Client overpaid my sales invoice with a bonus which I assume I now have to declare as income?
Do I need to adjust the sales invoice to reflect the total amount received or should I do a manual receipt to the bank and allocated the payment to the invoice and the tip to another nominal code?
I presume the payment arrived in one receipt? I.e. the client didn’t make a separate payment for the bonus?
Assuming one receipt, you can (as you mentioned) adjust this into your invoice on a new line. Alternatively you can split the incoming money on the bank and tag one part to the invoice and the other simply tag as “Something else not on the list” and post it to “Miscellaneous Income”.
I’d go with the “something else not on the list” approach, particularly if you’re VAT registered, as tips are outside the scope of VAT (reference). If you adjust the invoice total it’ll figure in your VAT return.
Yes they over paid me on purpose with the extra being a bonus.
You said option 1 is to modify the invoice, and option 2 is to split the incoming money on the bank and tag each part separately. I have a question about option 2:
How do you split a transaction like this? Do you mean creating two transactions to represent one transaction in the bank account? Doesn’t that make things more confusing, to have a list of transactions that don’t match the list in the bank account? I’m using an open banking feed that automatically imports transactions from my bank accounts, I don’t want the transactions to no longer match what is found in the bank account.
Hi @bidi
If you are wanting to tag the payment to an invoice and a nominal then you would need to break this payment down into two and then delete the automatically imported transaction.
You can tag one payment to two nominals or two invoices but you are unable to post to one nominal and one invoices.
Hope this makes sense
Thank you, that’s helpful. Thanks for making that clear.
(I hate converting one transaction into two, because I want to keep the transactions matched to the transactions in the bank statement. But at least now I know exactly what is meant by “split a transaction”.)
Generally if you need to do “part-invoice-part-not” splits like this while keeping your transactions matching your feed, then the simplest approach is to tag the transaction on your feed as a transfer from another spare bank account such as drawings/director loan, then manually create the split “money in” transactions in the same account to balance things out.
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