An overseas client paid in full but the bank charged me a fee. This is money I know I will never get back.
Right now the invoice shows up as Partially Paid and my Dashboard says I’m owed money.
How do I close the invoice, despite it not being paid in full?
This is one of those situations where you probably need an intermediary bank account (which could just be your drawings/director loan or it could be a specific merchant account you create called something like “international payments”). You mark the invoice as paid in full into the dummy bank account, mark the money you received in your current account as a transfer from the dummy account, then make a money out transaction manually in the dummy account for the difference (to return that account balance to zero) and tag it as an expense code like bank fees.
Thanks for your reply. Will that show as money never received by me? I am using the software for MTD, so I need to make sure that that dummy bank account doesn’t result as actual income.
The income happens when you mark the (full value of the) invoice as paid into the dummy account. The bank charges are an expense.
The transfer from the dummy account to your current account is just that, a transfer of money you already own. It does not count as income again.
It’s exactly like the situation where you take payments by card but your card provider deducts a fee before they hand over your money. The payment from the customer (income) is for the full amount they paid by card, the card provider’s fee is an expense, and the net settlement is just treated as a transfer.
Thank you Ian. I find it really helpful. I am just not sure why I would need to create a Dummy Bank Account though.
Can’t I just mark the invoice as paid in full and then create an expense/purchase called ‘international bank fee’ for those 10£? All done within my standard bank account?
You certainly can do it that way, and as long as the net result is right it doesn’t matter from an accounting perspective. I just tend to recommend the merchant account approach as it fits better for people who use an automatic bank feed, since it keeps the transactions in your QuickFile bank account aligned one-to-one with the transactions on your real bank statement.
I see, I don’t use the automatic bank feed, so I might do without. Many Thanks