Hello,
I’m own a small building company and i am putting in invoices from other trades under ‘Sub-contractors’ but when I then tag this payment it seems to put the P&L up rather than down. This doesn’t seem right to me am I doing something wrong?
Thank you.
Most likely because you are putting them in as sales invoices and not purchase receipts.
hi,
Thanks but i am definitely putting them in as purchases. ( i may have worded my 1st post wrong )
Hi @Adam_Porter
Would it be possible for you send over some screenshots of what you’re seeing? Could you also please redact any sensitive information that may be shown in them.
Once we can see what you’re seeing, it should help us to diagnose what’s going wrong for you.
phi, @QFSian Sorry but I’m not really tech-savvy enough to be able to do that! I will try and explain a bit better.
P&F says profit before tax is £1,834.83.
I then put in a purchase for a sub-contractor of £130 (No VAT)
The P&L deducts this and goes down to £1,704.83
But when I then tag the payment from my current account the profit before tax goes back up to £1,843.83
How are you tagging the outgoing payment from your bank account? It should be “payment to a supplier” and you select the unpaid purchase.
Edit: hang on, I think I see what has happened here. If the bank transaction was already sitting there untagged before you created the purchase then that would mean that your P&L was out by the value of the untagged transaction. Untagged bank transactions put their contra entry in the “suspense account”, which appears at the bottom of your P&L report - an untagged “money out” will show as an expense (debit) in the suspense account (reducing your profit), an untagged “money in” will show as income (credit), increasing your profit.
So what happened was that the £1,834.83 before you created the purchase includes the untagged £130 under suspense, when you created the purchase that would add an extra £130 to sub-contractors (putting the £130 credit contra entry into the creditors control account on your balance sheet), then when you tagged the bank entry it moved the £130 debit from the suspense account (P&L) to the creditors control account (balance sheet).
£1,834.83 is the correct final value for P&L, you can only believe the P&L bottom line if you don’t have any untagged bank transactions.
That makes sense. Thank you.
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