Paypal Cash Advance

I’ve been thinking about what happens if I take a Paypal cash advance, which is sort of like an interest free loan.

How it works is that if for example I want an advance of £1,000, they advance me the money and charge me a £12 fee. Then the £1000 balance is paid daily from my daily sales income rather like I pay my paypal fees.

So for example I can choose to repay between 10% & 30% of sales income per day to pay off the cash advance amount.

It’s not something I’m going to do right now (if ever) but it is nice to know I can get my hands on ready cash from paypal if I need it…but how would I account for it all in Quickfile?

The cash advance would be paid into my paypal account, so therefore quickfile would import that amount on my paypal feed - what would I tag the cash advance as?

The one off fee would be paid through my paypal and again that would be imported into quickfile through my feed - how should I tag that?

And the daily repayments through paypal - how would I tag them?

Just out of curiosity!

Oh and I’m a sole trader not Ltd, if that should make any difference in how to account for it.

Hi @Paulwk1972

I’d suspect you would record it as a standard loan as per this post, and you would end up with an extra step in your PayPal fees. However, assuming PayPal doesn’t charge interest, just the £12 fee, instead of adding interest, you would record the fee. Effectively meaning the loan account would start at -£1,012.00

You are most likely to have this sort of activity in your PayPal account for your sales:

IN £100.00 from client A
OUT £2.50 to PayPal as fees tagged as an invoice or direct to bank changes (or custom nominal)
OUT £2.50 to PayPal as transfer to the loan account from the above post
OUT £95.00 as a transfer to your current account.

Hopefully I’ve understood correctly, and hopefully that makes sense!


That makes sense for the £1000 in, and repayments back, but the regarding the one off £12 fee, it would need to be tagged as something that would show as an expense on the P&L I think?

I can’t really tag it as “loan interest repaid” because it’s not interest but a flat fee, although maybe it wouldn’t matter too much? Maybe I could tag it to “bank charges” or the nominal code “merchant handling fees” which I use for paypal fees?

I’m not an accountant, so I’d always recommend double checking, but merchant handling fees may be OK.

There is however 7905 which is Credit Charges:

Credit charges i.e. HP arrangement fee, credit card annual fee etc.

I need a bit of help here, I have logged my Paypal Cash advance as -£3,000.00 into my Loan Account - not recording it in my Paypal account. Then I transferred £1200 over into my bank account - so now it shows as -£4200.

I know I have done something simple wrong - but cannot work out how to record it correctly?

At the moment I make a weekly tally up of the loan repayments and that is fine, I am just wondering how I show the transfer of the £1200 right.

What you need to do is create a “money out” transaction, call it “Paypal Cash Advance - Transfer to Paypal Account” or something - and tag it as a £3,000 transfer from your loan account to your paypal account, because the money you received will have been paid into your paypal account.

This will leave a balance of £-3,000 in your loan account and £+3,000 on your paypal balance. Then tag a transfer of £1200 from paypal to your current account.

You should have +1800 in paypal, +1200 in your current account, and your loan account will still show as -3,000.

There will also be a one off fee on top of the 3,000 that you borrowed - let’s say it’s £100, so you need to pay paypal back £3,100 in total - simply create a supplier for example “Paypal Cash Advance Fee” and then create a purchase of £100 to that supplier, and tag it as “Credit Charges”.

Your loan account should now show the total balance owed, example £-3,100, with the £100 one off fee being a purchase on your P&L.

Each time you record a repayment to your Paypal cash advance it is coming out of your paypal account so you need to tag the repayment from your paypal account as a “transfer between accounts” and select your loan account as the recipient. That will keep your paypal balance correct and will reduce the amount showing as owed in your loan account.

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Thank you, yes I have the repayments and the advance fee under control - it was just how I moved the money from the loan into the current account that has caused an issue.

I thought I would not record it in the paypal figures as I got really muddled doing that, but just put it in the loan account, so that must be where I have gone wrong. It is a real muddle - the moving the money bit, the other bit ie repayments and the advanced fee are all good, its just the initial money into the loan bit and the transfer of some of it to the bank that I have done wrong.

Hope you have managed to sort it now.

Yes thank you so much, I understand now, I had originated the money from an account, rather than new money.

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