Invoices: selling on paper and in the books

What an invoice does

An invoice does two separate things, and keeping them separate prevents most of the confusion in this chapter.

1. It is a document. It goes to a customer, it shows what was supplied, what it cost, how much GST is included, and when payment is due. ByteBook prints it with your letterhead, and the same page can be saved as a PDF or posted.
2. It is an accounting entry. When the invoice is posted, the books record money owed to you, the revenue you have earned, and the GST you have collected.

You can create an invoice as a draft, which does the first job and not the second. A draft is a document you can still change. Nothing in your reports moves until you post it. That distinction is the single most useful thing to understand about the Invoices screen.

Raise one

1. Go to Invoices → New invoice.
2. Choose the customer. If they are not there, add them first under **Customers & suppliers**, because the customer's GST number prints on the invoice and is needed for a valid tax invoice over $50.
3. Add the lines: what you supplied, the quantity, and the price.
4. Decide how the price is expressed. ByteBook stores every amount **excluding GST** and holds the GST separately, so no report ever has to guess which way a number was meant. Tick the inclusive box if the price you were given already includes GST, and ByteBook will take the GST out of it.
5. Tick put it in my books now if you want it posted immediately. Leave it clear to keep it as a draft.

When revenue is recognised

This is where the accounting standard earns its place, and it is worth reading slowly.

Revenue is recognised when the business satisfies a performance obligation by transferring a promised good or service to the customer NZ IFRS 15.31. Not when the invoice is raised, not when the money arrives: when the promise is kept.

For most small businesses, those three dates are close enough together that the distinction does not bite. It bites in these cases:

• Stage payments on a contract. The builder's simulation raises several invoices for one job. Each invoice recognises revenue for the work it covers, because that is the work that has been transferred.
• A deposit taken before any work is done. Money received is not revenue yet. It is money you owe back in services.
• A service delivered in March and invoiced in April. The revenue belongs in March.

ByteBook will not stop you from posting an invoice on the wrong date. It records the date you enter, and the reports follow it. Choosing the right date is the job.

What posting does to the books

Posting an invoice creates one balanced entry. Three things happen at once:

Side	What it means
Money owed to you goes up	An asset. The customer owes the business
Revenue goes up	Income, recorded excluding GST
GST collected goes up	A liability you owe Inland Revenue, not income

The last line is the one people get wrong by hand. GST collected on a sale is never income. It is money held on behalf of Inland Revenue until the return is filed, which is why ByteBook keeps it in its own account and reports it in box 9 of the return.

Common mistakes

• Treating GST collected as income. Check that revenue in the profit and loss report is the figure excluding GST.
• Raising an invoice and assuming it is in the books. Look for the word draft. A draft is a document, not an entry.
• Entering a GST-inclusive price as if it excluded GST. The invoice then overstates revenue by the GST. ByteBook's totals make the error visible: the invoice total will not match the amount you agreed with the customer.

In the transaction list

Every posted invoice appears under Transactions with its own entry, and the entry shows both sides. Open one and read it. Learning to read the entry behind the document is the skill this screen exists to teach, and an auditor who cannot read the entry behind a document is stuck at the first question.