I always pay cheques in individually but the bank have paid 2 cheques for 2 different customers under 1 transaction, how do I tag that transaction to both customers?
There is an article about using “cheque holdings account” Bank Reconciliation Step by Step with more details explained by @Glenn at Uncleared Cheques and Bank Tagging.
The articles are about how to deal with Supplier payments, but the same applies to Client payments.
Thank you for that but it’s not actually answering my query.
There were 2 cheques paid in to the bank together so are showing on the bank feed as 1 amount - how do I split it between 2 separate clients when I want to tag it so that both invoices show as paid? or am I better deleting the transaction from the bank feed and inputting a manual transaction for each cheque
You either
- delete the single transaction and replace it with two separate transactions for the two cheques that add up to the same total, and tag each one individually, or
- tag the single bulk transaction as a transfer from another bank account (petty cash/drawings/director loan, or a dedicated holding account for split payments) then mark both invoices as paid into the same account to balance things back up
The first approach is quicker if it’s just an occasional thing, the second approach keeps your current account in QuickFile in sync with your actual bank statement.
Perhaps some of the details in the articles that I suggested will help you process cheques are a little confusing, but by having a seperate BANKING account that cheques are processed is really a useful addition to keeping track of how you log cheques.
By having a “Cheques” account which is allocated as a “General Bank Accounts” you have the facility to log receipt of a cheque for Sales Invoice (and the same applies to Purchase Receipts) as and when you receive or issue a cheque, but also can see what is outstanding to be cleared on cheques.
Keeping a seperate account allows for multiple cheques to be paid in using one Bank Giro Credit. Quite often business bank accounts charge for processing cheques and so reducing the paying slip for more than one cheque can be beneficial.
Create a seperate “Cheques” account in BANKING; the account has a couple of “Bank Tagging Rules” to send the cheques received in and out by the bank (If you have more than one account that you process cheques then the tagging would probably need addtional rules creating.
So, Leone you paid in two cheques on the same Giro Credit! This is how I see the scenario;
Current Account
10/03/2020 "CHQ IN AT ******* " £360.00 CR the description of the line may differ depending on who you bank with
A bank tagging rule would be created to transfer this payment from your Current Account over to Cheques;
Bank Tagging Rules
CHQ IN AT “starts with” Bank Transfer IN sent from Current Account to Cheques
So on the cheque holding account you have an entry in my example of £360.00
Cheques
10/03/2020 Transfer from Current Account £360.00 DR
Create the two seperate cheques received within this account and allocate the payments received to the relevant Sales Invoices, example;
10/03/2020 MR ANY HOW £120.00 CR allocated to Sales Invoice #000010
03/03/2020 MRS NOT KNOW £240.00 CR allocated to Sales Invoice #000012
By having a seperate BANKING account to process cheques you have the additional facility to send a customer receipt of payment on the day you receive a cheque rather than waiting for Bank Clearing of Cheques
A similar scenario works when issuing cheques for purchases but obviously the Bank Tagging Rule would differ.
A bank entry for a cheque issued;
Bank Tagging Rules
PAYMENT BY CHEQUE “starts with” Bank Transfer OUT sent from Current Account to Cheques
And so a similar position arises as with Sales Invoices, but entry needs to added for Purchase paid by cheque.
Cheques are a more unusal way to pay these days, but I cannot forsee them completely disappearing as a method of payment and so having a sensible way of recording those transactions should be worth the effort.
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