A client pays my invoices through an e-billing vendor. The client pays the e-billing vendor a percentage of the invoice and remits the remainder of the invoice to me. Should I account for this reduction of my invoice as a deduction of the customer payment or an expense line item on the invoice?
kpwas,
Who set up the ebilling? You? or something the cleint uses? Do you want the client to pay for the e-bill expense? Since it looks like you never pay the e-billing vendor directly then I THINK (without too much thought on the subject) one way to accomplish what I THINK you are trying to do is
Include the e-payment expense as a % markup on your invoice to your client
When tthe client pays both the total amount of the the invoice through the e -payment vendor that vendor keeps the % markup and you get the net amount which is the amount you really want to collect.
That leaves a remaining balance open on the invoice. When you post the client payment you can then also issue a credit memo for the amount of the % markup
The end result is that the Invoice is now at zero and you don;t record any expense or offsetting income for the e-payment.
Does that work for you?
Please let me know. If not I'll give it some additioanl thought.
Aloha
and your invoice and you get the net amount of your invoice.
My client set up and maintains the relationship with the e-billing vendor. So, you are correct that I do not pay the e-billing vendor directly.
If my invoice is $100, my client pays me $98 and my client pays the e-billing vendor $2. If I follow your advice, I will receive the $98 payment from the client, leaving a $2 remaining balance. When I issue a credit memo, how do I account for the allocation of the $2 remaining balance? Is the $2 remaining balance an Expense or Other Expense?
If you are incurring the loss, you are in fact paying the ebilling processor and this is your fee. In other words, you agreed to this. It's the same for folks who accept credit card payments.
I'd receive payment for the full amount of the invoice. When this money goes to the bank, you can enter a negative amount for the fees taken, posting "from account" as a processing fee expense account.
I like to show the full picture. You have a full sale, the customer paid in full, but you didn't receive the full payment, you incurred a fee.
qbteachmt,
The solution that you propose will not be correct because I am not paying the e-billing vendor. My client is paying the e-billing vendor. After paying the e-billing vendor the fee, my client remits the remainder of the invoice amount to me.
I became aware of my problem when I received a 1099-MISC from my client. The client issues a 1099-MISC to me and the e-billing vendor. As an example, if my invoice to the client is for $100, the client will pays $2 to the e-billing vendor and remit $98 to me. At the end of the year, the client issues a 1099-MISC to the e-billing vendor for $2, and a 1099-MISC to me for $98.
Then post the $2 to an account where you track the writeoff of income.
I would also ask your accountant about how to appropriately handle this situation, especially if you are subject to sales taxes.
