I have just receipted an invoice payment but the bank has retained a small amount. My client has accepted responsibility and will allow me to raise an invoice to recover the balance as an expense. This is fine but the amount will be included in sales twice. I anticipate I need to raise a credit note for the outstanding balance.
My question is how I can match/tag the credit note to the partial payment invoice to clear off
The amount the bank has retained / processing charge. Would be an expense, and should be shown as such.
If your client is willing to pay the bank processing charge, then re invoice for this, as this would be income / turnover.
Turnover would be higher, but net profit would be the same, as it would be, if you weren’t charge by the bank.
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