FrontAccounting forum — How to deal with over or under payments?

Re: How to deal with over or under payments?

null@example.com (bailey86) — Tue, 26 Mar 2013 12:32:47 +0000

After consulting with our accountant this is what she wants us to do.

Under payments. Leave them on the system and then later they will be dealt with as bad debts. Of course we could put in a small petty cash payment to clear any little underpayments to keep our books tidy.

Overpayments.

These are not supposed to be allowed. This is due to money laundering rules. These should stay on the accounts and be moved forward year to year.

Re: How to deal with over or under payments?

null@example.com (apmuthu) — Mon, 25 Mar 2013 15:19:23 +0000

Or send the company the credit note as well!

Re: How to deal with over or under payments?

null@example.com (elax) — Mon, 25 Mar 2013 13:16:30 +0000

What I do, for under payment, is create £1 discout (either when you enter the payment) or create a credit note for £1 (you'll need a special 'discount' item). That's the cleaner way IMHO.

Other wise, you can create a cash payment of £1 (but you'll need beforehand to 'feed' the cash account with $1 by doing a deposit from whichever GL account you want to associate this mistake).

The problem with that, is this £1 payment will appears on statement (even though the customer didn't pay it) , which is why, the credit note/discount is easier.

For over payment, you can create a fake invoice (to clear it) or make a cash deposit to this customer (pretending that you gave the cash back to the customer) then allocate this deposit to the initial payment (yes it works !!!). (again you'll need to make a deposit to the cash account against what ever you want so the cash account balances to 0).

However, if your customer is a company, it's better to leave stuff as they are, because if they do their accounting properly they will have also to do the same kind of thing on their side which is a pain for everybody, it's therefore easier to send them a normal statement and pay/receive the difference at some point.

/Elax

How to deal with over or under payments?

null@example.com (bailey86) — Mon, 25 Mar 2013 13:01:35 +0000

Say we have an invoice we sent out for £121.00

The customer sends us a cheque for 120.00 as payment - £1.00 under by mistake.

He is a good customer with sloppy accounts and as far as he's concerned the invoice has been paid. We're not bothered about chasing £1.00 from a good customer.

How do we account for this under payment? The invoice will always show as having £1.00 left unpaid. We could pay this from petty cash - but then how do we account for this?

And the same for an overpayment. Say the customer pays us £125.00 by mistake. We tell him but he says 'Don't worry - don't bother sending the overpaid £4.00 back'.

This will always show on the payment allocation screen as the £4.00 will never be allocated to anything.

Again, how do we account for this?

Cheers,

Kevin B