In accounting practice, it is common to issue invoices first and collect money later
First, invoices are prepared based on relevant documents such as sales contracts or orders. The invoice should clearly state information such as the name of the product, quantity, unit price and total amount. Then, submit the invoice to the customer and wait for the other party to confirm receipt of the payment. If the customer has already paid, the following entries can be made:
Debit: Accounts receivable (or bank deposits).
Credit: main business income
This entry indicates that the company has received payment from customers and recorded it under the "Accounts Receivable" account. At the same time, the main business income also increased by a corresponding income.
Secondly, when the customer does not pay the payment in time, corresponding dunning measures need to be taken. For example, you can contact a customer to ask if a payment has already been madeOr send an email reminding customers to complete their payment as soon as possible. If the customer still does not repay the loan on time, you can consider resolving the dispute through legal means. In this process, it is necessary to record the relevant expenses, such as attorney fees, litigation fees, etc. The occurrence of these charges can be recorded as other receivables on the debit side and processed at a later stage. Here's how:
Borrow: Other receivables - xx customer borrowings Law firm fees
Credit: Accounts Receivable - xx customers
This entry indicates that the company is recovering from the customerAt the same time as the arrears, you also need to bear the related expenses.
Finally, if there is no response from the customer after many reminders, you can consider returning the goods to the merchant. In this case, the company needs to charge a certain loss to the merchant on the basis of the return cost. This process requires the preparation of corresponding return documents and the return procedures in accordance with the prescribed procedures. The value of the goods returned to the company can be recorded as a loss on the debit side of the inventory. The specific accounting treatment is as follows:
Borrow: Loss on inventory decline
Credit: Other payables - xx** merchant return freight
This entry means that the company needs to bear the loss incurred due to the return and reflect the loss in the financial statements.