A shop sells over the counter all day. A distributor sells on credit to retailers who pay in thirty days. Many traders do both. The two kinds of sale need different handling in the books, and mixing them up is a common source of wrong receivables and wrong cash. This guide explains how to record cash sales and credit sales correctly, including part payments and discounts.
Two kinds of sale
| Cash sale | Credit sale | |
|---|---|---|
| When is money received? | At the counter | Later |
| Does the customer need a record? | Not always | Always |
| Document | Slip or short invoice | Invoice with due date |
| What is created in the books? | Cash and sales | A receivable, then cash when paid |
Recording a cash sale
For a simple cash sale, there are two effects. Money goes in and sales are recorded. Stock goes out, and the cost of the goods is recorded.
Example: a customer buys goods for Rs 18,500 and pays in full.
| Account | Debit | Credit |
|---|---|---|
| Cash | 18,500 | |
| Sales | 18,500 | |
| Cost of goods sold (at average cost) | amount | |
| Inventory | amount |
When the customer pays only part
A customer buys goods for Rs 18,500, gets a Rs 500 discount and pays Rs 15,000 now, with Rs 3,000 to come.
| Item | Amount (Rs) |
|---|---|
| Goods sold | 18,500 |
| Discount | (500) |
| Amount due | 18,000 |
| Paid now | 15,000 |
| Balance owed | 3,000 |
| Account | Debit | Credit |
|---|---|---|
| Cash | 15,000 | |
| Customer receivable | 3,000 | |
| Discount allowed | 500 | |
| Sales | 18,500 |
Debits are 18,500 and credits are 18,500. The balance of Rs 3,000 must be tied to a named customer, otherwise nobody can chase it.
Discounts
Record every discount in its own account, not by reducing the price on the slip. If you do, you can never see how much you are giving away. A separate account shows the cost of discounts each month, so you can decide whether they are worth it.
Receiving the balance later
When the customer pays the Rs 3,000, record a receipt against the same sale. The receivable falls to zero and cash goes up. Do not edit the original sale.
Returns of cash sales
If a customer returns the goods and takes a refund, the sale is reversed, the money goes back out of the same cash or bank account, and the goods return to stock at the original cost, not today's average. Limit this to people who are authorised to approve refunds.
The slip
Counter sales often need a small receipt printed on a thermal roll. It should show the date, a number, the goods, the quantity, the price, any discount, the amount paid and the balance.
Daily routine for a counter
- Count the cash at close.
- Compare it with the day's cash sales and the opening float.
- Investigate any difference at once.
- Check that every part-paid sale has a customer name.
- Keep the slips for the day.
Common mistakes
- Part-paid sales with no customer. The balance is lost.
- Discounts folded into prices. The cost is hidden.
- Editing a sale to record a later payment. Use a receipt.
- Refunds paid from the till without a record.
- Credit sales entered as cash sales to save time. The receivable disappears.
How OneAccounts does it
OneAccounts has a cash sale screen with an amount received field, so a sale can be part-paid; a customer must be chosen when anything is still due. A flat discount is posted to a discount account you choose. A thermal slip can be printed in 58 mm or 80 mm width, and a normal A4 PDF is available. A balance payment screen records the rest later and does not allow more than the balance due. A cash sale can be returned in full by an admin or accountant: the money goes back out of the same account and stock returns at the original cost. Cash sales and credit invoices share the same stock check. See Trading ERP software.
Frequently asked questions
What is the difference between a cash sale and a credit sale?
A cash sale is paid at the time. A credit sale creates a receivable that is paid later.
Can a cash sale be part-paid?
Yes, if the system records the balance against a named customer.
Where should a discount be recorded?
In a discount account, so you can see its total.
Can I return part of a cash sale?
That depends on the system. In OneAccounts a cash sale return reverses the whole sale.
How do I print a counter receipt?
Use a thermal printer and a slip layout that matches the roll width, usually 58 mm or 80 mm.