Basic accounting and terminology

Iteras makes it easy to invoice your subscribers or members because most things are handled automatically. If you're new to accounting, it may be helpful to get a few key concepts in place to begin with.

Iteras keeps track of the subscriptions and what is being delivered to the subscriber. When a customer is due to be charged, the system generates an invoice. Creating an invoice means that someone owes us money.

If we later find out that we invoiced too much – for example, because a subscription was canceled – we can issue a credit note. One way to think of it is that the credit note reduces the invoice, since in Iteras only invoiced amounts can be credited. For example, if we invoiced €100 and realize that was €50 too much, we create a credit note linked to the invoice for €50. So now the customer owes us €200 – €50 = €150.

If too little was invoiced, we need to issue a new invoice for the additional amount. Alternatively, we can credit the original invoice entirely and issue a new one for the full amount.

Technically, we do not alter existing invoices, as it is important to maintain a record of what has happened

It’s not enough to track what people owe – money also needs to come in. If we’ve invoiced a customer €100, we expect to receive a payment of €100 from that customer shortly after.

Iteras is designed to make it quick and easy to handle many customers, and with many customers, there will inevitably be cases where some overpay and others underpay (particularly with older payment methods such as Danish 'indbetalingskort', since with card payments and other modern payment method the exact amount is charged, as long as the payment goes through), so Iteras keeps separate records of payments.

For example, if we have an invoice for €100 and receive a payment of €100, Iteras will allocate the €100 to that invoice, marking it as fully paid.

What if we then credit €50 on the invoice? The invoice is still fully paid, but the system will return €50 to the payment, so that €150 is linked to the invoice and €50 remains unallocated. That €50 can then be refunded, if the customer prefers. Otherwise, it can remain as a balance on the customer's account – maybe we issue a new invoice for €150 to the customer a few months later, and the €50 will automatically be applied to that invoice, showing as an amount already paid.

It’s important to understand that allocating a payment to an invoice covers the debt on that invoice, but it does not reduce the invoice itself – the only way to reduce an invoice is by issuing a credit note. So when the new invoice for €200 is issued, it will be for the full amount of €200, but it will state that €50 has already been paid, and the remaining amount due is €150.

Some accounting systems don’t keep track of which invoices are paid, only the total invoiced amount per customer and the total amount paid – the balance. Iteras provides more precise bookkeeping, partly because some customers expect that once they’ve paid a specific invoice, it is fully paid, and also to make it easier to follow up on specific outstanding balances. The invoice overview in a customer’s profile shows the total balance, and on each invoice and payment, you can see how the money is allocated.

If there’s an error in a subscriber’s payment, the issue often resolves itself thanks to the automation built into Iteras.

If too much is paid, the system shows a surplus which will be automatically allocated against future invoices.

If too little is paid, the system can send a reminder for the outstanding balance.

If the payment is made toward a different invoice for the same subscriber, the funds are automatically reallocated. If necessary, you can manually release and reassign the funds.

What if a customer doesn’t pay at all? There are basically two things we can do:

Iteras does both automatically, depending on the configuration. Reminders in Iteras are issued when the due date of the invoice is passed, plus a grace period to account for payment processing time.

There are many cases to handle when sending reminders, so Iteras includes automation to manage this smoothly. For example, what if a customer accidentally pays €104 instead of €105? It may be better to credit the remaining €1 – rather than sending a dunning letter for an amount this small.

You can adjust the automation rules under settings to fit your preferences.

Technically, Iteras treats dunning letters almost like invoiced services, and conceptually it may be easiest to think of them this way.

Depending on how you want to summarize your accounts, Iteras can generate various financial reports by aggregating invoiced amounts, credited amounts, payments, and payouts. These can be used both internally (e.g., to understand what is profitable) and for tax and VAT reporting to the authorities.

The Revenue report shows how much has been invoiced and credited in a given period – i.e., how much we are expected to collect. It also shows accrued revenue, which is the amount that corresponds to the deliveries made in the period. If you invoice €120 on January 1st for a subscription to a digital magazine of 1 year, the invoiced amount in January will be €120, but the accrued (i.e. delivered) amount in January will be roughly €10 (roughly, because January has 31 days, so it's not quite 1/12 of the year). This allows you to keep track of the amount you owe the customers, i.e. the prepaid amounts where a delivery has not yet been made.

The Payments and payouts report shows all payments and payouts registered in the system. It can be used to check how much money has actually come in or whether a specific payment has been recorded.

The Accounts receivable report shows invoices that have not yet been paid.

The Credit report shows the opposite: payments with surplus amounts that could not yet be allocated.

The debt collection report shows invoices for which the reminder process hasn’t resulted in payment. From there, you can either write off the receivables as bad debt (crediting the invoice to release the VAT), or you can send the data to a collections agency.