The Realized Sales Report was introduced in response to requests from users.
As current users are aware, FloristWare uses the standard (and recommended) accrual method of recording sales. Please see the definition of the accrual method (as it relates to recording sales) below:
Under the accrual method, you record business income when a sale occurs, whether it be the delivery of a product or the rendering of a service on your part, regardless of when you get paid.
To be more precise, under the accrual method you recognize an item of income when all the events that establish your right to receive the income have happened, and when the amount of income you are to receive is known with reasonable accuracy. If you estimate an amount due to you with reasonable accuracy and record it as income, and the amount you eventually receive differs from your estimate, you should make an adjustment to your income in the year you actually receive the payment.
As you can see a question arises if payment is not made at the time of the sale - if for example the sale is charged to an account or payment is deferred. The sale is still recorded on the day that it was made and all of your figures reflect that - sales taxes are due, the sale appears in your income figure, etc.
The people who are interested in your records don’t really care when you get paid. If you did have to write off a bad debt you would make an adjustment in the form of a bad debt expense down the road as discussed at the end of the second paragraph of the definition shown above.
This is the way that municipal/state/provincial/federal governments want you to do it. And, to be safe, this is the way you should do it.
However, some stores are absolutely adamant that they do not pay sales taxes or consider a sale as being made until such time as they receive payment in full. If they make a sale today and charge it to an account they don’t want to record it as income or be eligible to pay sales tax on it until they themselves get paid. This is known as the "Cash" method.
In the eyes of the government this is almost always seen as wrong. However, we also respect the position of our users and their right to run their businesses as they see fit. And, since some of them had been working this way for years, we chose to give them the option of continuing to record sales in this fashion. The new Realized Sales report shows sales and sales tax figures according to the date the sales were paid - not the date the sales were made.
We are happy to support the practices of our users but please understand that this one concerns us greatly. Many stores that have been recording sales using the cash method are doing so because they do not know it was technically incorrect. It is a completely reasonable and understandable explanation, but that doesn’t necessarily get you out of the woods with the government. Another problem is that many florists who use the cash method for recording sales use the accrual method for recording expenses - picking and choosing the method that works to their advantages according to the situation. This is much harder to defend.
If you are currently using the accrual method you should stick with it and disregard this new report entirely. If you are currently using the Cash method because you did not realize doing so was technically incorrect we urge you to consult your bookkeeper/accountant and consider switching to the accrual method as soon as possible. If you are committed to the cash method then you have the new Realized Sales report to help you.
