I have a client who have taken out insurance for their off licence ( shop ) business but goes through on monthly instalments by direct debit by theie business bank account. How would I code this on Sage instant accounts : 8204 or 7104? Also, as it starts from Sep 2015 to Jun 2016 how would this be entered on sage?
Hi Anita
7104 is premises insurance. 8204 is other. BUT - you can set up another code if you want, I have a few for some clients, eg have one for PII cover, one for premises and one for asset cover. As long as you are consistent with your keying, its up to you. You could change the name of the code 7104 and have it as 'shop insurance' if you wish...whatever suits.
Key the invoice from the insurance company as a supplier, use code T2 as its an exempt supply, to whichever nominal code you choose
They will pay more than this invoice shows, as its spread monthly rather than a one off payment, so work out the difference between the charge for credit (you should have a separate doc showing this - the most common provider is 'premium credit' ) enter this difference as a dummy invoice to the SAME insurance supplier - NB - to a nominal code in the 79xx range (charge for credit or one of your own name).
Then when the D/D is presented through the Bank, key using Bank Supplier icon to the Insurance invoice and then the dummy invoice - when they have paid all of the instalments then you will see the suppliers account at nil.
You can then do a separate exercise for prepayments.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
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The client received one direct debit letter, stating the monthly payment schedule, therefore no additional invoice sent to them. How would this be entered onto sage instant accounts, can this be done manually by myself every month by creating a supplier than coding to 7104 every month instead of prepayments?
They will have an invoice - just most likely they havent given it to you. Or sometimes its by way of a letter that shows the total insurance, plus the payment schedule although careful as the latter covers the insurance PLUS an element for paying via instalments.
I wouldnt key an invoice upon payment of the direct debit as then the accounts are not reflecting the overall position as the insurance bill is incurred.
So - try again asking for the invoice or at the very least the insurance letter (they can get a copy from their insurance icon). Then set up the insurance company as a supplier and key the letter/invoice for the full amount for the year. Then, via the same supplier, set up another 'invoice' for the difference between the insurance and the total charge for credit as per the schedule and key this amount to the 'charge for credit' or similar cost code (set one up near the Bank charges/interest range in the 79xx area.
Then when the Direct debits are paid - allocate them to the main invoice first and as time progress then the dummy charge for credit 'invoice' and once all the direct debits are paid the balance will be nil.
On top of that you need to journal for your prepayments.
HTH
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi again
Just a thought - there is another way you can do this as well - you could key the insurance and dummy invoice straight to the 'prepayments' nominal code and then do your journals to do the reversal of the prepayments/dump to the expenses codes on a monthly basis. Horses for courses, but some people prefer to do it this way, so its whatever you are comfortable with!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I will ask my client again for another letter, hoping they would be able to locate this to me but I doubt very much they would have it or ask for it.
However, they have only gave me the direct debit payment schedule showing only 10 payments of £65.72 per month, starting from 10/09/2016 to 02/06/2016. Do I code this to 7104 code?
I would like to know what is the quickest and easier method for entering this onto sage instant accounts, again will this be entered as a journal entry and on Sage is this located in the nominal code heading?
I will ask my client again for another letter, hoping they would be able to locate this to me but I doubt very much they would have it or ask for it. Why would they not have it - are they in the habit of throwing away important paperwork? If they dont wish to hand you the original thats fine in this instance they can let you have a copy. Stress the need for it ie the direct debit does NOT show you what the insurance actually costs hence why you need the paperwork. Failing that - ring the insurance company and ask for copies.
However, they have only gave me the direct debit payment schedule showing only 10 payments of £65.72 per month, starting from 10/09/2016 to 02/06/2016. Do I code this to 7104 code? No - because the Direct Debit does not represent the cost of JUST the insurance, as explained in my response.
I would like to know what is the quickest and easier method So you dont want the CORRECT method? I have answered with the CORRECT method and indeed I have even gone to the trouble of giving you two ways this can be keyed. The Accounts need to be completed accurately. for entering this onto sage instant accounts, again will this be entered as a journal entry ( no - see my answer. The journal is for the prepayment exercise) and on Sage is this located in the nominal code heading?
Thanks
AnitaP
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi Anita, an alternative method would be simply to post a bank payment through sage to 8204 with T2 code (I always used T9 before but Jo is correct here) each month from the bank statement. Personally I wouldn't be worrying too much about posting any journals at this stage unless you are doing monthly management accounts and even then it wouldn't be particularly material. I would look at prepayment journals at the year end if that is your remit. There may be a further charge for paying monthly but not necessarily so, strangley enough when I took my PI with Hiscox they (or my brokers) insisted I pay monthly as an annual charge was more expensive!
The alternative method that you have replied back to my question, seems feasibly for me and it would be simply to post a bank payment through sage to 8204 with T2 code each month from the bank statement. There are no monthly management accounts for this business as its a small off licence/convenience store business.
I think you are correct to say to me as its the similiar situation with the client the annual charge was far more expensive hence they opted to pay this way for it.
Hi Anita, an alternative method would be simply to post a bank payment through sage to 8204 with T2 code (I always used T9 before but Jo is correct here) each month from the bank statement. Personally I wouldn't be worrying too much about posting any journals at this stage unless you are doing monthly management accounts and even then it wouldn't be particularly material. I would look at prepayment journals at the year end if that is your remit. There may be a further charge for paying monthly but not necessarily so, strangley enough when I took my PI with Hiscox they (or my brokers) insisted I pay monthly as an annual charge was more expensive!
If its through brokers, they often work quite differently than direct and its all to do with kickbacks. Certainly Hiscox are a breed apart (and Im not always sure in a good way - certainly expensive and sometimes combine more insurances than you need and say they cant split them, but have a good rep on the cust service front!)
-- Edited by Cheshire on Monday 28th of March 2016 02:36:45 PM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I think you are correct to say to me as its the similiar situation with the client the annual charge was far more expensive hence they opted to pay this way for it.
Regards,
AnitaP
Would be interested to know which insurance company they are with - might move mine to them!
If its premises insurance I would code to 77xx - personal pref but it keeps the premises exp together
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
