Hello, first post for me here, I've searched everywhere, so apologies if the answer to my question is staring me in the face!
I recharge expenses to my clients. This is definitely a recharge and not a disbursement.
When I enter an invoice it has my fees and the expenses I am recharging:
eg
Fees £100 Expenses £50
VAT £30 TOTAL £180
I use VT Transaction for my books. When I enter the above invoice, how do I enter the recharged expenses? If they go on the "Expense" heading, there is no way to show from which bank account/petty/credit card they've been paid so my balances and reconciliations will be wrong.
I am sure I've missed plenty of essential information from this question, so will await your responses eagerly, and provide as much as I can then.
Am a bit confused by question, as when we do consulatncy work we charge our customers for all "out of pocket expenses" incurred (i.e. flights, accomodation, meals etc) and we do normal expense report for the spending itself, so it is coded to the expense codes and if paid on company card paid from that account.
The invoicing of the expenses simply balances these positings, as we code the charge on invoice to same nominals and they just net each other off.
From my perspective the recording of the expense itself should resolve the bank account/credit card it was paid from and then the invoice to customer just credits the same nominal codes to keep true "expenses" that are not rechared to correct amounts.
So if I've got this straight, I should record the expenses as normal expenses when they are incurred and then effectively record them as sales when I input the invoice, so that they cancel out?
Won't this affect my recorded profitability, in that I will effectively be increasing my turnover (all the recharged expenses) without increasing my net profit? So my profit as a percentage of turnover will be reduced?
I would set up an income account called something like 'Recharged expenses income' and use that for the income. It needs to be shown in your turnover. You could also set up specific accounts to record the related expenses, for instance an 'Expenses recharged to clients' cost of goods sold account, although it may be that these expenses are not easy to separate from other expenses.
