Disbursements

 Disbursements

accounting for disbursements - I have made some disbursement payments on behalf of my client and would like your views on how to account for these.  They are not sales, therefore no sales invoice required, so how do I record these in the books to avois turnover yet still be able to see the customer liability?
Invoice them


I would certainly invoice them, not least to act as a prompt for your client to make payment.

Naturally you wouldn't charge a disbursement to 'sales' in your accounts. Simply code the invoice to the same nominal account(s) where you have allocated the expenses, which will either be the cost code that best fits the nature of the disbursement or a suspense account.

Either way, the credit from the sales invoice will net off the debit of the cost so your sales and costs are unaffected, but your trade debtors will record your client's debt.

- Kind regards Andy


davidwinch's picture
Watch the VAT


If these genuinely are expenses of the client which you have paid on his behalf and he is going to reimburse you then the VAT you have paid out is not input VAT of yours and the VAT which you are invoicing to the client is not output VAT of yours either.

See the HMRC VAT guidance on disbursements.

David


patvanaalst's picture
 

Entirely a suggestion, rather than any kind of correction, but I wouldn't use your own expense accounts for the contra.  I'd drop it into the balance sheet as a 'sundry debtor', in a unique control account.  Thus, whenever there's a balance in that account you've forgotten to charge something on to the customer!  The double entry on invoicing would be between the two balance sheet accounts.  I'd be worried about the disbursement getting 'lost' in the mix of other expenses.

Cheers
Pat

 Disbursements

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