I would be cautious, my understanding is that this may constitute theft under the Theft Act
The client is intending to deprive the rightful owner. Not an expert but the clients intent is the key issue, even if he were to hand it back if challenged. If he is never challenged, he would never return it.
The company received a payment from a customer. The thing is, that this payment was for invoices that are not due, in other words the balance is cleared. My director told me instead of posting a payment on account, create a new nominal code in sage for unallocated payments and keep it there. In case the customer realize he made a payment that was not due we will pay it back.
Can anyone advice? I would like to record it as payment or account or at least to inform the customer and transfer the money back. I do not know how it works. Can I really create a separate nominal code for a such payment?
I would post it as a payment on account. I suspect that your director doesn't want to do this, as it would show up if you send a statement out.
When this happens to me, I drop a quick email to my client letting them know that they've (very kindly) paid me twice, and that I will knock the payment off their next invoice. I suppose it depends upon your relationship with your customers.
I have had to deal with this sort of thing as well....both payments made twice or by unknown people and the director not wanting to pay it back until the customer notices they've done it! If I know who it's from I would post as a payment on account on their account. If I don't know who it's from (and it has happened a couple of times) I have created a new customer account called "Unknown customer receipts" and have posted it as a payment on account. I suppose you could create an "uknown/miscellaneous income" nominal account and do a bank receipt to this.
I hate it when the client refuses to pay it back until the customer notices, which sometimes hasn't been until a year later when they've had their year end accounts done!
I was afraid about the Theft Act, as far as I know it is fair to tell the customer that he overpaid, but as I told before, my director disagrees. I think I will follow Pauline's advice and will create an account for unrecognized customers though not sure if it is a right thing to do. If it was upon me I just would inform the customer and put it as a payment on account.
I think I will follow Pauline's advice and will create an account for unrecognized customers though not sure if it is a right thing to do. If it was upon me I just would inform the customer and put it as a payment on account.
Just to re-iterate, I would always tell my client about it and it would be up to him whether to tell the customer or not. I would probably get him to put something in writing to the effect that I had told him and he was aware of it...just to cover myself. If I knew who the payment was from I would put it as a poa on their account....I'd only open an unrecognised customer's account if I didn't know who it was from.
From a bookkeeping perspective rather than a moral one.........some companies (usually larger companies) will keep a separate suspense account for unallocated payments. They will be genuine 'unknowns' either due to the incorrect referencing on the payment or simply the laziness/incompetence of the receiving sales ledger staff (i.e., a little investigation will probably lead to identificaton of the payer).
The point is, this account will be a bit of a headache and will usually involve time and effort trying to sort it out and identify the correct customers. What you have here are known payments and if you create a similar account, and if you get more and more of these overpayments, then you will create an account that you will have to keep on top of and will continually have to reconcile. You will be causing more work for yourself theoretically and doing the opposite of the companies mentioned above!
One question to ask: what has caused this directors attitude to the customer where he will even consider technical theft? Is it just with this customer? Thats two questions but a likely answer is he doesn't feel he is charging enough.
To be honest i have no idea why he wants to double charge his customer, he thinks that it is their fault if they do not look after their accounts and payments. Thank you a lot for your advice, I will try to convince to put the payment on the account as we do know who the customer is.
