Hi - I have a Norwegian customer who pays an invoice to my UK ltd company every month, different amounts each month. Recently the payments have started coming in exactly £8.00 short each month. The originator says he’s sending them with all charges paid and my bank (Starling) assures me they have charged nothing. Putting aside whether the sender should be making up the shortfall, from an accounting perspective how should I tag the incoming bank transaction? Previously I’ve always just tagged it to the relevant invoice, but now this clearly leaves a partially paid invoice and presumably the £8.00 sitting somewhere. How do I account for the £8.00?
Unfortunately the answer to your question means you can’t leave aside whether he had indeed paid all charges or not.
Because the answer depends on it.
Either you need to leave the £8 outstanding on the invoice or mark it as fully paid and offset the £8 as charges.
Thanks Paul - this is probably a dumb question but how do I offset the £8.00 as charges after I have tagged the bank transaction to the invoice leaving it partially paid? Do I need to put a journal entry in? How do I then allocate that to the invoice so that it’s no longer partial?
You can’t.
What you need to do is create another bank account like a holding account.
Create a money in transaction for the full invoice amount and tag it to the invoice.
Then create a money out transaction for the fees and tag that to the fees.
Then the balance will be what was actually paid, create a money out and tag it as a transfer to your actual bank account matching it up to the payment you received.
Ahhh, got it - thanks.
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