When you create an invoice in Wave, you can add multiple products or services to it. Every product or service you create needs to be associated with an income account.
Wave automatically keeps track of the income from invoices under the income accounts you set for each of the products and services you sell. This means you don’t need to manually categorize payments for the invoices you created in Wave to income accounts. Even before an invoice is marked as paid, the income from your invoices will be reflected under the income accounts on your accrual basis reports. Once the invoice is marked as paid it will reflect as paid income on your reports.
When you create a product or service through the Products & Services page, you will be prompted to set an income account for it. If you add a new product or service while creating an invoice, Wave sets the income account to Sales by default, but you can edit this.
Setting appropriate income accounts ensures you’re able to track income separately on your reports for each of the products and services you sell. If you did not set the correct income account for a product or service, or want to change it later, you can do so by editing the product or service. However, this change will not reflect on your past invoices. Learn how to change the income account for the product or service on past invoices in Update the income account of a product or service on past invoices.
The example below shows you how income from invoices is reported in Wave.
How income is recorded on your reports for invoice payments
As an example, you sell furniture. You create an invoice for 10 couches and 10 chairs. The product Chair is related to the income account Chair Income, and the product Couch is assigned to the income account Couch Income. The total amount for 10 chairs is $1000 and the total amount for 10 couches is $2500, making the invoice total $3,500.
Wave automatically tracks the income under the appropriate income accounts, which in this case were Chair Income and Couch Income, and you can view these on your accrual basis reports.
Once you receive payment for the invoice, all you need to do is mark your invoice as paid, either by recording a payment on the invoice, or by categorizing the transaction as an invoice payment.
If you receive a payment through Wave, the bookkeeping is taken care of, so you don’t need to manually mark the invoice as paid. Check out Automated Bookkeeping with Wave Payments for more information.
Even though the payment transaction on your Transactions page will be categorized as an invoice payment, in your reports, the income would be recorded in your Chair Income and Couch Income accounts.