My client gets a payment that is offset against something else. He needs it to show as income, which I have done. I posted it as income into his current account. He hadn't told me he didn't physically receive a payment until I queried it when the payments weren't being reconciled in his bank account. Where should/could I post them to if not into his bank account?
Where money doesn't hit the bank I keep a (virtual) petty cash float for clients.
With many clients who bank irregulary I use the petty cash float as a holding account.
At year end they either bank the balance of the float or it gets moved to drawings (after taking account of outstanding cash paid expenses).
So, taking the above in simple terms
Client gets paid cash
I record that as petty cash
Client banks money
I move from petty cash to bank
The float of unbanked cash at period end is either drawings or balances off expenses.
On the expenses front :
Expenses paid personally all recorded as accruals
If reimbursed from bank then reduces accrual balance
If not then balance off against petty cash float (see above).
It all keeps the tiniest businesses sweet and sorts out those that seem to have a real difficulty moving actual cash to a bank account (got a couple of those).
All cash payments and receipts basically run at a simple petty cash system.
HTH,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
On another business that all would have been fine, however he doesn't receive any cash either. He works in healthcare and the payment is from the NHS, but is offset against associate payments, however (and this is where it gets complicated), not directly, so I can't even put it against those. I'm wondering if its just worth me creating a separate 'bank' account for this income and see what his accountant suggests when he does the year end next month.
Thats why I was suggesting using a petty cash account.
The money doesn't have to be cash. The accountant can almost be thought of as a scratchpad area to tie up the loose ends.
I think that you are thinking of the petty cash account as a litteral cash account rather than a virtual one.
Pay the payments from the NHS into the petty cash. Take the offset payments out of the petty cash basically unwinding the offsetting, transfer the balance to bank as that was the bit that was received and the matter will resolve itself.
Hope that makes sense.
The more that I do this the more that I get used to unwinding the messes that clients make without seeing that they are doing anything that would cause an issue to record and using the petty cash as a holding account to resolve things like offsetting has been one of the main weapons in my arsenal... The other one being beating processes, procedures and entry controls into clients.
HTH,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
