• From: Bahrain, Manama
  • Registered: 12/24/2019
  • Posts: 28

Topic: Cash collection transactions

I run a delivery service which is collecting money from customers, I charge my clients 10$, the clients charge his customers $50 for the items being delivered by my company.

I invoice the client $10 and I have $50 cash in hand which will be deposited in my bank account. How do I reconcile the $10  from the $50 and pay the client $40 without effecting my sales and purchase reports (sales = $10) and how can I show that I have to pay the client $40 as this $40 is not a sale. it is a money collected on behalf of the client which goes to my bank account and then it gets transferred to the client. 


Service amount (Direct Sale invoice) = $10
Money collected from Client's Customer = $50
Money needs to be transferred to client = $40

any suggestions or guidance on to how I make these transactions after making the direct sale invoice and how I reconcile the $10 from money collected and send the rest to the client?.

  • From: India, TN, Karur
  • Registered: 05/16/2014
  • Posts: 1,182

Re: Cash collection transactions

Here you are acting as logicstics company as well as money collector.  And all money comes to your bank account and moves to your customers. So it's came into your bank and moves to them.

So you need to invoice only for $10 USD  and from payments you need a little modification to record the received 50 USD and 10 will be your accountable. And 40 has to transfer to the customers account.  And this customer account has to be balanced with accounts receivables.  This way you can process it.

Because the money reached your bank. So you need to record it in your system. And debit it from your bank and credit it on customers account. May be with that you can retain balance of multiple payments and make the payment to your customers at one entry. Till that it will be only your bank balance. So keep the GL entries to handle it..

Subscription service based on FA
HRM CRM POS batch Themes

kvvaradha's Website

3 Reply by DrCard (edited by DrCard 11/01/2021 08:22:05 pm)

  • From: Bahrain, Manama
  • Registered: 12/24/2019
  • Posts: 28

Re: Cash collection transactions

kvvaradha wrote:

Here you are acting as logicstics company as well as money collector.  And all money comes to your bank account and moves to your customers. So it's came into your bank and moves to them.

So you need to invoice only for $10 USD  and from payments you need a little modification to record the received 50 USD and 10 will be your accountable. And 40 has to transfer to the customers account.  And this customer account has to be balanced with accounts receivables.  This way you can process it.

Because the money reached your bank. So you need to record it in your system. And debit it from your bank and credit it on customers account. May be with that you can retain balance of multiple payments and make the payment to your customers at one entry. Till that it will be only your bank balance. So keep the GL entries to handle it..



So, I tested the method by putting a $10 in sales for the customer. Then I input an entry to debit bank and credit customer with $40. it was a succus as in the customer balances it showed me $-40.

But now there are orders with zero amounts for the items and the fees is $10. So, I have put it $10 in sales. So, again the customer balance is coming correctly however we have remaining $10 in customers payments to allocate in the system and by doing so. we will have incorrect customer balance.

Before second Payment
https://ibb.co/b5LpQvK customer balance correct
https://ibb.co/pWNyS5g remaining for the customer to pay (shouldn't be anything left)

After second Payment
https://ibb.co/4gyd4SR customer Balance Incorrect

Please advise me on what to do.

Thank you so much for the reply

Best regards

  • rafat
  • Senior Member
  • Offline
  • From: UAE, Dubai
  • Registered: 11/28/2017
  • Posts: 540

Re: Cash collection transactions

After you Direct Invoice the $10 then Receive the $50 ...Go
Banking and General Ledger ->Journal Entry

Journal Date    Account Code    Account Name                                Debit           Credit      Memo
01/11/2021    1060    Checking Account                                      50.00       
01/11/2021    1200 00001    Accounts Receivables: Donald Easter             10.00   
01/11/2021    2100 00001    Accounts Payable: Dino Saurius                     40.00   
                                                                                   Total          50.00            50.00

You then can go to Customer Payments and allocate the $10.
Then go to Payments to Suppliers and allocate the $40.

rafat's Website

  • From: India, TN, Karur
  • Registered: 05/16/2014
  • Posts: 1,182

Re: Cash collection transactions

If you take them in real world scenario. His customers are to be considered as suppliers,
And his customers clients will be his customers.

So that we can charge 50 USD from his customers and pay the 40 to his suppliers. But in this case there should be tax added for it.

In order to avoid that. He wanted to carry them as billing to their customers. Not his clients. The logistics companies can charge adjust the person who sends the goods. Not with receivers.

Lets consider you are invoicing only the 10, that would be fine. During the time of customer payment you will be having 50. And 40 has to be divided  and allocated Against the customer.

So payment to suppliers is not available. Here payment to customers. Which will be paid out to them. This thing we have to make some change in code.

Subscription service based on FA
HRM CRM POS batch Themes

kvvaradha's Website

6 Reply by DrCard (edited by DrCard 11/01/2021 08:24:37 pm)

  • From: Bahrain, Manama
  • Registered: 12/24/2019
  • Posts: 28

Re: Cash collection transactions

Thank you so much for the fast reply

Please tell me which are the files that needs to be modified and I will do the needed adjustments to the code and post them for you after testing them.

i will also post this in the Bug section
https://frontaccounting.com/punbb/viewt … 193#p40193

Best regards