FreeAgent - Difference between expense and bill...

[HostThree]

Hi,

Looking for a bit of advice with the freeagent program.

I'm slightly confused with the difference between a bill and an expense. From what I understand a bill is something you get and will pay at a later date, so for example if I buy 5 mobile phones from a supplier and don't need to pay it until next week, that would be a bill however if I bought 5 mobile phones and paid for them there and then that would be an expense? Is that correct?

For example, last week I bought a mobile phone for £30 for the business and I paid for it there and then with my business account would that be an expense or a bill?

 

[gouldie0]

Hi,

You're right, a bill is something that is invoiced to your company from a supplier which requires payment at a later date. The bill function allows you to detail the timecales on which payment is due.

An expense is paid straight away and is applied to the correct expense account, in your case assuming it's the standard nominal listing, it would be 273 Internet and Telephone.

If you have any other queries just give me a shout.

Kind Regards

Neil

 

[MyAccountantOnline]

Hi,

Looking for a bit of advice with the freeagent program.

I'm slightly confused with the difference between a bill and an expense. From what I understand a bill is something you get and will pay at a later date, so for example if I buy 5 mobile phones from a supplier and don't need to pay it until next week, that would be a bill however if I bought 5 mobile phones and paid for them there and then that would be an expense? Is that correct?

For example, last week I bought a mobile phone for £30 for the business and I paid for it there and then with my business account would that be an expense or a bill?

In general if you by something on credit when you dont pay immediately you enter it as a bill and your records then show money you owe. Whilst if you buy something and pay for it immediately you enter it as an expense.

 

[Philip Hoyle]

In FAC, "bills" are for things that are paid by the company directly, either now or later.

"Expenses" are things initially paid for by the director which will be reclaimed by the director from the company later.

The timing of the payment isn't relevant when deciding which way to enter - the deciding factor is whether it's a company liability, paid by the company directly, or a liability initially paid by the director but later reclaimed on his expenses claim.

 

[gouldie0]

Hi Philip,

I should've clarified, I meant when applying expenses directly to the bank account in the form of a payment. The OP didn't state whether it was from his own personal funds or directly from the business account.

The bill function does work on a standard accounts payable basis.

The expenses functionality is as you state, it assists each business owner capture business expenses out of their own personal funds / accounts which need to be reimbursed.

Kind Regards

Neil

 

[HostThree]

So to confirm...

If I bought an item via the business account then it would be a bill, however if I paid for it via my personal account then it's an expense?

 

[HostThree]

Bump! Anyone know or can help?

 

[gouldie0]

Hi,

That is correct, it will accumulate all of the expenses you've paid out of your own pocket. You'll then be able to withdraw the money when you reimburse yourself through the bank. You withdraw the money and process the transaction as money paid to user and select the expense payment option.

Kind Regards

Neil