Invoice paid but payment appears short due to bank deduction fee

Van

I have a client whose payments are for the correct amount but the bank deducts a 6GBP fee with each payment. I managed to mark the invoices as paid. But this means that when it comes to bank reconciliation, it won’t match. If I adjust the amount of the client payment to match the payment shown in the bank, this leaves the client showing as owing money, whereas the client has paid correctly, it is the bank fee that has lowered the sum. I have created expenses categorised as foreign exchange loss for this client, but this doesn’t help with the reconciliation. What can I do to achieve reconciliation?

Katie

Hi Van,

Payment handling fees can be tricky to manage, but here is how to do this effectively.

Record your invoice.
Record a payment for the amount you received into your bank account. You’ll see part of the invoice is still outstanding.
Record another payment for the remaining amount, but say this was paid into a personal bank account. The invoice now appears fully paid.
Record an expense for the charge and say it was paid for personally.

The personally received payment and expense cancel each other out, so you’ll end up paying the correct amount of tax based on the invoice.

All the best,
Katie

Van

Hi Katie
Thanks for your reply, worked nicely.
Kind regards, Van

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