I supply services to artists - framing, fine art printing etc. Sometimes I invoice an artist but they elect to collect and pay for the job at my wife's Art Gallery, through her card payment facility. In this case the Gallery will charge me a small fee usually 5%.
I can see the Gallery can invoice me for the 5% so, presumably, that part is straightforward.
I now have to get a system in place for my taking a payment of 95% from the Gallery and the Gallery has to have something to justify paying me the 95%. If I invoice the Gallery then I'm essentially duplicating most of the invoice given to the Artist.
There are several ways to do it. The full path of my suggestion is below. It depends how much of an audit trail you want, as some stages can be bypassed
Invoice customer as normal
In bookkeeping terms I would
Debit Customer account (full amount)
Credit Sales account (full amount)
When payment is made
Credit Customer account (full amount)
Create a psuedo bank account (gallery?) and debit account 95%
Create expenses account (Handling fee?) and debit account 5%
This will leave a debit in the Gallery account. When that is paid to your own bank account
Credit Gallery account, and debit your own bank account.
The shorter route would be to
Credit Sales (full amount)
Debit expenses account (Handling fee) 5%
Debit your own bank account the balancing 95%
But this way does not keep track of what your customer, or the gallery owe you
Like I said, there are other ways too, these are just my suggestions
Bill's inital suggestion is better for an audit trail should anyone look at it in the future and try to see the transaction lifecycle through your wife's accounts - as you can quite clearly see these as bank charges which is how I would account for (Acquirer - debit/credit card handler) fees.
