Recording purchase of services used for support

[Michael Barnes]

I'm just setting up my chart of accounts in Sage and I'm not sure where to put a certain item used in the support of customers but not technically a product being purchased for resale.

For example: We purchase a licence from Teamviewer which allows us to provide remote support to customers. This is a direct cost in relation to two of our product sales Remote Support & Contract Support which we want to report on separately under NC 4004 & 4005 respectively. So of course this doesn't really come under products purchased for resale NC 5000 (renamed from Materials purchased).

Should this be reported under the 5000 range or somewhere else?
Thanks

 

[Michael Barnes]

Just thinking further on this, should this go under the 6000 range as it's a cost incurred for something which allows us to provide a product/service but isn't technically something we resell as such, but then again neither is packaging but that comes under 5000. Although I suppose you could argue that if you purchase packaging for a product you sell, when you sell it to the customer you are giving them the packaging so technically I suppose you are reselling the packaging to them it's just not detailed anywhere, whereas the Teamviewer licence simply allows us to provide the customer with remote support but we never actually pass ownership of the licence to them.

 

[Scalloway]

I would consider it an overhead.

Sent from my HTC One mini using Tapatalk

 

[Michael Barnes]

Would it really be an overhead? I would expect an overhead to be something which is used in the running of the business as a whole whereas this expense is directly related to providing a specific service to customers.

 

[john1989]

Overhead.

An electrician uses a screwdriver to help deliver a service. I certainly wouldn't categorise the screwdriver as a cost of sale.

In the end it doesn't matter as long as you are consistent.