VERY LATE invoice payment after year end

[proofpositive]

Hi,

I have just realised while finalising my tax return that I requested by invoice a relatively large payment in Oct 12 and didn't receive it. I am not sure how I managed to miss it (embarassing) but I work really closely with the company concerned, so I am certain we will get it sorted.

My concern is whether we will do so before Friday when my tax return has to be in! I plan to submit my tax return via freeagent which has an automated bank feed, so how do I account for this payment which will be long after the end of the tax year and possibly after the deadline? Do I just write it off? But I still want the money - so how do I account for this?

Hope my question makes sense, my lack of understanding of tax etc. makes it difficult to phrase the question!

Thanks in advance

 

[David Griffiths]

You include it in your sales for the year and the balancing entry is in accounts receivable. You cannot write it off in last year's accounts as it wasn't bad at the year end.

 

[proofpositive]

Hi, Thanks for your quick reply.

So I have already created an invoice in Freeagent for this money - is this what you mean by including it in my sales?

I have no idea how to create a balancing entry in accounts receivable? (this is why I have now employed a bookkeeper!)...

Sorry for being dim - have a very simple service based business so have very limited experience/understanding.

 

[David Griffiths]

If you've already created an invoice, correctly dated in October 2012, then the amount will already be in your sales/

You dont need to create any balancing entry - Freeagent does that for you.

 

[kevin.doran]

As per David's comment, you need do nothing, FA will handle it correctly.

Creating the invoice means you've declared the sale in the correct tax year, with an outstanding debtor balance showing on the balance sheet i.e. somebody owes you money (Accounting > Reports > Balance Sheet > Trade Debtors under Current Assets).

Then, when the client does finally pay up, the amount will simply go into your nominated bank account and be used to close down the open debtor position - job done.

 

[proofpositive]

That's great guys - thank you.

Can I ask a another quick question?

I rent a room for half a day a week at this clinic and the guy who runs it is not too organised. At the very end of the tax year (ie on April 3 or 4) he finally invoiced me the costs for the year. Which I immediately paid by bank transfer. However, I have just noticed that in Freeagent on my automated bank feed that comes up as having been paid on 8th which means it will register as this tax year not last. How can I rectify this?

Thanks again!

 

[kevin.doran]

Input his invoice as a 'bill' during the correct tax year then analyse the subsequent bank transaction to the supplier account (trade creditor) instead of expensing it as rent.

This is basically the exact reverse of what I described in my last post.

 

[proofpositive]

Hi Kevin, thanks again - yes I realised it was the reverse situation, but had no idea how to work it out in freeagent.

Thanks so much - this is making my arduous and onerous task much easier today!

 

[kevin.doran]

Pleasure - i've actually only got one client who uses FA but i've got his login details stored and since i'm sat at work at 2.30 on a Sat afternoon the info is only a click away.

Feel free to fire over any further Q's, never a problem.

 

[proofpositive]

Thanks :-D