off comes out right without another copy to correct (B-38). {documents_v2} ## 1. Issue and send an invoice - Preview first: `books.create_invoice` without `confirmed` writes nothing. It returns the posting, the number and due date the invoice will take, and its DRAFT PDF; show the human the PDF and the posting. An abandoned preview uses up no number. - Confirm with `confirmed: true` only after the human has seen it. The invoice posts Dr Accounts Receivable / Cr each line's account, takes the next number (B-40), and the issued PDF, the page the customer gets, is filed with it. That filed copy never changes: a later look at the invoice (`books.document` with `pdf: true`, or the viewer's Save invoice PDF) is a re-created copy as of that day, says so, and shows what has been paid since. - Give a line a quantity and a unit price when the work is billed that way (`quantity` times `unit_price` must equal the line's amount exactly); the page prints "3 × $33.33" under its description. The customer's purchase order goes in `customer_ref`; `memo` prints under the lines. The company's email, website, payment methods (each can show a QR code) and footer come from the settings, not from the call. - The page prints the customer as it was when the invoice was issued (its name, billing address, contact, phone and billing email, and a Ship-to line when it has a shipping address); changing the customer's record later never changes an issued invoice. - The books never send mail, and never say they did. Hand the issued PDF to the human (`books.document` with `pdf: true`; the viewer's Save issued copy), and let the owner or a delegate send it. - Then record the send with `books.mark_sent`: the invoice (`invoice:7`), the day it went out, who sent it (`by`: the owner, or the agent acting for them), how (`via`: `email`, or `mail`, `portal`, `hand`, or another channel's own name), to whom (`to`: the bill-to email, else the customer's email), whether it was the original or a reminder (`kind`: `original` for the first send, `reminder` after), and the channel's own reference when there is one (a message id). - A send changes no figure and never moves the due date. Several sends are allowed: each is recorded in order, and `books.documents` shows the latest as `last_sent`. - A void invoice can't be marked sent: it should never have reached the customer. An invoice already open, partly paid, paid or written off can (a copy for the customer's records, a reminder). ## 2. Record a customer payment - Ask for the date the money arrived, where it landed, and what it paid. One deposit may settle several invoices of the same customer: pass `applications` with each invoice and its cash amount. - Record how it moved (`instrument`) and the processor's or bank's reference. The books record payments; they never collect them. - If the customer paid more than the invoices owe, the payment is refused: record the excess as a plain entry to 2300 Customer Deposits (no role) and apply it when the work is invoiced (D-49, A-12). - A check or note marked "paid in full" of a disputed amount earns the UCC §3-311 warning. Record only the payment; a lawyer or the payer's agreement settles the rest. ## 3. Pay a vendor bill - Ask for the date, the account it left, and which bills it pays. One payment may settle several bills of one vendor (`applications`). - Record the method and the reference. A card payment is tagged as card and stays out of 1099-NEC (D-40). - Use `books.bills_due` for what is due and when, with each vendor's early-payment discount window. ### Taking an early-payment discount - A bill on "2/10 net 30" takes 2% off if paid within ten days. Pass the discount beside the cash (`discount`); the books post the gross method: the bill is credited in full, the discount goes to Purchase Discounts (6995), and the bank gets the rest. - A discount at most the terms allow and dated on or before their discount date needs no reason. A larger or later one needs `discount_reason` (a vendor who honours it anyway); it is journaled. - A bill with an asset or prepaid line refuses a discount: record the bill net of the discount, or reclassify with an entry Dr 6995 Purchase Discounts / Cr the asset account (D-49). Never split the discount across the asset lines. ## 4. Void, write off, or reverse One of these, and only one, fits what happened: - **Void it** (`books.void_document`) when the document should never have existed: a duplicate, the wrong customer or vendor, a test entry. It is reversed, keeps its id (and, once numbered, its number) and reads void; nothing is deleted. Refused while a payment stands on it: reverse that payment first, and the refusal names it. Use a void for a mistake, never for an invoice that was real. - **Write it off** (`books.write_off_invoice`) when the invoice was real and the work or goods went out, but the customer will not or cannot pay. That is a bad debt: the books post Dr Bad Debt Expense 6990 / Cr Accounts Receivable for what will not be collected, and what it owes falls from that day. The evidence of worthlessness — the collection letters, the bankruptcy or liquidation notice, the collection agency's report — is filed with the write-off in the same call (`upload_id`, or an `existing_attachment_id` already filed), because a bad debt is deducted on all the pertinent evidence (Treas. Reg. §1.166-2(a)). Write off all of it, or part of it with `amount`: a partial write-off is deductible to the extent charged off (Treas. Reg. §1.166-3(a)), and the rest stays owed and in the aging. The books must be on the accrual basis: a cash-basis company never counted the invoice as income, so there is no basis to deduct (IRC §166; Treas. Reg. §1.166-1(e)), and the tool refuses. - **Reverse an entry** (`books.reverse_entry`) when a posted entry is wrong: a payment against the wrong invoice, a wrong amount, a check that bounced, a write-off made too soon. Posted is forever: the correction is an opposite entry linked to the one it reverses, never an edit and never a delete. Reversing a payment puts the invoice back to owing what it did; reversing a write-off re-instates the debt. A bill is never written off: a vendor releases you with a vendor credit or by voiding its own invoice, and until then you owe it (ASC 405-20-40-1). If a vendor's bill was wrong, ask for a corrected bill or record a credit when one is built; void it only when it should never have been entered. ## Recovering a debt written off - **The same tax year**: reverse the write-off — `books.reverse_entry` on the write-off's entry. The invoice reopens, owing exactly what the write-off took off; then record the payment with `books.receive_payment` as usual. Nothing else is needed: within the year the deduction comes back out, and the payment is a payment. - **A later tax year**: do not reverse the write-off. Record a plain entry — `books.draft_entry`, `books.add_line` on each side, `books.post_entry` — debiting the deposit account and crediting a "Bad debt recoveries" revenue account (tax category other income), with a memo naming the invoice. The invoice stays written off, and the recovery is income in the year it arrives (IRC §111); the CPA sees it apart from the year's sales. Neither procedure invents a new kind of movement on the document: the books record what happened, and the invoice's timeline shows the write-off (and, if it was reversed, that it no longer stands). ## 5. A processor's fee - The books never charge or collect; a processor does, and keeps a fee. Pass `fee` on `books.receive_payment` (amount, and optionally the expense account and the processor's vendor). - The entry is gross: Dr the deposit account the net, Dr the processing-fee expense the fee, Cr Accounts Receivable the gross (A-4). Only cash movements count toward a 1099, so the fee is not a payment to the processor. ## A replacement payment arrives before a bounce is known 1. Park it: a plain entry Dr the bank / Cr 2300 Customer Deposits (no role), described with the customer and what it is for. 2. When the first payment bounces, reverse it (`books.reverse_entry`) dated the bounce day; it un-pays its invoices. 3. Apply the parked money with `books.receive_payment`, `deposit_to: "2300"`, dated on or after the bounce, against the invoices it pays. The 2300 balance returns to zero. ## 6. What the CPA will check - The agings tie to 1200 and 2000 at month and year end (they do by construction: `books.control_check` says so; run it at month end and tie the aging to the trial balance before the CPA asks). - Invoice numbers are unique and sequential, voids stay visible with their number, nothing is deleted. - Every bill is coded to its real account (the Form 1065 lines, B-32), never a catch-all, with the vendor's invoice attached and its number recorded, and no bill is paid twice (the same vendor and number twice is refused). - Payments are matched to documents, and card payments are identified (excluded from 1099-NEC: Treas. Reg. §1.6041-1(a)(1)(iv)). - Customer deposits are liabilities (2300), never netted inside receivables; Schedule L lines 2a and 15 come straight from the control accounts. - Approvals and three-way matching are deliberately not adopted for a two-member LLC: light governance, by decision. - Every write-off carries its reason and its evidence of collection efforts. Write-offs are not used in place of a credit memo for a valid invoice, and never to hide a mistake that a void would show. Whether a debt is worthless, and in which year, is a tax judgment that stays with the CPA: the books flag each write-off made this year in Needs attention, with the evidence beside it, until the year ends. ## The evidence rule Every entry needs its receipt ({evidence_rule}). A document the books post themselves — an invoice, a bill, a payment, a write-off — carries its own: the issued copy, the vendor's bill, the payment's reference, the evidence of worthlessness. A reversal needs none of its own: its original carries it.