We use self-billing for our suppliers. We create the invoice for goods supplied and on the same invoice subtract our commission so it would look something like this:
Amount collected for goods supplied: £50
Our service charge: £10
So the amount we pay the supplier from out bank account would be £40, and the £10 is income.
I am not sure how to account for this. I can set up a purchase for the £50 but I can only pay £40 from the bank account. I’ve tried numerous things but none seems to work when I look at the reports.
Maybe we are similar in some ways to a merchant (eg. PayPal). We are a middleman. We invoice our customer for goods supplied by our supplier, then pay our supplier, minus our commission.
Any help greatly appreciated.
If you enter a line on the invoice for -£10 the invoice total would become £40 so this could be tagged.
Or you could use holding accounts for these suppliers to track the commissions. Largely depends on how much detail you want within Quickfile.
Thanks. Yes I just tried the -£10 and that is good and VAT seems to be accounted for to. I think I was over complicating matters!
It would be nice to have more detail so that we can see the commission totals separately on the Profit and Loss account rather than it all being lumped in together. Can I simply do this by using a sales account that I have set up (called Service Charge) for the -£10 amount? The reports seem to be okay with that.
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If you’ve already invoiced your customer for the full £50 as your general sales turnover then the “service charge” would be more of a discount on the cost of sales side rather than additional income on the turnover side - you’re taking £50 income and spending £40 on cost of sales, leaving £10 gross profit. If you put the £10 on the income side then it’d look on your reports like £60 income and £50 expense (same GP but feels like you’re overstating both sides by £10).
You can indeed post the -£10 to a different code but I’d keep it under purchases rather than sales.
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Ah yes, thank you. I can see that would be doubling up. I have posted with a different code under purchases as you mentioned and I can see that it breaks it down for me on the report. Thanks very much for your help.
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