Allocate fees or commission to a bank transaction

This article explains how to allocate bank charges, payment processor charges, currency charges, commission or fees to a bank transaction.

For example, you've charged your customer £120 but the money that comes into your bank account for that sale is only £117 because your customer pays you through a payment processor who deducts charges such as PayPal, GoCardless, Stripe (if you haven't enabled a feed), Dwolla or SumUp.

Navigate to the bank transaction 

Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.

Choose the relevant bank account from the list of accounts and click on the transaction that relates to the sale to open up the explanation options.

Next, click on ‘Adjustments' and select 'Fees and commissions' from the drop-down menu. If you just need to allocate the transaction between two or more categories, select ‘Split transaction’ instead.

The next steps will vary slightly depending on if you are splitting a money in or a money out transaction.

Money in transaction

Enter the amount of fees or commission

Enter the amount of fees or commission in the 'Value' field, £3 using the example above.

You’ll see that the transaction total has increased by the amount of fees or commission.

Next, select the relevant category for the fees or commission.

If you created a custom category for the fees or commission, select 'Other' and choose the custom category from the drop-down menu.

Please note that this will allocate the fee or commission amount entered to the selected expense category.

Once you've chosen the relevant category, enter a description for the fees and select 'Save and finish' at the bottom of the screen to allocate a single fee or commission amount. If you’ve got additional fees or commission to allocate, select ‘Save and add another’ instead and repeat the above steps.

Explain the remaining amount

FreeAgent will then add the fee or commission amount to the transaction and you can explain the remaining amount.

If you created an invoice for this sale, select 'Invoice Receipt' from the ‘Type’ drop-down menu and choose the relevant invoice. If you didn’t create an invoice, select 'Sales' instead.

Select ‘Explain transaction’ to complete the process.

Money out transaction

Enter the amount of fees or commission

Enter the amount of fees or commission in the 'Value' field, we’ll use £3 in this example as well.

You’ll see that the transaction total has decreased by the amount of fees or commission.

Next, select the relevant category for the fees or commission.

If you created a custom category for the fees or commission, select 'Other' and choose the custom category from the drop-down menu.

This will allocate a split value to the selected expense category.

Once you've chosen the relevant category, enter a description for the fees and select 'Save and finish' at the bottom of the screen to allocate a single fee or commission amount. If you’ve got additional fees or commission to allocate, select ‘Save and add another’ instead and repeat the above steps.

Explain the remaining amount

FreeAgent will then remove the fees from the transaction total and you can explain the decreased amount.

Select ‘Explain transaction’ to complete the process.

Using bills to record fees or commission

If you create bills to record commission or fees, you’ll need to manually adjust the value of the transaction.

To do this, navigate to the relevant transaction and select ‘More options’ from the drop-down menu.

If you created an invoice for this sale, select 'Invoice Receipt' from the ‘Type’ drop-down menu. If you didn’t create an invoice, select 'Sales' instead. You would then change the value to the full amount of the sale, £120 using the example above.

Select ‘Create New Explanation’ at the bottom of the screen.

FreeAgent will then add a new Money out transaction for the difference, £3 using the example above, which you can explain as a Bill Payment for the bill you created for the fees or commission.