GoCardless - The Book-keepers Forum (UK)

KChally · Veteran Member

GoCardless

VinceH · Expert

The easiest way to deal with GoCardless is to create a separate 'GoCardless' bank account in your accounts software.

When the money has been collected from the customer (or when you receive the payment from GoCardless) there are three transactions to post:

1) The full amount received against the invoice to that account (in your example, £140)
2) The GoCardless fee as a payment (in your example, £1.40)
3) A transfer from the GoCardless account to your 'real' account for the amount you actually receive (in your example, £138.60)

Your GoCardless account will now always balance out at £0.00, and your 'real' account reflects the one transaction that actually hits it.

Cheshire · Master Book-keeper

Go Cardless= rip off= don't use it. Get two years completely free banking, get folk to set up a free standing order, save yourself the money.

VinceH · Expert

Standing orders are only useful when you're talking about regular, fixed amounts.

For variable amounts (especially with clients for whom dealing with their own admin, such as paying people, is too much effort), the GoCardless fee is a very small price to pay for actually getting paid on time.

IMO.

Cheshire · Master Book-keeper

Got the impression the poster was doing the fixed monthly payment thing with clients, but I get your point if they are on offs.

Although if they are paying you up front it's not an issue.

For those paying in arrears, first time one of mine is late, they get a rocket up their wotsits, try it a second time and once they have paid me then they are an ex client.

edited for typo

-- Edited by Cheshire on Monday 18th of September 2017 09:27:21 AM

KChally · Veteran Member

Thanks for your replies.

Hi Joanne,
This is the new customer who is using Wave with 2 companies on it; Fitness and graphic design and is putting them both through one bank account, nightmare!!! have tried to explain she can get another free business account but shes not interested. She's been moving stuff around from one company to the other, another nightmare!! Some things are entered twice and others not at all. The Go Cardless is hers, yet another nightmare trying to match things up cos shes not put in any customers or even suppliers. Youre right, i wouldnt touch it with a barge pole.

Hi Vince,
Thanks for your suggestion, it seems simple when you spell it out, i will try it.

Wish id not said yes to this job now, but in my naievity as a new bookkeeper i was unaware of what could happen!! I shall not be stung again.

Thanks

Leger · Master Book-keeper

Hi Vince

Just to clarify. £140 to GC bank account. Payment to ? of £1.40 and transfer £138.60 to current account?

2) The GoCardless fee as a payment (in your example, £1.40)

Where to, commision or bank charges?

This is how I do it for Paypal transactions (paypal fee as a bank charge) as I see Paypal as a bank in a sense, but struggling with the same concept for GC (NOT saying you are wrong)

The alternative is probably more complicated (credit note to sales invoice?)

Leger · Master Book-keeper

KChally wrote:
Wish id not said yes to this job now, but in my naievity as a new bookkeeper i was unaware of what could happen!! I shall not be stung again.

Thanks

Hi Karen

What software are you using. It may be possible to split the two businesses in the accounts but just have the one bank account. On mine (VT +) you can have departments which gives separate PLs, TB's and Balance Sheets.

Hi Joanne

I'm not doing GC at the mo (hell, I'm not even doing standing orders) but have considered it for future use, I don't think 1% is a rip off given that paypal (which I do accept) is 3.4% + the dreaded 20p lol.

My only bugbear is on my bank statement for Tax Filer payments it just states Go Cardless, as I found out last week when importing the bank statements to my own accounts (first time I'd done it, what a breeze)

KChally · Veteran Member

Hi John,

The client is insisting on staying with the free Wave software and she has the 2 businesses set up separately, but with the 1 bank account, which I have asked her to disconnect for the time being until I have sorted everything out.

Thanks

KChally · Veteran Member

Oh yes John, I have also noticed a transaction for paypal, do you think it a good idea to set up another bank account for paypal and do the same as GC?

Thanks

Leger · Master Book-keeper

Hi Karen

I'm not familiar with Wave, but are the two businesses under one account (but separated on the software in a similar way to how I described departments) or is it two different accounts but shes got the same bank account on both?

Cheshire · Master Book-keeper

Hi Karen
I agree with John - the charge for Go Cardless is not a commission. It need to be categorised as Bank charges, although you could have a separate pot for it in that area of your chart of accounts. Agree with Vince's processing - via a 'dummy' bank account. You will reconcile this separate dummy account to the reports you download from Go Cardless, in the same way you do the main actual bank.

On the paypal bit - you will need the paypal statements/reports and yes you treat this as another Bank account. That includes again reconciling and agreeing the balances each period. You will also need to know what it is that is feeding into paypal. Ie - is it people just using paypal as a method of payment? Is so - then you have to allocate the difference between what is invoiced/due from her client and what paypal have paid you -again a Bank charge. Do this as Vince suggests. Or you can do as John suggests by way of a credit note, but with the coding on the credit note NOT to sales, but to the bank charges expenses category.

IF she is using paypal to collect payments for sales via her own website or via ebay/amazon then thats different again. Ebay/Amazon - you will need their reports so you can marry up to paypal. Individual charges per sale/purchase is IMO a direct cost so they go to direct expenses and the monthly ongoing costs to Bank charges.

NB Dont forget she may well have expenses going out of paypal so you will also need receipts/purchase invoices for that lot.

If you can departmentalise in Wave then you should be ok. If you cant she has some problems that need highlighting - Ive mentioned before the VAT. Question is - what is her rolling 12months turnover figure from that is going into Wave? If its close to the VAT threshold she has big issues and needs to separate the banking and wave for her own benefit (given they should be easily viewed as separate trades from your other posts, although the way she is working it, she wont be able to prove that!!!!!)#

Another thought - what happens to all the cash payments she receives?

KChally · Veteran Member

Thanks for your help guys,

This job has become a real awkward mine field of problems and I'm having to learn the quirky bits fast.

She's not VAT reg yet and still a good way off it, so nothing to worry about there yet.

John,
She has one Wave system showing two companies, yes a bit like departments (I can switch between the two easily) but only one real bank account on this system.

Joanne,
Yes, bank charges not commission, I agree and good idea to separate EVERYTHING out. I think the Paypal thing will just be for things she has purchased thru EBay, at the moment, but who knows, anything could happen in the future with this client. So I don't think a bank account is necessary at the moment, will just put thru as an expense?
Don't think can departmentalise in this Wave system, but will double check.
I'm trying to separate her two businesses the best I can. I've had to do a lot of deleting and reinputting from one company to the other, it's such a mess. When I've finished I'm going to tell her that if she wishes for me to continue, she mustn't mess around with the system. I've already noticed the "odd thing" going on. Need to get this finished now, it's "doing my head in" as they say.

Oh yes, nothing going on with cash that I can see, as yet!

Thanks

Artois · Guru

KChally wrote:
This job has become a real awkward mine field of problems and I'm having to learn the quirky bits fast.

Hi Karen

Well at least you have been thrown in at the deep end to begin with so hopefully your next clients will prove to be a bit easier.

Leger · Master Book-keeper

Hi Karen

Do both businesses link to the one bank account? If they do then it shouldn't be a hassle. It's just a question of training your client to enter the info into the right business in the first place biggrin

I think it will be a good idea to set the paypal account up as a bank account anyway, as it would be good practice for when it becomes a bit more complicated.

Years ago one of my clients would pay stuff through paypal and I just used the main bank account because it was simple and straightforward. A couple of years down the line he started selling stuff on ebay and didn't tell me, and it caused me major problems when nothing matched up, as sometimes paypal would take part payment for something from the bank, and the other from their paypal balance.

For reference the process is as follows.

In the paypal bank enter the items she bought, then do a bank transfer from main bank to paypal. Paypal balance stays at 0 but bank shows deduction.

She's not VAT reg yet and still a good way off it, so nothing to worry about there yet.

The problem you have here is that both businesses could well grow in the future. Say one business turns over £20k and the other £25k. That's fine, but what if both businesses double their turnover? She would have to register for VAT and it would affect both businesses.

If she keeps things entirely separate now it will just make life easier for her later on.

KChally · Veteran Member

Hi Doug,
Haha yes you're right, hopefully easier on the next one.

Hi John,
She's removed the automatic bank feed at my request, for the time being. Yes both businesses did link to the one bank account, but she had entered things incorrectly so it messed it all up, hence removing the bank feed, I've now done it manually and moved things around.
It was only one purchase made through PayPal, so I've just entered it as a cash payment, do you think that's ok to do that? Yes I can see though how awkward it could become if you don't have all the info from the client.

When you say, enter the purchase in PayPal then do a transfer from the bank account, do you mean from her cash account, otherwise the bank account won't actually balance?

Yes, I see what you mean re VAT. I did think though that I have read somewhere that if you have more than 1 business then the VAT is totalled up and if you were at the limit both businesses would have to register, or have I got it wrong? Or can you have 2 businesses each with a turnover of say £80k and not need to register?

Than you very much for your help.

Artois · Guru

KChally wrote:
Yes, I see what you mean re VAT. I did think though that I have read somewhere that if you have more than 1 business then the VAT is totalled up and if you were at the limit both businesses would have to register, or have I got it wrong? Or can you have 2 businesses each with a turnover of say £80k and not need to register?

Hi Karen

My understanding is that if the combined turnover of both businesses reaches the VAT threshold then the individual would need to register and charge VAT for both businesses

KChally · Veteran Member

Thanks Doug,

That's what I thought.

Just one more question for today (I'm sure there will be more tomorrow lol).

This client has purchased a few things using another form of payment not linked or connected to her business i.e. Personal credit and debit card and also cash. She is also paying for her mobile phone charges through her personal bank account. There isn't a petty cash system or a cash account set up in her business, only an actual bank account. She wants me to put all these items through her business, so what would be the best way to record these transactions?

It's all very well getting qualified but they only teach you the straightforward ways of doing things, not the real life situations that crop up.

I really do appreciate everyone's help in my early days of trying to be a bookkeeper.

Thanks

Cheshire · Master Book-keeper

Hi
Agree with John about setting up PayPal from start. Problem you have without the PayPal statements is knowing exactly what has gone through. Plus remember everything processed throughpayoal attracts a charge, so you need to allocate that as well as the payment.

Any items paid personally must have receipts (everything!) or purchase invoices as usual. W&E applies. Unless she has a separate personal phone she can't put the whole bill through.

Does Wave allow journals? If so just process that way. If not open a further dummy account, called 'Personal' or some such, debit and credit via there with direct links to supplier PIs or just as payments, via drawings.

Re the VAT limit, as I've said on a couple of posts, this one is asking for trouble if and when yo try to disaggregate the two businesses because she is (stupidly) running it as one!! look. Up artificial separation. This shouldn't be an issue, except the way she is conducting her business.

Re cash- it won't be obvious, but you need to ask the question. I don't believe a personal trainer isn't paid any cash!

Leger · Master Book-keeper

KChally wrote:
Hi Doug,
Haha yes you're right, hopefully easier on the next one.

When you say, enter the purchase in PayPal then do a transfer from the bank account, do you mean from her cash account, otherwise the bank account won't actually balance?
Yes, I see what you mean re VAT. I did think though that I have read somewhere that if you have more than 1 business then the VAT is totalled up and if you were at the limit both businesses would have to register, or have I got it wrong? Or can you have 2 businesses each with a turnover of say £80k and not need to register?

Hi Karen

Has the paypal payment come from her own bank account then? I'm sorry, I just assumed it had come from the business account. Yes, it's the cash account.

Yes, as a sole trader both businesses count towards the threshold regardless. However, if the businesses are kept separate it makes it easier later on if the businesses grow and she needs to alter the structure eg one of them becomes Ltd. This makes them different legal entities and each business would become separate for VAT purposes. What she can't do is run both together, get near the VAT threshold then try to legally separate them to avoid hitting the threshold.

KChally · Veteran Member

Hi John,

It was actually 5 purchases for Facebook advertising, so I've put them through as cash expenses, there weren't any charges applied from PayPal, I thought that was the easiest thing to do, is that ok do you think?

See what you mean re the VAT for the two businesses, the client is way off the threshold, but will advise her for the future.

Thanks

Leger · Master Book-keeper

Yes that should be fine. You also asked about other cash expenses as well (can't find it now) and from memory you had a balance of (1571) Yes, it's CR funds introduced, DR ~~expense~~ cash to put the cash account back to NIL, but is there any cash transactions as well? Maybe best giving it a different name to avoid a clash with the real cash in the business

Edited to correct my wee typo biggrin

-- Edited by Leger on Saturday 23rd of September 2017 08:45:55 PM

Cheshire · Master Book-keeper

Leger wrote:
Yes that should be fine. You also asked about other cash expenses as well (can't find it now) and from memory you had a balance of (1571) Yes, it's CR funds introduced, DR expense to put the cash account back to NIL, but is there any cash transactions as well? Maybe best giving it a different name to avoid a clash with the real cash in the business

Wee typo there methinks - dr cash.

Personally for the bits and bobs she buys and pays for personally I put through drawings (reverse of course). Unless she is taking nothing out (yer right!) and that would leave the drawing o/d. Or unless they are substantial capital items. Each on its merits.

Leger · Master Book-keeper

Cheshire wrote:
Leger wrote:
Yes that should be fine. You also asked about other cash expenses as well (can't find it now) and from memory you had a balance of (1571) Yes, it's CR funds introduced, DR expense to put the cash account back to NIL, but is there any cash transactions as well? Maybe best giving it a different name to avoid a clash with the real cash in the business
Wee typo there methinks - dr cash.
I was just checking to see if you were awake - he says lol
Personally for the bits and bobs she buys and pays for personally I put through drawings (reverse of course). Unless she is taking nothing out (yer right!) and that would leave the drawing o/d. Or unless they are substantial capital items. Each on its merits.

Yep, me too. On VT I have capital introduced and I think Karen mentioned wave has funds introduced.

KChally · Veteran Member

Hi,

Yes, Wave has Owners investment/drawings, so put the cash expenses as expenses and the same amount to owners investment. Also set up a PayPal bank account, no money going into it, just a payment out of it for an expense so bringing it back to zero.

God, it was so confusing as the bank account in one of her companies was called "cash on hand" and in the other business it was showing as her personal name. I think I well underpriced it for the work I had to do, but I've definitely learnt a lesson!! Anyway it's all done and I've been paid.

I've given her some recommendations which she's going to think about, but I don't think she'll want me to carry on with her books, she wants the cost to be next to nothing I think! Well, I'd rather pass on the job than spend more hours sorting out the mess that she's going to make.

Thanks for all you help guys.

MarkS · Expert

I have been using GoCardless for about 3 years. About 80% of clients pay via it.

Fee is small amount to pay as sends you reports of any payment that has bounced so you can reapply, you can make changes at your end to payment (with standing order client needs to inform bank), snapshot shows how much has been paid, has cleared to pay and is in processing.

I download the transactions each month (well usually more like each quarter at VAT return time) and upload CSV file into GC account in Xero.

Journals are effectively

Dr GoCardless Bank £98

Dr Bank Charges £2

Cr Sales Ledger £100

to recognise receipt of monies then

Dr Current Account £98

Cr GoCardless Bank £98

When monies are paid over to me.

Balance in the GC Bank account in Xero each month is payments cleared but not yet transferred to my current account which is usually any payments in the last 3 days of the month as takes a few days for payments to transfer to my current account.