How to Bookkeep Unbilled Income and Expenses at Year-End

Create the Unbilled Income Asset Account:

1. From the left-side menu, click Accountant > Chart of Accounts.
2. Click on the 'New Account' button.
3. In the Account Type dropdown, select Asset.
4. Name the account Unbilled Income or something similar.
5. Click 'Save'.

Record the Unbilled Income Journal Entry:

When you determine how much income you’ve earned but haven’t invoiced yet, you need to record the income.

1. On the left-side menu, click Accountant > Journal Entries
2. At the top right, click 'Add Entry'.
3. Create the Journal Entry:
   - Debit: Unbilled Income (Asset) account for the amount of income earned but not yet invoiced (e.g., €1500 from the partially completed projects).
   - Credit: The relevant Income/Revenue category for the earned amount (e.g., Sales/Revenue account for project income).

Reverse the Entry When Invoicing the Customer:

When the invoice is created for the customer, reverse the initial journal entry:

1. Create the Journal Entry:
   - Debit: Sales/Revenue (to reverse the earlier income entry).
   - Credit: Unbilled Income (Asset) (to clear the unbilled income balance).

This ensures that once you invoice the customer, your unbilled income balance is cleared and the income is correctly recorded in the revenue account.

Bookkeeping Unbilled Expenses:

Unbilled expenses refer to expenses you’ve incurred but haven’t received the bill for yet. For example, if you have a service that’s been provided, like a phone bill, but you haven’t received the invoice yet, you should still record the expense.

Create the Unbilled Expenses Liability Account:

1. Go to Chart of Accounts
2. On the left-side menu, click Accountant > Chart of Accounts.
3. Create a New Account
4. In the Account Type dropdown, select Liability.
5. Name the account Unbilled Expenses.
6. Click 'Save'.

Record the Unbilled Expense Journal Entry:

1. On the left-side menu, click Accountant> Journal Entries.
2. At the top right, click 'New Entry'.
3. Create the Journal Entry:
   - Debit: Unbilled Expenses (Liability) account for the amount of the expense you’ve incurred but haven’t been billed for yet.
   - Credit: The relevant Expense account for the type of expense you’re recording (e.g., Phone Bill, Utilities, etc.).

Record the Bill When It Is Received:

When you receive the bill and are ready to pay it, you need to mark the bill as paid and reverse the original journal entry:

1. Create the Journal Entry:
   - Debit: Unbilled Expenses (to clear the liability that was recorded earlier).
   - Credit: Bank Account or Accounts Payable (to reflect the actual payment of the bill).

This clears the liability balance and ensures the expense is recorded in the appropriate accounts once you pay the bill.