How should I record agency deductions so invoices show as fully paid?

Accounting
1

I would appreciate some advice on the correct way to handle payments that are received through an agency. My situation is as follows: I issue invoices directly to my client for the full amount due. However, the payment is made through an agency rather than directly by the client. Before transferring the money to me, the agency deducts a small fee from the payment. For example: Invoice amount: £100 agency deduction fee: £10

Amount received in my bank account: £90

When I record the payment received, QuickFile shows the invoice as partially paid, with £10 still outstanding.

My understanding is that the client has effectively paid the full invoice amount and that the £10 should be treated as an agency fee or business expense rather than an unpaid balance on the invoice.

Could you please advise:

What is the correct accounting treatment for this situation?

Is there a recommended workflow that will allow the invoice to show as fully paid while recording the deduction as an expense?

2

Hello @Sapper

This is usually done using a merchant bank account

  • Set up a merchant account in the banking screen (for the agency)
  • Pay the invoice in full using the merchant account (e.g. £100)
  • Raise a purchase invoice for the agency fee and pay it using the merchant account (e.g. £10)
  • Record a bank transfer between the merchant account and your bank for the remainder (£90)