This article explains how to record in FreeAgent if you receive an amount of money that's already had bank charges, payment processor charges, currency charges, commission, fees or subcontractor's CIS tax deducted.
It's fairly simple to split a transaction between more than one category in FreeAgent, though you may need to start by setting up one or more new categories.
But what happens if you receive an amount of money that's already had bank charges, fees from a payment processor such as PayPal, GoCardless, Stripe, Dwolla or SumUp, currency charges or commission deducted?
CIS Deductions for Subcontractors would be split when creating the invoice.
Here's an example.
Customer paying net of payment processor charges
You've invoiced your customer for £126, but the money that comes into your bank account for that invoice is only £100 because your customer pays you through a payment processor, who deducts charges.
So how do you record that receipt so that you account for the charges and don't have your customer's amount permanently looking as though that customer still owes you £26? By splitting the Money In transaction.
1. Increase the amount of the invoice receipt
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.
Select the transaction, then choose 'More Options (alternatively, you can hold down the 'alt' key on your keyboard while you select the transaction) to access the 'Edit a transaction' screen. As you explain the transaction with type Invoice Receipt, change the amount to the full amount of the invoice. So in this example, you would change the amount from £100...
Finish explaining the transaction as normal, choosing the correct invoice from the unpaid ones.
Create the new explanation.
2. FreeAgent automatically adds a new payment for the deduction
You'll see that FreeAgent has now put a new payment of £26 in, to make the accounts balance match the bank statement balance.
You now need to explain this as the deduction, which might be bank charges, commission paid, or tax.
In this example, you would explain the £26 as bank charges, which is a type Payment and is in the Bank/Finance Charges category.
You would then explain the rest of the transaction as normal and then save it.