Invoicing for commission sales

I sell some of my products through a community market. They operate a system whereby I (the producer) invoice them each week for the products that were sold at that week’s market, then at the end of each month they give me a cheque for the total amount of that month’s sales minus their 10% commission.

What would be the best way to record this in quickfile? The easiest way to get the amounts right would be to give a 10% discount on each week’s invoice and then the end of month cheque would pay off all that month’s invoices in full, but then the commissions are recorded as discounts rather than as commission payments. Alternatively I could record the full amounts in the invoices and then have a separate supplier record to which I post “payments” of the commission, but that would look a bit odd on the bank records as I’d be claiming to have been paid (say) £100 by cheque but only actually paying in £90 to the bank.

Or is there some other trick I’ve missed? (I’m only in my second month of trading so still trying to get to grips with the concepts…)

Thanks


Edit: In the spirit of the “processing split payments” KB article, I suppose I could set up a virtual holding account, mark the weekly invoices as paid in full into this account and pay the commissions out of it, and then the bank transaction that pays in the cheque is treated as a transfer from the holding account to the bank account and everything balances nicely. Does that sound sane?

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Step 1: First add a new nominal code under the sales category as shown below:

Step 2: Now create your sales invoice and once you have entered all the sales items, add a new line in order to enter the 10% sales commission paid. Finally, click the question mark (?) on the commission paid line and choose the category ‘Sales Commissions Paid’ (created in step 1) in order to post the commission paid to this nominal code.

See the example below:

Year End Adjustment:

The total sales commissions paid will be posted as a debit balance under sales on the new nominal code created in step 1 and therefore at the end of the year the total balance on this nominal code will need to be journaled to ‘6100: Sales Commissions’ under 'Direct Expenses, in order to move the debit balance to the expense side.

See the example below, using a year end of 31/12/2013:

@Joe Hello, I’m interested in this as I have taken the role as treasurer for a small arts charity. We have a small gallery and take a commission from the sale of artist’s work. Currently the book-keeper makes lots of spreadsheets and I am trying to reduce time and paper.
I thought I would create an invoice to: Client as Gallery Sales and then enter two items 1. Artists sales 2. Gallery Commission. I need the Artists sales to sit in an expense account waiting to be paid out. The commission varies from 15-25%.
Regards Paula

Hi Paula,

The above answer related to a question where the seller was invoicing an agent for the sales less the agent’s commission.

In your example, if you’re invoicing the customer directly, you would not reduce the amount of the sales invoice by the commission. Instead you would simple invoice the customer for the full amount, the artist would then raise a sales invoice to the gallery for the amount less commission.

You can also use self-billing to prepare the invoice on behalf of the artist and forward a copy to them, follow the steps below for entering the purchase.

ENTER PURCHASE:

STEP 1: First add a new nominal code under the purchases category as shown below:

Step 2: Now input the purchase and ‘Sales Commissions Received’ (created in step 1) in order to post the commission paid to this nominal code. See the example below:

Year End Adjustment:

The total sales commissions received will be posted as a credit balance under purchases on the new nominal code created in step 1 and therefore at the end of the year the total balance on this nominal code will need to be journaled to ‘4902: Commissions Received’ under ‘Sales’, in order to move the credit balance to the sales side.

See the example below, using a year end of 31/12/2013: