Payments

 

THERE ARE TWO TYPES OF PAYMENTS WHICH ARE RECORDED WITHIN A BUSINESS - PAYMENTS TO SUPPLIERS / TRADE CREDITORS AND OTHER PAYMENTS.
 
 
WHEN PAYING A SUPPLIER, FROM WHOM A PURCHASE INVOICE HAS PREVIOUSLY BEEN RECEIVED AND RECORDED THROUGH PURCHASES ENTRY SCREEN THEN PAYMENT TO THE SUPPLIER IS SIMPLY REDUCING THE AMOUNT OWING TO THAT SUPPLIER.
 
 
FOR ANY PAYMENTS WHICH ARE NOT SUPPLIER RELATED / FOR WHICH AN INVOICE HAS NOT BEEN RECEIVED SEE "PAYMENTS - USING PAYEE OPTION"
 
 

BANK>  PAYMENTS>

 
 
Payments from                  
 
Select the bank account from the drop down list from which the payment was made (bottom right hand corner of entry screen). It is important that you ensure you are working from the correct bank account at the start.
 
 
Reference
 
This is the cheque number or the bank statement reference in the case of Direct Debits/Standing Orders
 
 
Date                                                            
 
Date as written on the actual cheque or in the case of Direct Debits/Standing Order the date of transaction per the bank statement
 
 
Supplier/Payee
 
Select the Supplier from the Supplier listing (F2) that you are paying.
 
 
Nominal Account              
 
If a Supplier is selected from the Supplier listing the Nominal account will default to Trade Creditors, this cannot be changed.
 
 
Amount                                                                  
 
The amount per the cheque or per bank statement.
 
 
The entry posted for a Payment to a Supplier is :
 
Dr                    Trade Creditors Account        123.00             Balance Sheet Payable
Reduces amount owing to the Supplier
 
Cr                    Bank Account                       (123.00)          Balance Sheet, Paid   
Reduces amount of funds at bank
 
 

In choosing a Supplier in the “Supplier/Payee” option you may only reduce the amounts payable to “Trade Creditors” and reduce the bank balance, no VAT will be captured at this point as it is assumed that the Suppliers invoice was posted via the Purchase invoice entry at which point the VAT was already captured.

If a purchase invoice has been posted then the “Trade Creditors” account is showing an amount due to the Supplier, the expense has already been captured and the VAT has already been captured also.

The P&L accounts for actual expenses, the expense was already captured through the Invoice posting so at this point you are merely creating an entry to note that the amount (or part of) is no longer due to the Supplier but is now paid and the bank balance is reduced accordingly to denote the payment out of the bank account. 

So now the bank account balance has been reduced because the account has been credited and the “Trade Creditors” account has been debited reducing the amounts payable to Suppliers.

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