Does the delivery status (Undelivered / Delivered) affect financial statements and reports?
Yes, the delivery status affects journal entries and reports, but only in one specific area: inventory and cost of sales. Sales, tax, and the client balance are recorded when the invoice is saved, regardless of whether it has been delivered.
What happens from an accounting perspective?
| Event | What is recorded |
|---|---|
| Saving the invoice (delivered or undelivered) | Invoice entry: debit Client, and credit Sales and Tax. |
| Confirming delivery (in full or for an item) | Inventory issue movement dated on the delivery date, and a cost of sales journal entry: debit Cost of Sales and credit Inventory. |
| Cancelling delivery | The associated inventory issue movements and cost of sales journal entry are reversed. |
Impact on reports and financial statements
| Report | Before the invoice is delivered | After delivery is confirmed |
|---|---|---|
| Income Statement (Sales) | Sales and tax appear in full. | No change. |
| Income Statement (Cost of Sales and Profit) | The cost of goods is not recorded, so gross profit appears higher than it actually is. | Cost of sales is recorded, and the actual profit is shown. |
| Balance Sheet (Inventory) | The value of the goods remains included in inventory. | Inventory value decreases by the cost of the delivered goods. |
| Balance Sheet (Clients) | The amount appears as due from the clients. | No change. |
| Trial Balance | Only the invoice entry appears. | The cost of sales entry also appears. |
| Inventory Reports and Product Movement | The quantity is not deducted and remains included in the available balance. | The quantity is deducted on the delivery date. |
| Invoice Profit and Profit Reports | The full cost is not reflected. | The correct cost and profit are shown. |
| Tax Return | The invoice is included according to its date. | No change. |
| Client Statement and Payment Status | Not affected. | Not affected. |
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Note: For a partially delivered invoice, the cost is recorded and quantities are deducted only for the delivered items.
What should I do before issuing financial statements?
- Review invoices with the Undelivered and Partially Delivered statuses in the Invoices List, and confirm delivery for items that have actually been delivered so that cost of sales, inventory, and profit are reflected correctly.
- If you always deliver goods at the time of sale, enable Mark Invoices As Already Paid By Default in the invoice settings.
For more details, see the guide Enable Default Delivery Status for Sales Invoices.