Budget - Business Income shows in budget when client is invoiced not when payment is received

Scooterlam
Scooterlam SuperUser, Windows Beta Beta
I set up a budget for my business in Quicken in 2017.   I am a cash based business.  I use a [client invoice] account to receive client payments, matching payments against the Quicken invoice that I sent.  The client payments are received via the "receive a customer payment" form, then directed into my business checking account.  As I understand it from Quicken Help, this A/R type account [Client Account] can be used for both accrual and cash accounting methods.
In my 2017 budget I have a category called business income and it is assigned to the category group of the same name.  I ensured the category was tied to Sched. C Gross Receipts (image 1).  In 2017,  I noticed that my client invoiced amounts showed up in my budget "actuals" column when they were invoiced and not when payment was received (image 2).  
I didn't expect this at all.   I would have expected the client payments to show as "actuals" in my budget when I "received the customer payment" in Quicken.  So..... how does Quicken's budget feature treat business income actuals - when invoiced or when payment(s) received? 
Fast forward through 2018 and into 2019, I now have the client on a payment plan and I am receiving periodic payments.   I was never able to show these client payments as business income in my budget through 2018 or 2019 (image 3).  Each time I would receive a client payment, I would use the "receive a customer payment" process.
I've taken yet another effort to figure out what is going on here.  My expectation was to budget-out the client payment plan and show payments against this plan regardless of when it was invoiced.   I can't seem to figure out why client payments do not show in my budget actuals, business income category when....
  • The tax center's projected tax table and income tab shows correctly business income (client payments) (image 4).
  • Business Reports> Profit/Loss Statement, Cash Flow, and Schedule C and Tax Schedule show correctly business income (client payments).
Oddly enough, the Business Report > Accounts Receivable also shows the same business income (client payments) when the [client invoices] account (which I thought is A/R) shows the value of the invoices less customer payment to date. Two very different figures.
What is happening?    Is there some connection not being made between A/R account, business income, tax line assignments?  Have I used the A/R account incorrectly when I am a cash business?  Are Quicken budgets incorrectly attributing  client invoicing rather than client payments?   Illegal category naming (business income) named the same as the category group.   Running out of ideas!  Anyone experienced in Quicken's business / budget features who can provide any addition insight? This one is escaping me!

Scott
2019 QW HBR r18.15

Image 1


Image 2 - Invoices sent, budget shows actuals = invoice value in the month invoice is sent


Image 3 - Budget does not show actuals upon customer payment receipts in Jan and Feb.


Image 4




Answers

  • Quicken Sarah
    Quicken Sarah Administrator, Moderator mod
    Hi Scott,

    Thank you for taking the time to report this issue to the Community, I appreciate the amount of details provided and the screenshots of the budget view.

    Based on the information provided, the categories, tax line assignments and transaction entry process should all be set-up correctly so I tested this behavior in my personal data file and for me, the invoice payment is reflected in the Budget Actuals in the month the payments were received as they should be, so I'm not able to replicate this issue.

    Is the budget carried forward from a previous year or was it created as a new budget?

    Would you be willing to create a new "test" budget, in the same data file, customized for only the business related categories and accounts? 

    If so, are the payments posting in the budget actuals for when the invoice is created?  Or does the payment show up in the month it was actually received as it should be?

    Thanks!

    Sarah
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    edited March 2019
    ...Is the budget carried forward from a previous year or was it created as a new budget?

    Would you be willing to create a new "test" budget, in the same data file, customized for only the business related categories and accounts? 

    If so, are the payments posting in the budget actuals for when the invoice is created?  Or does the payment show up in the month it was actually received as it should be?

    Thanks!

    Sarah
    Hi Sarah, 
    Thanks for having a look at this and confirming the expected result!  Pls. note, I also sent you a PM with a full complement of images to accompany this post.  For now, for others that might be interested, I think this post can stand mostly on its own w/o the images.  Sorry for the lengthy write-up....there will be some glassy eyes!

    The summary...
    For the newly created business budgets, the income posted in budget "actuals" are, as before,  when the client invoice is created.   Received client payments, categorized as "business income" are never shown in the budget "actuals".

    Regarding your questions/requests...

    I keep a separate Personal Budget and a Business Budget.  For both, I carry forward only the prior years budgeted categories to the next year budget. 

    As requested, I created a test business budget with only business income and a few expense categories.  Also, I selected only business accounts, specifically, [client invoice], [Business Checking] and [Business Credit Card] accounts.

    In the NEW 2019 test business budget, as before, the two client payments in February 2019 did not show as actuals in the "Business Income" category.  For reference, I've attached a 2019 YTD Schedule C Report showing the client payment received along with a screen grab of the newly created business budget. 

    I rolled back the newly created 2019 budget to 2018, using "categories only" and find again, the client payments did not show as actuals in 2018.  There were 2 client payments that showed on the 2018 schedule C but still do not show as Actuals in the 2018 budget.

    I rolled back the 2018 budget to 2017, again using "categories only".  I find again the client payments in November and December 2017 did not show as actuals in the budget.  But, as previously shown, you can see in the 2017 budget, the 3 client invoices do still show as actuals.  For reference, I've attached a 2017 Schedule C Report showing the business income received from the client payment.

    A few "extras"....to take you further back in the history/process...
    • Did the error manifest itself in a prior version of QW and carry through to today?  I upgraded to Quicken 2017 Aug. 1, 2017 and likely wrote all three invoices from the then current 2017 HBR revision.  I would have purchased, installed and updated on or about that date.   I purchased to Quicken 2018 Subscription on Oct 24, 2017.  So the last invoice in 2017 may or may not have been created under QW 2017.   I have not invoiced from my current version of QW 2019r18.15.  I can do a QW 2019 version test invoice/receipt of payment next, if you like.
    • When I invoice, I selected "Business Income" in the Invoice dialog's category field and properly identify customer, project and business tag.
    • When I "receive a customer payment",  the payment was always a partial payment applied to the first (oldest) invoice, attributing receipt to the client name, deposited to my business checking account and a check mark against the oldest invoice in the "outstanding invoice" table.
    • Lastly,  I noted in the schedule C report, the client payment shows multiple lines (6x) that seem to coincide with the number of billing lines on the original invoice   They also seem to have some pro-ration applied. I expected only one line item showing the customer payment on Schedule C.   Is this expected behavior?

    All for now, :)

    Scott
    2019QW HBR r18.15

  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    edited March 2019

    • Did the error manifest itself in a prior version of QW and carry through to today?  I upgraded to Quicken 2017 Aug. 1, 2017 and likely wrote all three invoices from the then current 2017 HBR revision.  I would have purchased, installed and updated on or about that date.   I purchased to Quicken 2018 Subscription on Oct 24, 2017.  So the last invoice in 2017 may or may not have been created under QW 2017.   I have not invoiced from my current version of QW 2019r18.15.  I can do a QW 2019 version test invoice/receipt of payment next, if you like.

    So my curiosity got the better of me and I decided to have a look to see if a new invoice created in my current version of Quicken would make any difference.  Well it did not...Same issue as previously reported.

    For posterity here is what I did...

    1.  Made a copy of current data file.  Made data file copy my current data file.
    2.  Created new test invoice using same customer, tag et al, data
    3.  Verified that new test invoice shows up as Actuals in my business budget, under business income.  It does - But it shouldn't show since it was an invoice and not a customer payment.
    4.  Performed "Receive a customer payment" recording a $500 partial payment against the newly created $1000 invoice.
    5.  Pulled a Schedule C report and verified that the new "business income" of $500 was correctly attributed to business income category and other meta data.  It does.
    6.  Verified that the $ 500 client payment received DID NOT show up in Acutals, under "Business Income" category of my business budget.  It does not, but it should.

    ~Edit~
    One last-ish thought.....Its seems on the surface that Quicken may not be respecting "cash basis" accounting in "budgets".   If I was an accrual based business, an invoice to a client could mean revenue recognition at that point and thus I might expect to see the invoice amount show as actuals in the budget in the month invoiced, right?   The other situation is that the customer can ask to be invoiced early but revenue recognition might come later, when a pay point reached, delivery made, acceptance granted, or a title change occurs (risk of loss) et al.  right?  Not quite sure how that second scenario may show in the budget feature.  Nonetheless, as a test, I changed the Schedule C report to be an accrual based report and found that the entire $1000 test invoice shows - what I might expect - and what is currently shown as actuals on the budget.   Not sure if this is a clue or not related to the original issue!  :)

    Scott
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    Update to the community....  I understand from Quicken Sarah that there is now a ticket created on this issue.  Hope that someone can do some RCA on it.  Thanks @Quicken Sarah!
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