I am struggling with the following problem. One of my clients recieved a monthly returning invoice. These invoices are added using the creditors tab. These invoices are usually paid using the business account. Unexpectedly, the client chose to pay the same invoices using a private bank account last month.
First i added the new invoices, afterwards i tried to mark them paid. Unfortunately the list does not contain a private payment method and only provides the option to pay using liquid assets.
How should i approach this issue?
Thanks in advance!
Company expenses paid from personal funds should be recorded as
Expense Claims. The transaction is allocated to the same account as if paid from a company source, but rather than crediting a bank/cash account, it creates a liability because the business owes money to the person who paid the business expense.
Expense claims require that the person be an employee, capital account owner, or otherwise be created as an expense claim payer under
Expense claims liability can be reimbursed directly. Or, if the payer is an owner or partner, transferred into a capital or owner’s equity account as an equivalent contribution of capital.
Expense Claims, the invoice received should not be entered as a purchase invoice, because the business has not bought anything on credit. So you should delete those purchase invoices and substitute expense claims. The supplier’s invoice merely becomes documentation supporting the expense claim.
You could just make a payment from the private bank account into the business account and then process that receipt as if it was from the client to the appropriate invoice. The Private account would then have a matching (cancelling out) deposit and payment,
Or, if you wont to keep the funds in the private account then you would do a Journal.
Debit - Equity account for a sole trader/partnership or Shareholders Loan account for a company
Credit - either Accounts Receivable + Invoice or Customer Credits + Supplier as per normal
As your situation doesn’t involve expenses/suppliers/payment of personal funds or reimbursements - expenses claims aren’t required
PS: have assumed your reference to “creditors tab” was meant to be Customers tab as all your other commentary relates to Clients
@brucanna and I seem to have interpreted your situation differently, @Ramzi_Amarniss. When you mentioned a client, I believed you meant an accounting client for whom you were providing bookkeeping or accounting services. I thought you were describing a situation in which someone at your client paid a company expense with personal funds. I did not think you were describing transactions for your own business.
@Brucanna seems to believe you are discussing a client (customer) of your own company, paying a sales invoice from you. Obviously, these would be very different situations. So we gave contradictory advice.
Rereading your original post, I can also see additional ways your situation might be interpreted.
So we don’t confuse you, could you describe the situation in a little more detail, please?