Cashback payment to clients

Hi, Thank you for your support… I will be providing sales to clients who will be purchasing directly from the supplier through me. I will then receive a commission from the supplier for every sale I make. After receiving the commission I will be providing a 5% cashback to clients as a thank you purchasing through me. How should I record the cashback since they do not pay me directly and cannot be recorded as refund?
Stay safe

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Your “cash back” payments are straight expenses. Post them to an appropriate expense account.

Be aware that in some jurisdictions they would be considered bribes or kickbacks and might be illegal.

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Hi Tut,
Thank you for the quick response… I will be recording the commission as income or margin from the supplier. Will I record the expense as a credit note first then effect the payment? Traditionally, I purchase from supplier and sell to client providing the 5% discount. To avoid me chasing payments, there is the option of direct purchase from supplier under my name.

Please don’t change the circumstances. You asked about one thing, and now you’re asking about something else. Rather than me guessing, why don’t you tell me all the circumstances.

Apologies. I was just elaborating on the usual transactions, not changing the circumstances. In this instance there’s only one circumstance which relates to my first question. Thank you for your help.

Quite correct, as you only ever asked about “one thing” - cashback payments.
Providing your “traditionally” comparison did not ask “about something else”.

No, as your “customer” paid the supplier directly, not you, therefore they aren’t a customer on your books, so there is no customer to issue the credit note to.

So just making the payment only will suffice. Providing a TRANSPARENT reverse commission, discount, cashback as part of the commercial terms is unlikely to be considered a bribe or kickback, as it’s being fully disclosed.

Thank you Brucanna for the clarification.