Is there a way to record revenue based on the service date? I am invoicing customers in advance of when the service is actually provided.

Hi kfontaine,

This is a great question. Making sure your books are tracking the way you'd like them will ensure that you have a solid understanding of where your business financials stand so you can plan and move forward with your work. I'd be happy to go over how QuickBooks Online works with revenue recorded from your sales entries.

To match accounting standards, QuickBooks Online includes two accounting methods: cash and accrual. Cash-based accounting means that the program displays information in reports based on whether the funds have actually be received and accounted for in your books. Accrual-based accounting takes into consideration funds that you still have yet to receive in your reporting. It doesn't doesn't add the funds to your bank accounts for you or anything like that, but rather gives a sort of projection of how things are faring with pending sales and expenses.

With what you've mentioned, it sounds to me like you've created an invoice for the customer, but don't want to see the revenue from it until the payment is actually received on the service date. Cash accounting would benefit you here, and here's how you can change your accounting method in QuickBooks Online.

1. Select the Gear icon.
2. Choose Account and settings.
3. Click the Advanced tab.
4. Click the Accounting section.
5. Choose Cash from the Accounting method drop-down menu.
6. Click Save.

This will change the settings for your books overall. If you're simply looking to see the change on singular reports, you can change the accounting method on a report without changing the method for the account overall. When you run a report, choose from the Accounting method toggles at the top and select Run report. Here's a more in-depth look at report customization options if you're interested: Customize reports in QuickBooks Online

If you don't already have it configured, you can turn on the Service date field on sales forms while you're in the Account and settings area. In that part of your books, click Sales, then the Sales form content section to see where you can toggle that option. Click Save to complete the change.

I hope this helps! If that's not quite what you're looking for, let me know in a reply. I want to make sure you're good to go.

It would be good to note here that the the only businesses in Canada allowed to use the Cash Method of accounting are Farmers, Fishermen, and Self-Employed Commission Agents.

From CRA:

Generally, you have to report business income using the accrual method of accounting. Farmers, fishers, and self-employed commission agents can use the cash method or the accrual method to report income, but not a combination of both.

The accrual method

Under the accrual method, you have to report income in the fiscal period you earn it, no matter when you receive it.  You can deduct allowable expenses in the fiscal period you incur them, whether or not you pay for them in that period. Incur usually means you paid or will have to pay the expense.

The cash method

If you use the cash method, you report income in the fiscal period you receive it whether it is in cash, property, or services. You deduct allowable expenses in the fiscal period you pay them, except prepaid expenses. If you are a farmer, fisher, or self-employed commissioned sales agent, you can use the cash method.

This info is all found in the following CRA web link:  https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/business-income-tax-reporting/accounting-your-earnings.html

This clearly states that unless you fall under the three categories that allow the cash method, you must use the accrual method, which means recording the sale or the expense in the period in which it occurred, regardless of when you get paid or when you pay the bill.  Accounts Payable and Accounts Receivable must be a part of your bookkeeping.  This is based on the accounting theory (both GAAP and IFRS) of the matching principle; income and related expenses should be recorded in the same period.

I have a golf cart rental business and I collect the rental fees in advance of the actual service date.  If the client reserves a golf cart in March and pays the Sales Receipt in full, but the rental (service date) is not until May, how can I record May as the month for rental income?  Or at least show on an income report based on the service date, not the date the invoice or sales receipt was paid in full?

This is important because the expense of the rental will occur in May.  A good example would be commissions paid to the property manager that referred the client.would be payable the month of the actual rental (service date), not the date of the paid sales invoice.

Not sure this is possible.

Thanks!!