Does an invoice automatically generate a transaction?

Therese

Question: when we upload and process receipts in the menu purchases ---> receipts, the receipt is automatically added to the menu accounting and a transaction is generated. Does this apply to invoices too? Does an invoice issued in sales ---> invoices automatically generate a transaction and if yes, at what point.
Thanks for clarifying! Therese

Alexia

Hi, @Therese.

The short answer is yes! Here's a longer one:

When you create an invoice in Wave, it immediately records it as income. Wave works in accrual-based accounting, which means that income and expenses are created at the creation of an invoice or bill, rather than upon payment. This first part of the process won't appear on your Transactions page, but you'll see that in your reports.

Once you record a payment, you'll see that transaction appear on the Transactions page as an income to your bank account, categorized as "Payment for an invoice".

To explain this with double-entry accounting...

• When you create an invoice, you credit your Sales income account and debit Accounts Receivable.
• When you record a payment for an invoice, you credit Accounts Receivable and debit your bank account

Therese

Thanks for your help! I suspected as much. I checked the transactions after sending the invoice, but (as you explained) it wasn't yet there and as we have not yet recorded any invoice payment, I couldn't check.

Alexia

More than happy to help, @Therese!