Hello. Our financial year starts 1st May. We have a payment to Amazon showing in our bank feed on 4th May 2020, but the invoice is dated 31st April 2020. Four days is a bit unusual, but I do often see the invoice date and payment date a day or two out with Amazon. This means I have the invoice dated for financial year 2019/20, and the payment going through in financial year 2020/21. I’m wanting to tag the invoice in our bank feed. Does it make any difference to anything? I imagine it does but I’m happy to be wrong! Thank you.
It would depend on whether you use cash basis or traditional accounting for your company finances.
If cash basis then you record any transactions in the financial year they were actually received or paid regardless of when any invoice was raised.
If traditional accounting it is possible to have an invoice recorded in one year and a payment recorded in another.
Thank you - sorry, I should have said we do cash accounting. Where I’m ignorant is whether it’s okay to have an invoice dated for one financial year and the related payment dated in the next.
No worries. Yes, it should be fine. As you are on a cash basis all of your business finance calcs will default to recording the payment date and essentially ignore the invoice date.
Your Amazon transaction will have taken place in the 20/21 year.
That’s smashing - thank you very much.
The term “cash accounting” is specific to VAT - @Bluesden was asking about whether you use “cash basis” for your income or corporation tax, not cash accounting for your VAT.
Cash across the board, ie each transaction (and its VAT) is logged as it happens with no projections of income or VAT.
In that case you pretty much answered your own question.
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