Help required with invoice from another system

I have a supplier that invoice my client directly and take payment via DD. Once this has completed they pay me the difference/commission.

  1. Should I import all the suppliers invoice to each client?
  2. Tag these invoice with the single invoice I get from the supplier?
  3. What do I do/ how do I account for this commission?
  4. how do I account for VAT on all these transactions?

Is there someone I can talk to on this if you don’t understand?

I would like to be able to use quickfile for my annual company return next year so this going to be the first full year using this. I’ve been using this as just an invoicing tool to date.

All old data has been removed and I’ve started from the 1st January 2015 inputting that latest data.

I did find how to do a bulk CSV invoice import as I can get this from the other invoicing system.


For the commission you would just raise an invoice to the supplier with your commission and that is all that is required. What they do regarding invoicing your customers directly does not need to go in your books.

Just worth adding to @Lurch’s post that when you create an invoice, if you click the little question mark on that line, you can select the Commission category to help you differentiate it from the rest of your income.

Thanks for the info @Parker1090, @Lurch but I think you or I’ve missed the point.

We need all invoices from whichever system to be allocated for company accounts and wanted to use quick file fo do everything for us.
We so need to claim the VAT on all invoice as we pay VAT on the commission.

I invoice a client from quickfiles this it allocated and I can see the details in quickfile.
3rd party send invoice to client on my behalf, I don’t see it in quickfile unless I import it, I can see it on the other system.
They actually pay me the gross difference between the clients invoices and my wholesale invoice.
Is that a better way of showing what I’m trying to do.

If your client is receiving an invoice from you and your supplier are they paying both, or only one?

Does you client ever pay you anything?

@Lurch, Thanks for the help.
The client only receives 1 invoice.
My supplier is not only issuing the original invoice but taking the direct debit on my behalf.
Therefore I get an invoice from the supplier with my costs, the client get an invoice with my cost + uplift.
I buy a service at £10 from the supplier, and sell to my customer at £15.
Therefore the supplier invoices the client at £15 in my name and takes the DD.
I get an invoice for the supplier at £10 and they pay the £5 as commission directly into my bank.
As the invoice has my VAT and my company number on the invoice I have to account for this with whatever accounting system I’mm using.
I had an accountant that did all this for me but wanted to use quickfile instead.
Some customer don’t pay by DD so they actually pay in to our bank account via BACS.
So I match the invoice number on quickfile with the suppliers invoice numbers, so in reality there is only one invoice but on 2 systems. These invoice need to be imported here so I can sort out the company accounts / profit&loss and make the correct payment at the end of the year to both Customs & Excise (VAT) and Corporation TAX.
Isn’t this the same as if I buy from supplier 2 and pay them directly then invoice my customer directly.

In reality this is all pretty straight forward, I think you might be overcomplicating it by trying to link it all together on the books.

In the above example your supplier invoices you and you pay the £10. Standard purchase would cover this.
The £5 commission can be tagged as income directly from the bank feed to the relevant supplier if this is automatically paid without you needing to raise an invoice beforehand.

The final example where the customer pays you by BACS isn’t quite 1 invoice on 2 systems, it is 2 invoices on 2 systems, there is no need to match the incoming and outgoing invoice numbers. This would probably be inconvenient as the way Quickfile works is that it automatically generates sequential invoice numbers as this is the way you should be doing your invoicing as per HMRC guidelines. For this transaction you would just pay your supplier as other supplier payment ignoring the fact that you are just passing these charges on and then you would also raise an invoice for your client. Again this could be done from the banking screen as part of the tagging process if the payment is sent to you without you sending invoices beforehand.

Some things to note doing it the above way is some of the payments could be termed as prepayments or payments on account which are sometimes handled differently and also tax point dates would need checking. If these things are happening on the same day each month recurring invoices and recurring purchase schedules could be used to automate a lot of the invoice creation work.

What I’m trying to do is to use ONE accountancy system - Quickfile.

Yes, I haven’t said anything to the contrary.

If I don’t import the invoices and only add the commission, at the end of the year won’t my books be skewed?
When I had the accountant I passed these invoice to him and any other invoices i.e. Quickfiles and he reconciled the books.
I’m not an account so I’m not sure how this works.

From what I can gather from the information you have provided they’re not your invoices so you shouldn’t be importing them. They are an invoice from your supplier to someone else. All you should have on your books is money coming in to and leaving your account. The invoices and payments to/from your suppliers and their clients and the fact that they are also your clients is irrelevant.

There are a few ambiguous points though so this is something you need to discuss with your accountant I think so you can get a clear idea of what you are doing as it does seem an odd method of working. It may be that everything is in order and there are just some precise terms that are missing from this conversation that would clear everything up but it also looks like you are paying tax and VAT for no apparent reason on someone else turnover.

Sorry this is not on someone elses turnover.
The missing info is that I buy from a wholesale company who then whitelabels the sale to My clients with a profit I set up with them.
They then take payment on my behalf and instead of me paying the wholesale invoice, they take the money from the sale to clients, then pay me the difference.
Wholesale invoice £10
Sale invoice to client £20
Different paid to me £10
Don’t I now need to declare these sales on my books so that I can pay the corp tax and VAT?

I’m not an accountant so take what I say with a pinch of salt…

It doesn’t seem to make any difference to the overall profit or VAT liability whether you treat it as a purchase from the wholesale supplier and a sale at full price to the customer, or as receipt of a sales commission from the supplier, but it would make a difference to your turnover. In the first case, conceptually:

  • you buy some wholesale items from your supplier at (say) £10+VAT
  • you modify those items (adding your branding) and sell them on to your customers at £15+VAT
  • your customer pays using a payment processing service (that just happens to be run by the wholesale supplier)
  • at the end of the process you end up with £5+VAT more in your bank account than you started with
  • your turnover from this transaction is £15
  • your gross profit is £5
  • your VAT return shows input VAT on the £10 and output VAT on the £15, so you pay over £1 VAT to HMRC

In the commission case

  • the supplier sells something to your customer for £15+VAT
  • they pay you £5+VAT commission
  • your turnover from this transaction is £5
  • your gross profit is £5
  • you have no input VAT but have received output VAT on the £5, so you pay over £1 VAT to HMRC

Since it’s your VAT number and contact details on the customer invoice, the first approach seems more correct as the full £15 counts as VATable turnover against your VAT number. In QuickFile you’d set up a virtual bank account the same as you would for a normal payment processor like PayPal, then

  • raise an invoice to the customer for £15+VAT (this would be the invoice you import from the other system)
  • create a purchase from the wholesale supplier for £10+VAT
  • “pay” the purchase from the virtual bank account (sending it to £12 overdrawn)
  • when you receive the £5+VAT (£6 total) payment from your supplier
    • mark the £15+VAT invoice as paid into the virtual account
    • tag the £6 bank transaction as a transfer from the virtual account to your bank, which should leave the virtual account at zero balance.

Does that make sense?

Edit: You should clarify with your accountant exactly when to enter the “payment” for the £10+VAT purchase - should you register the payment straight away or delay it until you receive the balance from your supplier? If you’re on cash accounting for VAT this matters as it’s the date of the payment (rather than the purchase invoice) that determines when you can claim the VAT back from HMRC.

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@ian_roberts, Thanks for your input, you’ve seem to have understood what I was getting at.
Good idea to treat the wholesale company as a virtual bank. Just need an accountant to verify if this is the correct way and would be allowed.
All I want to do is to show my business profit and loss correctly by showing via the accounts all transactions at year end. This would give us all out business liabilities etc.

It’s the same situation as when you use a conventional payment provider like PayPal or Stripe who take money from your customers and pay it over to you less their fees or commission. You create a virtual “merchant” account in QuickFile, log the gross value of the customer payments as money in to the merchant account, the net payment from the provider to you as a transfer from the merchant account to your bank account, and the difference (their fees) as a purchase paid from the residual balance of the merchant account.

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