Ask the Expert - Statement Charges versus Invoices - Accounting Software Secrets
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Ask the Expert – Statement Charges versus Invoices

Ask the Expert – Statement Charges versus Invoices

Ask the Expert – Statement Charges versus Invoices

Q – I am relatively new to QuickBooks and I am trying to figure out how to best enter the amounts my clients owe me for services I have performed. Should I be using statement charges or invoices? What are the pros and cons of each?

A – There are many variables that make one choice better over the other depending on the business, thought process of the owners, and procedures in general.

Typically invoices are sent as work is completed, and statements are used when an invoice becomes past due. For some types of work, it is more efficient to enter statement charges directly into the customer register then send a statement regularly with the statement charge detail. With the statement, there is not the same level of customization as the invoice. For example, additional description lines without an item are not available; the subtotal type lines are also not available. For some businesses this is important, for others it is not. This method is not recommended if selling taxable items, an invoice would be required for accurately calculating the amount of sales tax due.

With QuickBooks Pro and higher, there is a timesheet feature that can be helpful for tracking what time needs to be invoiced. When using this feature, you must use an invoice to change the time from billable to billed automatically. For situations where they projects are priced at a flat rate (also known as “value pricing”) the time will not be invoiced directly and should be either marked as not billable, or, if the time is not paid through QuickBooks for job costing purposes, the time sheet feature may not be needed at all.

Statements can be used with either invoices or statement charges as a summary of work performed but not yet paid. With version 2003 additional flexibility has been added such as: the ability to have the due date print or not (requires release 2 or higher); to add the detail lines from the invoice to the statement; and to create balance forward or open invoice statements.

In summary, statement charges work well for single line entries onto a statement. Invoices are preferred if additional details are needed. With either option it is possible to create a statement to show the amount due/past due.


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