There are only four places in the software where you will enter your business transactions. Each one is outlined below and explained in more detail a little later on.
Customers This is where you create or enter the invoices to your customers. This should only be used for customers you offer credit to i.e. customers who do not pay you straight away.
The Customers tab may not be visible to you if you specified that you do not offer your customers credit in the initial set up wizard.
Suppliers This is identical to Customers except it is to handle your supplier invoices rather than your customer invoices. Supplier invoices are invoices from your suppliers that have offered you credit, i.e. you don’t pay them straight away. You may not be able to see the Suppliers tab in your account if you specified that your suppliers do not offer you credit in the initial set up wizard, however, you can toggle it back on in the settings.
Banking This is where all of your cash/banking transactions are entered. Here you will have a number of accounts including your bank accounts, credit cards, cash and Paypal etc. This is where you will enter the majority of your business transactions.
Adjustments This is used to transfer amounts between categories. You may never use this feature as it is more for adjustments at your year-end such as depreciation of assets etc. Your accountant will either enter the adjustments for you or give you the information to enter them yourself.
From here you can create new customers and enter or create (depending on whether you want the software to create invoices) invoices and credit notes you have issued to customers. Remember this is only to be used when you have customers that do not pay you straight away. Instant sales can go straight through banking.
Entering customer invoices
If you create your customer invoices yourself in Microsoft Word or through other similar software, you will enter your customer invoices in a batch as below:
Simply click ‘+ Invoices’ and start entering your information from the sales invoices you have produced for your customers.
For each invoice you should enter the date on the invoice, select the customer you issued it to (you should add the customer if they are not on the list), the appropriate sales account (if you have more than one), the reference on the invoice (usually the invoice number) and the net amount (amount before VAT is added). Please note, if you specified in the initial wizard that you are not VAT registered then you will only have the total amount field.
If you are VAT registered, there are three different VAT codes you can use on your invoices:
ST: This is standard VAT which you will mostly use, this is set at the current rate; 20% but can be overtyped if some of the services/products you provide are the reduced rate of 5%
EX: This covers services/products you provide that are exempt or zero-rated. Examples of exempt sales are insurance and education. Examples of zero-rated sales are food and books.
NV: This covers transactions that do not relate to VAT. So if you sell to countries outside of Europe or transactions where VAT does not apply such as payments to employees, loans etc.
If you have chosen for the software to create your customer invoices then it’s fairly self-explanatory:
Simply enter the same information as above but in an invoice format. This can then be saved as a PDF, printed or emailed to your customer. You can add your company logo in the invoice settings.
Payment reminders and recurring invoices are also possible.
When customers pay you for invoices you have issued to them, you can apply the payments to the appropriate invoices when you process your banking transactions in the Banking tab (explained in more detail later).
This is identical to the Customers tab but handles invoices from your suppliers rather than invoices you give to your customers. Remember this is only used for invoices you receive from suppliers that you do not pay straight away.
For example, you might have an account with a stationery company where you order stationery and pay them each month. The invoices from that supplier should be entered here and the payments you make to them through the banking tab. If you buy stationery from a physical stationery store, for example, then you would simply enter those transactions in the Banking tab because you are paying straight away (no supplier invoice required).
When you click on the banking tab, a list of your bank accounts and their balances will be shown. In the example above you can see this business has one bank account, a cash account (this may be a till or petty cash) and a merchant account (for taking card payments).
From here you can add accounts, drill down into accounts (to view how the balance is made up), edit/delete them and enter new banking transactions, either manually or by importing them.
To enter new manual transactions transactions click ‘Money in/out’.
When entering your banking transactions, you are essentially copying out your bank statements into the software. There will be a live balance on the screen (click ‘show running balances’) so if at any point the balance on screen does not match the running balance on the bank statement then you know there is an error somewhere. As long as the balances agree, a bank reconciliation is not needed.
Each transaction will need the following details:
Date: This is the date of the transaction on the bank/credit card statement.
Bank Account: This is the account the transaction relates to; Natwest account, Paypal etc.
Type: There are four types of transactions:
- Money In: This type of transaction is for amounts received into your bank account. This could be loans received, refunds, sales you have made (that are not from customers you offer credit terms to).
- Money Out: Any amounts going out of your bank account apart from payments made to suppliers that have offered you credit.
- Customer Receipt: This is for amounts received from customers that you have issued an invoice to.
- Supplier Payment: This is for amounts paid to suppliers that have issued an invoice to you.
Category: If the transaction is a customer receipt or supplier payment, this option allows you to select the customer/supplier it relates to. You will then be able to select the invoice the amount relates to. Once the invoice is selected you can move on to the next transaction. You do not need to separate the VAT amount for customer receipts and supplier payments as this has already been done at the invoice level.
Description: Entering a description helps you to understand what the transaction relates to if you refer back to it later. This can be copied from the bank statement or you can make up your own
Tax code: If the transaction is money in or out and your business is VAT registered then the relevant tax code should be selected (see explanation above under ‘Entering Customer Invoices’).
Net amount: If the transaction is money in or money out you should enter the net amount here (the amount before VAT). Alternatively, if you do not know the net amount you can enter the gross (total amount) and the VAT will be calculated automatically.
To import your transactions rather than manually enter them, you will firstly need to download the transactions from your online bank account (usually CSV or OFX format) for the period you would like to upload. Then simply click on ‘Import Transactions’ in the banking tab and follow the wizard. Your transactions will be imported ready for you to categorise and confirm them. Bank feeds will also be available very shortly.