Recurring bills and invoices: set them once, never forget

Why make anything recurring

A surprising share of a small business's transactions are the same every month: rent, a loan payment, insurance, software subscriptions, a monthly retainer invoice to a client, a maintenance contract. Typing them in each month is slow, and forgetting one is worse. A forgotten retainer invoice is income you never asked for; a forgotten rent bill makes last month look more profitable than it was.

A recurring transaction is a saved template with a schedule. Set it up once and the software either enters it for you on the right date or reminds you that it is due. In QuickBooks Desktop these are called memorized transactions.

What to make recurring (and what not to)

The test: if the amount, the account and the other party are the same every time, a schedule saves work. If any of them change, a template still helps, but enter it by hand with the real figures. Loan payments are a middle case: the total is fixed but the interest part shrinks, so update the split now and then (see how to record a business loan). Depreciation works well as a recurring journal entry once the schedule is worked out (see fixed assets and depreciation basics).

Setting the schedule

Every recurring transaction needs the same few decisions:

• How often: weekly, every two weeks, monthly, quarterly, twice a year or yearly.
• The next date: the date the next one should carry. For rent due on the 1st, that is the 1st of next month.
• When it ends: a lease end date, or a number of payments for a loan or an instalment plan. Without an end, a finished contract keeps billing.
• How early to enter it: a bill due on the 1st might be entered a few days before, so it shows up in your bills to pay in time.

For a recurring invoice, check the terms (so the due date is right), the sales tax on each line and whether the customer wants a purchase order number on it. For a recurring bill, check the vendor's terms so it falls due when they expect payment.

Automatic or a reminder?

Most software gives you a choice for each template: enter it automatically when it is due, or just remind you. A sensible rule:

• Automatic for amounts that never change and that you would never skip: rent, fixed retainers, transfers, standard journal entries.
• Reminder for anything you want to look at first: variable bills, invoices to customers who sometimes pause, anything you might change this month.

Whichever you choose, look at what was entered. An automatic entry is still your entry; it shows up in your reports, your sales tax and your customer's statement exactly as if you had typed it.

Mistakes to avoid

• Doubling up with bank downloads. If rent is entered by a schedule, and the bank feed or statement import also adds it, it is counted twice. Match the bank line to the existing entry.
• Old prices. When a price or rate changes, update the template, not just this month's copy.
• Old sales tax rates. When a tax rate changes, recurring invoices keep the tax set on the template until you change it.
• Templates for things that have ended. A cancelled subscription that keeps entering bills makes it look as if you owe money you do not.
• Dates in a closed period. If your books are locked with a closing date, an entry dated inside the locked period is refused; move its next date forward.
• Forgetting to send. Entering a recurring invoice in your books is not the same as sending it to the customer. Build the sending into your routine.

A yearly review

Once a year, ideally as part of your December month-end close, open the list of recurring transactions and ask of each one: does this still happen, at this amount, on this date, to this account? Delete what has ended, update what has changed, and add anything new you have been typing by hand all year.

In AcboBooks

In AcboBooks, the Make recurring button (or Ctrl+M) saves a template from a journal entry, Enter Bill, Write Checks, Create Invoice, Sales Receipts, Create Estimate, Credit Memos, Purchase Orders, card charges, Make Deposit or Transfer Funds. The Recurring Transactions list (Ctrl+T) shows every template with Enter, Schedule and Delete buttons. Enter posts a copy on a date you pick. Schedule sets the frequency (daily, weekly, every two weeks, monthly, quarterly, twice a year or yearly), the next date, an optional end date or number remaining, and how many days in advance to enter it. Tick "Automatically enter when due" and AcboBooks enters it when you open the company. Due templates are also listed on the Home screen as "Recurring transactions due", and "Post due recurring now" on the Recurring Transactions list enters them all. A recurring bill comes in with its due date from the vendor's terms and appears in Pay Bills; a recurring invoice gets the next invoice number.

Frequently asked questions