What are balancing items or credits on invoices?

In earlier versions of MIDAS (pre v4.25) on option existed to disable the automatic calculation of line totals and the grand total. This option was present whenever creating a new invoice or modifying an existing invoice.

By default, this option wasn't selected, and so if a user were to adjust an item's quantity or rate, MIDAS would automatically calculate and update the line total and the grand total.

However, if a user chose to override these automatic calculations, line totals and the overall invoice total wouldn't be automatically recalculated when the user changed a quantity or rate.

Whilst this gave users freedom to "tweak" each invoice element, it could also lead to inconsistencies where an item's rate multiplied by its quantity would no longer equal the line total, or be reflected in the final invoice amount.

We made a number of changes and improvements to invoicing for MIDAS v4.25. One of these changes was to remove the option to prevent amounts and totals from being automatically calculated. Now, whenever a change is made to an item's rate or quantity, the amounts will always be automatically recalculated and updated accordingly.

This change was made to ensure consistency and integrity of invoices, and to facilitate exporting of invoices to various accounting packages, such as QuickBooks, Sage, and Xero.

Consequently, when updating to MIDAS v4.25 from a previous version of our software, if MIDAS detects inconsistencies on existing "sent" invoices, it will automatically adjust them, ensuring that the invoice total remains the same.

These automatic adjustments will appear on sent invoices as either a "Balancing Item" or a "Balancing Credit".

Examples of instances where these may appear are illustrated below:

Where a "Balancing Item" may apply:

Now, let's assume that this invoice was manually modified by a user who bypassed the automatic calculation of totals. The user adjusts the item's rate to $40, but doesn't update the invoice total. The final invoice remains for $100.

As there is a $20 discrepancy between the items on the invoice and the grand total, when updating to MIDAS v4.25, an additional "Balancing Item" with a quantity of 1 and a rate of $20 will be added to the invoice. The addition of this item ensures that the items on the invoice total up to the grand total of the invoice.

In extremely rate instances, a "Balancing Item" with a value of 0.01 may also apply to invoices created prior to MIDAS v4.16 where quantities or rates had been manually specified to more than two decimal places. A rounding error may have occurred whereby these values were incorrectly rounded. For example, a rate of "10.225" may have been rounded down to "10.22" instead of up to "10.23". MIDAS v4.25 will detect and correct any such instances with the addition of a "Balancing Item" on any affected invoice.

Where a "Balancing Credit" may apply:

Now, let's assume that this invoice was manually modified by a user who bypassed the automatic calculation of totals. The user adjusts the item's rate to $60, but doesn't update the invoice total. The final invoice remains for $100.

As there is a $20 discrepancy between the items on the invoice and the grand total, when updating to MIDAS v4.25, a "Balancing Credit" of -$20 will be added to the invoice. The addition of this credit ensures that the items on the invoice total up to the grand total of the invoice.

In summary, the presence of Balancing Items or Balancing Credits on existing sent invoices is simply a formality to ensure consistency and accurate record keeping. Any such adjustments won't affect the invoice total or the amount the client has paid or still has to pay.