I have recently taken over the running of an office and included in this is the running of VT Trans + after studying this I think I am sort of up to speed however there is one thing ii just cannot get my head round. There are quite a lot of entries missing from VT Trans that I have had to update but one is driving me crazy.
We have fuel cards and we receive an invoice from the Fuel Card company which goes on VT, we also pay these amounts by DD every month which also get logged on VT however when the guys give me the actual receipt that they get from the petrol station these have also previously been entered onto VT.
Now maybe I am completely wrong here but surely that will create an overpayment on our part? If someone could please advise me with this I would greatly appreciate it. Maybe I need to add them as something other than a payment or am I right in saying that these should not be on VT.
Although the latter one is more likely to be done just by going into the list of suppliers, picking the fuel card, clicking on the entry and saying pay.
Out of interest, is your fuel card set up as a seperate bank account? That would give slightly different processing missing out the PIN
Dr Expenses
Cr Fuel Card Account
To pay fuel card
Cr Bank
Dr Fuel Card
There are no doubt a couple of dozen other ways of achieving the same goal. It will be best to keep with the way that the previous bookkeeper did it which will not be difficult to track. Just start with the motoring expenses excpenses and drill backwards. The previous incumbants method will reveal itself.
HTH,
Shaun.
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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.
If you're logging the fuel receipts I would opt for the second method, but not log the invoice. When the invoice has been paid I would reconcile the fuel account and match the entries on the invoice against the receipts.
What I do (I only have about 12 a month to log though) is keep the fuel receipts to one side and pin the fuel receipts to the bank of the invoice that relate to it. Then I log the invoice as a PIN.
Shaun: Thinking aloud, would logging the receipts when they come in have any ramifications if VAT registered? I'm thinking that the tax point should be the date of invoice?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
quite correct. I would record them based on the date on the receipt even if such is in a later period.
If receipts are provided late then they are picked up on the next VAT return (in general we would be talking very immaterial amounts and VAT will have been slightly overpaid rather than underpaid).
For others not used to the way that VT works, when it processes VAT all entries that make up that VAT return are marked as having been processed. It does not use only dates to determine the transactions for inclusion so nothing is ever missed by the software.
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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.
Thank you for your response however I am not sure I explained myself very well in my first post. As it stands this is the process:
I will receive:
PIN from Direct Fuel Co which will go onto VT as a DR
I will also have a DD on the bank statement for the amount of above invoice which will be entered to VT as a CR
I will then receive a VAT receipt (from the driver who filled up the van) which will also go on VT as a PAY on the Bank Statement as fuel expenses??
I do not profess to be up to bookkeeper standards but surely this is creating a double CR on the one invoice resulting in an overpayment?
John, when you mentioned just keeping the receipts and attaching them to the invoice when it arrives (to hand to our accountant for quarterly accounts) would I still have to log them somehow on VT or could I just log the invoice and the DD payment??
I am sorry I am coming across as not having a clue (but basically that's the long and short of it) and you having to explain everything in Lemans terms. I really appreciate you both taking the time too answer.
the way that you are thinking about what you are doing seems to be missing a step completely I'm afraid.
The raising of a PIN is a credit (Cr), the settlement of the PIN is a debit (Dr). The way that you have it set up currently as you say, you have two credits.
The real issue here is where in the software is the physical link in your scenario between the motor expenses and the purchase invoice? You seem to be running them completely seperately which is as you identify having the effect of doubling up.
Lets look at the way that you are approaching this and attempt to work around it.
I see what you are doing in that you are entering everything through the payments and receipts effectively missing out the PIN (but you are still entering one). If you want to continue to use that method then you need to set up the fuel card as a bank account as at the moment you seem to be recording the same entries twice (From payment to bank and then from PIN to bank).
The accounts that you would need to maintain are Payment to fuel card (Motor Expenses & Bank:Fuel card) and then handle the payment of the card as a transfer between accounts rather than a payment (Bank:Current Account & Bank: Fuel Card).
See how that worked? The expense was recorded via the P&R screen to the card then the card was cleared via a transfer between bank accounts.
No PIR was raised using this method.
Its not the method that I would use but it fits with what you are doing currently.
You will need to delete and reinput all of your entries related to fuel that you made under your existing approach (PIR's, expenses, bank movements, etc.) and reenter using the fuel card as a bank account approach (you could amend you entries but I can pretty much guarantee that you will find it much faster to simply get rid of wha you have done to date and redo it. You will only hit issues if you have already filed a VAT return because it will not allow you to get rid of the entries unless you also delete the VAT return(s) which would also need to be recreated (if you do that remember to first take a note of all entries from VAT returns that are removed and recreated)).
It sounds from your first post that you had only just started that excercise so gingers crossed it shouldn't be too time consuming for you.
Hope that helps (and hope that you haven't done too many already!)
kindest rgeards,
Shaun.
p.s. I would wait until John has also commented before acting upon this as VT is software that can be adapted to the way that you work and maybe John will see something in the scenario that I haven't because I am basically relating everything back to the way that I would do things and trying to work that into the way that you have been using the software.
p.s.2. amended to add the VAT return warning
-- Edited by Shamus on Monday 8th of February 2016 10:23:04 AM
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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.
John, when you mentioned just keeping the receipts and attaching them to the invoice when it arrives (to hand to our accountant for quarterly accounts) would I still have to log them somehow on VT or could I just log the invoice and the DD payment??
In that scenario just the invoice and the DD. What's happening at present is that both the fuel receipts and the invoice is being logged, and as you've realized, ending up with too much fuel expenses. Check with your accountant that he/she is happy for you to do it the way I suggested, but it's certainly the easiest imo.
To explain Shaun, when the driver fuels up, they have a fuel card and are issued with a receipt (just checked fuelgenie and it's a proper VAT receipt) This receipt is being logged but when the invoice comes in from the fuelcard company, that is also being logged
To my mind, it's either log the invoice as a PIN, which is matched off when the DD is paid or log all the receipts but not the invoice, and if I was doing it that way I would certainly use a dummy bank account as you suggested.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I said: Shaun: Thinking aloud, would logging the receipts when they come in have any ramifications if VAT registered? I'm thinking that the tax point should be the date of invoice?
Shamus wrote:
Hi John,
quite correct. I would record them based on the date on the receipt even if such is in a later period.
I probably didn't explain myself very well there, as it commenting on the receipts versus the invoice, which hopefully has been clarified by my later post. At the time I didn't realise that the fuel receipts had the vat breakdown. But the receipt (in my case from Morrisons) has the petrol station VAT number on it, whereas the invoice has the fuelcard VAT number on it.
It probably doesn't really matter in the general scheme of things but as I say, I was just thinking aloud.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Leger wrote:To explain Shaun, when the driver fuels up, they have a fuel card and are issued with a receipt (just checked fuelgenie and it's a proper VAT receipt) This receipt is being logged but when the invoice comes in from the fuelcard company, that is also being logged
To my mind, it's either log the invoice as a PIN, which is matched off when the DD is paid or log all the receipts but not the invoice, and if I was doing it that way I would certainly use a dummy bank account as you suggested.
I'm pretty sure that we are both saying the same thing in different ways John. Appologies if my explanation earlier was in any way phrased badly (certainly wouldn't be the first time!).
I'm taking the fuel card the same as a debit type credit card (you get a monthly limit and each month it is automatically paid off in full by DD).
The debit card in itself is merely an extension of whatever bank account feeds it (whether physically or artificially joined) so as we are both saying, using that method you don't raise a PIN.
Taking the chain of events (as they should happen) :
1) Worker fills car with fuel on fuel card and gets an invoice
2) Worker hands invoice to Sarah who enters it via the P&R screen into VT
Dr Motoring Expenses
Cr Fuel Card
3) Fuel card statement arrives
4) Transfer money from Current Account to Fuel Card (as its a DD this part is done automatically but needs to be recorded in VT as a transfer)
Cr Current Account
Dr Fuel Card
The statsus now is that :
a) The expenses are recorded against motoring expenses
b) Bank is reduced by the correct amount in VT
c) Balance of fuel card account is zero in VT.
Where Sarah was going wrong was at (4) where when the statement arrived she was then entering the payment against the bank as a repeat of the expense.
As I say, I think that both of us are singing from the same hyme sheet John but it seems to be getting a little lost in translation.
Definitely one of those where you really want to be sitting there with VT up in front of you going "look, it goes there" (to which I would expect the response, "But thats what I was saying").
To my mind, it's either log the invoice as a PIN, which is matched off when the DD is paid or log all the receipts but not the invoice, and if I was doing it that way I would certainly use a dummy bank account as you suggested.
I think that your last paragraph emphasises that in that it encapsulates pretty much what I thought I was saying in my first reply in this thread but may not have conveyed properly.
Do you then agree that Sarah's best approach would be to delete the current entries from VT related to this and reenter them correctly?
If you concurr with that then I hope that you are in agreement over my warning about the potential VAT issue within the software if a return has already been filed.
kindest regards,
Shaun.
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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.
To my mind, it's either log the invoice as a PIN, which is matched off when the DD is paid or log all the receipts but not the invoice, and if I was doing it that way I would certainly use a dummy bank account as you suggested.
I think that your last paragraph emphasises that in that it encapsulates pretty much what I thought I was saying in my first reply in this thread but may not have conveyed properly.
Do you then agree that Sarah's best approach would be to delete the current entries from VT related to this and reenter them correctly?
If you concurr with that then I hope that you are in agreement over my warning about the potential VAT issue within the software if a return has already been filed.
kindest regards,
Shaun.
I wasn't disagreeing with what you were saying Shaun, and my apologies if it came across that way, but I did think you had missed the bit where both the receipts and the invoice were being logged. It appears you didn't!
Yes I agree with your last two paragraphs and hopefully this has been caught before a VAT return has been done.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
May I just throw I small spanner in the works.
I have a fuel card account and we receive a weekly invoice for the fuel purchased. However our fuel account doesn't work like a debit card as your example Shaun. As we pay a fleet rate per litre the value we pay is different than shown on the receipt the driver obtains from the garage. So I do as John does, check the individual receipts against the litres charged and pin them to the weekly invoice. The fuel card company would then be a supplier and the weekly invoice is entered as a PIN (fuel expense) and the payment by DD is allocated to the invoice.
In that scenario I would still process the way that I do but then put through a balancing entry for discounts.
Same outcome, you are simply entering the discounted amount up front rather than the true cost. With my method it would be easier to show the savings that have been made in management reports but then its not that much more difficult to calculate it out if required so a bit of six of one, half a dozen of the other there.
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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.
Sounds a lot of faffing about that Shaun, if you don't mind me saying. The fleet rate will vary each time depending on the cost of fuel.
In your scenario you could have 98p at the pump after a price reduction but £1.05 on the invoice, or vice versa after an increase, but until the invoice comes, how will you know the fleet rate at that point?
I would imagine its even more messy if VAT is involved.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
maybe its my mind but I don't see it being at all complex.
Whatever the difference is between the receipts in total and the statement is the discount.
20% of the variance must relate to VAT on the discount.
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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.
Sounds a lot of faffing about that Shaun, if you don't mind me saying. The fleet rate will vary each time depending on the cost of fuel.
In your scenario you could have 98p at the pump after a price reduction but £1.05 on the invoice, or vice versa after an increase, but until the invoice comes, how will you know the fleet rate at that point?
I would imagine its even more messy if VAT is involved.
The joys of management accounting (in particular). I used to see this sort of thing on management accounts when I worked in Corporate.
Although, isnt not showing the discounts missing a potentially vital piece of info - bit like not entering the info about the NI allowance 'gains'.
Dare I ask what 'PIN' is? I dont use VT. Yet! But always have a read for when I take the plunge (if I can ever find time!)
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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 use the shortened names as those are the letters in the middle of the button so makes my explanation easier to understand if one is using it alongside VT.
My appologies that I didn't expand upon what I meant in the original post for those who don't use VT.
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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.
Ahhh. I think I might've got that the other day, but then thought the might be something else, the secret code like Sage nominals appear to non sage users. Lol, before you say anything, I will wash my mouth out for suggesting it!!!
Oh and no need to apologise, you know me.....inherently nosey, especially when bored with work piles or I should by studying!!!
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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
Sounds a lot of faffing about that Shaun, if you don't mind me saying. The fleet rate will vary each time depending on the cost of fuel.
In your scenario you could have 98p at the pump after a price reduction but £1.05 on the invoice, or vice versa after an increase, but until the invoice comes, how will you know the fleet rate at that point?
I would imagine its even more messy if VAT is involved.
The joys of management accounting (in particular). I used to see this sort of thing on management accounts when I worked in Corporate.
Although, isnt not showing the discounts missing a potentially vital piece of info - bit like not entering the info about the NI allowance 'gains'.
Hi Joanne, It's probably the different approach based on our backgrounds lol. I see Shaun's approach as an unnecessary step, based on the clients I deal with. I am not saying it's difficult or complicated. However, you have dropped in a couple of extra steps by listing the receipts as they come in, then check them against the invoice, then calculate the difference (not necessarily a discount, it could be a premium some weeks) I would also argue that the tax point for VAT is the date of the invoice, not the date of the receipt.
The fuelcard will have a standard countrywide price for that week, and it doesn't matter whether the driver fuels up at Asda at 97.9p a litre on Wednesday or in rural Scotland the next day at £1.10 a litre, so I fail to see any vital info that is missing. In fact, completely the opposite, because the business owner hasn't been charged the pump price.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
I would argue that the tax point is at the point that the service was rendered, not when the invoice was reveived. As an extreme example. what if the supply of goods was in one year but the receipt of invoice was not until the next year. In this case the amounts are hardly material but in principle does your arguement not break the fundamental basis of accruals accounting in that elements of the financial statements must be recognised in the period to which they relate, not when they were paid.
Filling up a car with fuel to do a job but not recording that until the next period when the invoice arrives means that the expenditure could in certain instances not match the income to which it relates.
As I say, the amounts are immaterial so ity really doesn't matter in this instance but I just wanted to make the point.
On the seperate issue of when does management reporting become important, in this last quarter I've had a very small client who takes on several largish projects a year. Their quote system did not take into account proportional reallocation accross jobs of general overheads which meant that some jobs were actually being performed at a loss.
If I had not been able to properly analyse the clients books and records I would not have been able to improve their quoting system to ensure that all jobs taken returned a profit and that they also knew when to turn projects down.
The moral of the tale is that even though our clients believe that they are too small to need management accounts and proper analysis the reality is that we put ourselves in a better position to expand our services and offer value added services by taking those extra few steps to collect information that in many cases we may never use but for the cases where we do it opens opportunities to charge clients extra.
Also my background is not dissimilar to Joannes (#1) so like her I share a similar need to collate as much data as possible... Not quite up to IBM's big data where they collect absolutely everything but certainly things like discounts received I would always record seperate to the real expenditure to which they relate. In that instance it would be to tell the business owner how much they saved over the period when they innevitably ask.
#1 Joanne was front of office corporate, conversely I was back office banking operations.
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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.
I would argue that the tax point is at the point that the service was rendered, not when the invoice was reveived. As an extreme example. what if the supply of goods was in one year but the receipt of invoice was not until the next year. In this case the amounts are hardly material but in principle does your arguement not break the fundamental basis of accruals accounting in that elements of the financial statements must be recognised in the period to which they relate, not when they were paid.
Filling up a car with fuel to do a job but not recording that until the next period when the invoice arrives means that the expenditure could in certain instances not match the income to which it relates.
Hi Shaun
Fuel put in 25th - 31st January. Invoice is dated 5th February. If management accounts were needed I would accrue it to January. Even for a small business I would accrue the fuel back to January if that was the year end, so in that aspect we agree (I think) However we weren't discussing accruals but the date recorded on the software.
For VAT though, the tax point is 5th February surely?
What if I order 10k worth of goods and it is delivered to me on 25th January. The invoice is dated 5th February. For VAT purposes what date do I record the invoice as? I'd say 5th February but I guess you would say 25th January?
Understand your later comments and see where you're coming from.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
