Logging Credit Card Purchases

[robbiec]

Hi,

I operate an online selling business and have recently migrated to Quickfile from Quickbooks Online. I am looking for advice on how to log the purchasing of inventory. I think that I have a grasp on the basics having read other forum posts but just need confirmation of the process please.

I always make inventory purchases using my credit card and then pay the credit card bill in full at the end of every month. Therefore in essence I have an outstanding bill to American Express (for example) rather than multiple suppliers such as Tesco, Asda, Argos (for example). Therefore I will have one bank payment from my business account every month that covers the credit card bill.

I don’t wish to split the entry on my main bank account so I understand that I can create a credit card merchant bank account in Quickfile and then process the transactions through that. Each time I purchase stock I would add an entry to the merchant account and so that account will form a negative balance. Then when I pay the credit card bill I do a bank transfer from my business account to the merchant credit card account to bring it back to zero.

However I understand that it is not possible to tag multiple invoices from different suppliers to one bank entry so I am thinking that I should set up my credit card (American Express) as a supplier (as well as setting them up as a bank account) since they are the people I will be paying at the end of each month rather than the outlet from where I purchased stock.

Is this the best way to deal with this?

If I do things this way then can I add some form of memo to each individual invoice to inform me where I actually purchased the stock from otherwise every invoice will simply say the supplier is American Express?

[QFMathew]

Hi @robbiec

The good news is, that sounds pretty spot on.

I just want to clarify a few things though to make sure you’re on the right track.

@robbiec

I don’t wish to split the entry on my main bank account so I understand that I can create a credit card merchant bank account in Quickfile and then process the transactions through that. Each time I purchase stock I would add an entry to the merchant account and so that account will form a negative balance. Then when I pay the credit card bill I do a bank transfer from my business account to the merchant credit card account to bring it back to zero.

This is correct. You would have a merchant bank account which would act as your credit card balance. I’ll stick your example of Tesco, Asda and Argos. If I make a purchase at each of these from the credit card, I would create the 3 transactions in that bank account. I would also record all 3 invoices/receipts as normal so I have my evidence.

When you create the bank entries in the credit card balance, simply tag it to the purchase, like this:

This still puts your balance as a negative, so it will still show that you owe the money on the credit card (my example shows a value of -122.48). Each of these transactions are tagged to a purchase invoice I’ve already created.

@robbiec

However I understand that it is not possible to tag multiple invoices from different suppliers to one bank entry so I am thinking that I should set up my credit card (American Express) as a supplier (as well as setting them up as a bank account) since they are the people I will be paying at the end of each month rather than the outlet from where I purchased stock.

The first part of my post above will fix this - each payment is still allocated to the relevant invoice. But now, you need to deal with the fact that you owe that money. So today, I’ll pay off £100.00 from the credit card, from my current account. I would create a £100.00 money out transaction in my current account, which would still match my current account bank statement. This is then tagged as a Transfer between accounts:

And select Credit Card (or whatever you call your credit card account):

By tagging it as a transfer, QuickFile will automatically create a matching transaction for you:

And job done - my credit card is now at -12.48.

I hope that helps

[robbiec]

Thanks for the prompt response.

I would like to identify what type of item I purchased from each outlet since generally I am only going to be purchasing inventory or something that is a business expense such as stationery etc. Can I do this as shown below or maybe do it the other way round so that the outlet is in the ref column and the type of purchase is in the notes?

When tagging the items do I allocate them to American Express at this stage as shown below?

And then I assume that categorising inventory at this point as General Purchase will place it in the correct place to allow for calculation of COGS?

And the stationery (as an example can be categorised differently to show as an expense in the P&L report?

Sorry for all of the questions - I am manually migrating my accounts over from April 2016 to date so wish to ensure that I do things properly.

[QFMathew]

@robbiec

Can I do this as shown below or maybe do it the other way round so that the outlet is in the ref column and the type of purchase is in the notes?

When you create the purchase invoice (Purchases >> Enter New Purchase), this can contain all the detail you want. You can keep it as basic as “Stock”, or you can list each item on the receipt/invoice - the choice is yours.

You can also attach documents to each invoice, so if you wanted to keep it simple, you would still have the backing document in case anyone asks any questions, like HMRC.

@robbiec

When tagging the items do I allocate them to American Express at this stage as shown below?

Generally these would be tagged to a purchase invoice so they’re linked to the correct supplier. For example:

@robbiec

And then I assume that categorising inventory at this point as General Purchase will place it in the correct place to allow for calculation of COGS?

There are a few ways to create a purchase invoice, including:

1. Go to the Purchase menu, and select Create new purchase
2. Create it through tagging (as you’ve shown in your screenshot)

Each method creates them slightly differently. By doing it direct through the purchases menu, you can enter as much detail as you need. If on the other hand you have lots of tagging to do, you could use tagging to create the invoice (like how you’ve shown). This is however limited to a few characters and will only record a 1 line purchase invoice.

So it depends on what level of detail you want, depends on how you can create them. I would suggest giving them all a go and seeing what works best for you.

But to answer your question regarding General Purchases, this is a COG code and will be treated as such. You can view a full list of the codes by going to Reports >> Chart of Accounts.

@robbiec

And the stationery (as an example can be categorised differently to show as an expense in the P&L report?

Office Equipment is balance sheet code and will flag it as an Asset. For something like ink, I would go for Hosting Fees & IT Consumables.

If you create these through the Create a new purchase option, then there’s also an option to help you find the correct category

@robbiec

Sorry for all of the questions

It’s no problem! It’s why we’re here.

We also have this article in our knowledge base which gives a full run down on credit cards. You may find this useful:

Managing credit cards in QuickFile

Introduction In QuickFile credit cards are treated as a type of bank account. The bank account tracks the balance on the credit card at any given point in time. It's easy to create a new credit card account, all you need to do is go into the Bank Management area and click the blue **Create** button and then select **Credit Card Account** [image] You will then see a form like the one below where you can enter account name, account credentials, and any opening balance on the card. If you owe mon…

[robbiec]

Thanks - I have played around with both options in terms of creating purchase invoices. So if I use the option Purchases > Enter New Purchase I assume that I complete the Payment Details section as in the screenshot below if I wish to tag it as being paid by my Amex credit card?

Using that method also allows me to purchase items that are categorised differently (inventory + office expense as an example) as shown above.

It seems to make sense that I tag every entry as I enter it into QuickFile since I cannot bulk tag if using your method of defining the outlet as a supplier rather than Amex. I assume that I would have to open each invoice individually and complete the Payment Details section for each one?

Also - I like to create some form of code for each receipt such as 280917-01 or 280917-02 etc. Should this replace the auto generated receipt no or is supplier ref an option or does it not matter?

[QFMathew]

@robbiec

I assume that I complete the Payment Details section as in the screenshot below if I wish to tag it as being paid by my Amex credit card?

You can do if you wish. That would create the bank transaction for you. If you’d prefer, you can leave it unticked and just save it. This will label it as “UNPAID”. You can then tag it from the bank statement page using the “Payment to Supplier” option.

@robbiec

Using that method also allows me to purchase items that are categorised differently (inventory + office expense as an example) as shown above.

Correct!

@robbiec

It seems to make sense that I tag every entry as I enter it into QuickFile since I cannot bulk tag if using your method of defining the outlet as a supplier rather than Amex. I assume that I would have to open each invoice individually and complete the Payment Details section for each one?

As above, you can tag straight from the bank tagging page if you wish, similar to this:

@robbiec

Also - I like to create some form of code for each receipt such as 280917-01 or 280917-02 etc. Should this replace the auto generated receipt no or is supplier ref an option or does it not matter?

What’s the purpose of the code? Where does it come from? The #QF number is auto-generated and the format can’t be changed. Generally the Supplier Reference would be like the supplier’s invoice number (so you don’t enter the same one twice). But it’s not enforced, so you could use it for whatever you wish.

[robbiec]

@QFMathew

You can do if you wish. That would create the bank transaction for you. If you’d prefer, you can leave it unticked and just save it. This will label it as “UNPAID”. You can then tag it from the bank statement page using the “Payment to Supplier” option.

This bit confuses me. I have entered a new purchase and saved it without making payment so it is labelled as Unpaid but I cannot see it in the Bank stmt in order to tag it. Did I miss a step somewhere?

[QFMathew]

If you just save the purchase without marking it as paid (and therefore it shows as “UNPAID”), it won’t create a matching bank transaction. It will assume you’ve already got one, or will add one at a later date.

If you import your statements for example, or if you enter the transaction manually, you can then just tag it. as I illustrated in the gif in my previous post.

[robbiec]

Thanks. I have uploaded my credit card statement and can now see how it would allow me to tag the entries to previously created purchases or create them on the fly as I tag them. I think that will be the fastest way for to get my old records into the system.

I don’t think I will use the receipt code in the format that I mentioned now. It was a legacy system that I used before but with Quickfile creating receipt no’s and allowing me to upload receipts attached to invoices then I don’t think it will be required.

Thanks again for your help - it is most appreciated.

[QFMathew]

Glad to hear everything is in order

You may find this link useful which could help you get set up quicky:
https://www.quickfile.co.uk/home/startup/

Let us know if you have any further questions.