I run a platform which works as follows: Orders are placed on our system, we issue an invoice to the customer, we collect the money and then we pay the supplier minus our service charge. I have just moved from Quickbooks to Quickfile (loving it) and wanted to know if I am handling the data correctly before I go and start entering it wholesale.
Our system works as follows:
We send the customer an invoice for £100 which they pay to us.
We pay the supplier £90 and take £10 as a service charge (this is our income).
There is VAT to pay all round.
Here is how I currently handle it in QB:
- Create an invoice for the customer: for £100 which is posted to a current liability account. It goes to a liability account as it is money we owe the supplier. Payment is received from the customer.
- Write a cheque to the supplier:
First line: £100 to the current liability account to clear it
Second line: minus amount for the service charge (-£10) to the Accounts Receivable (AR) account. (Think this is the Debtors Control Account in QF). We fill in the Customer: Job with the name of the supplier
Current Liability account will be zero
Both invoices in AR will be paid
The £10 service charge will be in our income
Banking will be correct
We receive payments in the Suppliers AR account just to get open items closed off:
Receive Payments, Select Invoice, Select Discounts and Credits, Select the correct credit.
It’s a lot of data entry and feels a little clumsy but is what was recommended to me (I am not an accountant, just do all our own accounts). I just wondered if there was an easier/better way of doing it.