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Sage 50 query please help

  • Member PM.Dip
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  • 4 posts
  • # 70435

Hello everyone,
I'm new to this forum so please bear with me if I've posted this incorrectly.

I have taken over the books for a small family company on Sage 50 and am stuck. The Mastercard account is set up in the Purchase Ledger (PL) as a supplier (this set-up appears to have been requested by the accountant in the past). There are also several other suppliers set up in the PL. Recently, a director paid part of the balance of one of our suppliers by Mastercard.

I have tied myself up in knots trying to work out how I should post this transaction to ensure that both supplier's accounts (Mastercard and supplier) and the bank account are all correct.

Can anyone out there please advise me what I should do?

kind regards
  • 115 posts
  • # 70437

Hi Jayne

When the director paid a supplier by Mastercard all he did was reduce the balance on one creditor (the supplier) and increase the balance on another creditor (Mastercard). The bank account doesn`t come into it until some, or all, of the Mastercard debt is paid. At that point you would post a bank payment to the Mastercard supplier.

Hope that makes sense. Get back to me if not.

Steve
  • 4 posts
  • # 70438

I would clear the supplier account mastercard and set it up as a bank account as it makes more sense and is much easier to work with.
Is it a personal credit card or company credit card?
  • 115 posts
  • # 70440

I agree with Rehana but if the accountants want it that way then it may be better, at least for now, to carry on with it. I used to have a client that wanted it this way and its not so bad once you get used to it.

Steve
sarah
  • Companion Fellow PM.Dip
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  • 1137 posts
  • # 70446

Hi Blacksheep.

I thought you may find this useful as to why the accountant may have it set up this way .  This is one of my threads in the accounting Web Sage Discussion Group under Helpful tips for Sage where a number of accountants and Bookkeepers felt this was an excellent way to go in the current climate.    I hope you find useful in your understanding of the issue of Credit / Mastercards.

Creditors Procedures for purchases by credit cards to prevent fraud. Using 1240 Bank Account.

Setting up procedures can cut the costs of your credit card bills 

 In a time  when cash flow is tight and more companies are searching for better prices.  A large number of my clients are purchasing far more off the the Internet .  In some cases they are now purchasing more on their credit cards to get better deals then they are through the creditors ledger.   

But for some reason many people let the purchasing procedure go out the window. 

Just because you order it on the internet, this  does not mean you should not do a purchase order.  

We spend a lot of time completing bank reconciliations and I now think we now must integrate this same and strict procedure for the credit card statement, you would not let items go through your bank twice but yet this happens quite a lot with credit cards. 

I have set up a procedure using sage with my clients who purchase heavily using the company credit card, and I hope it may be of use to other sage users.  I am aware that fuel is purchased through credits cards, but for other purchases here are some recommendations.

Some of my clients have been delighted by the savings they have made with their credit cards.

The main thing to remember that your clients Credit Card is just the same as a bank account it is no different you receive a statement every month or you can print it from your internet Banking on a daily basis if you wanted to. 

Credit Card Procedure : 

  • inform all users of the company credit card that they must have Purchase order and Authorisation before any purchases are done on the company credit card .  Exactly the same as you would have done for your creditors ledger.                                                                                                  
  • Create a purchase order                                                                                                                      
  • The purchaser should then give the invoice to the accounts department and should be entered into your purchase ledger                                                                                                                        
  • This will provide you with a more accurate Profit and Loss, Balance sheet and cashflow information                                                                                                                                                 
  • When the statement comes in you can now reference the items .                                                             
  • Instead of entering your credit cards using the bank payment , you will now do a purchase payment (Supplier payment  using the 1240 Credit Card Bank Account creating a reference in the ref box just like a cheque number instead of the 1200  account and allocate the payment to the the right receipt or invoice. If you order quite a lot off one internet company, there is the potential for the credit card company to take 2 payments which very often happens .                              
  • You can now mark your purchase order as complete.                                                                         
  • Then enter anything that cannot be done this way with a reference for example Crd2Dec by the above using the bank payment option but using Bank Account 1240.  This make it clear in your reports it was a credit card                                                                                                                            
  • when the direct debit comes out of your 1200 current account you can use the bank transfer option to transfer the payment in to your 1240 bank account.                                                           
  • Like with your bank rec , you can give it a statement reference and reconcile on the date your payment came out to Zero                                                                                                                 
  • You are now ready for when the next statement comes in , and you can always view your PDF statements if you need to in view history within the Bank Rec window .

I am aware in the real world that bits and pieces are purchased  on credit cards,  but the company credit card is not for personal use.  Almost everyone these days has their own credit and Debit card, my experience is that when people do this they are well aware, and are hoping that the company does not have procedures set up to check.  

You would not let any one use your own business bank account in that way.
 Hence why I think it is must, that you reconcile your monthly credit card statement.  

In my experience Mastercard/Visa cards are either not enter correctly, and one of the reasons I am given is they do not have a receipt, or they have just enter it anyway.  The Bank will take direct debit from your clients bank account.   Regardless if you are missing a receipt.

When you present your P&l to your client they expect all things to be accounted for and leaving receipts out from Credit card will distort the P&L 

I am very interested in other people views and sage hot tips regarding credit card purchases or any other general functionality.

Kind regards

Sarah @ Douglas Accountancy and Bookkeeping Services Glasgow

 

Posted by sarah douglas on Thu, 01/04/2010 - 17:30

Using the F7 when editing your chart of accounts

 When editing your Chart of Accounts the F7 insert a line is very useful . It allows you to add a new code in the your prefer place and  keep you P&L in order without to much work.

Sarah @Douglas Accountancy and Bookkeeping Services Glasgow 

Posted by sarah douglas on Thu, 01/04/2010 - 22:06

EDITED TO MAKE THINGS CLEARER


Edited at 27 Apr 2011 08:18 AM GMT

  • Sarah Douglas C.FICB

    HouseTree Business Ltd 


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  • 59 posts
  • # 70450

Excellent, clear and very useful chunk of information there Sarah, thank you.
  • Member PM.Dip
  • Practice Licence
  • 4 posts
  • # 70451

Thank you all very much for your replies.

I'm having another look at it this norning so I might be on here in a short while.

thanks again everyone
  • 698 posts
  • # 70457

Hi Jayne

Not to be picky but should you even be doing this as you do not apear to be a cb.cert therefore it is my understanding that you are not qualified to do computerised bookkeeping and should only be doing manual.

Sorry to be a pain but you could be breaching the terms of your practice licence and you will also not be covered under your PI insurance.

Kind regards
Stuart

  • Forum Moderator, South East & Greater London Regional Chairman

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annepebo
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  • 58 posts
  • # 70458

Hi Blacksheep

I think Sarah's  solution to handling creadit card transactions is the best way, it's how I've always treated credit cards, and wouldn't have considered any other way.  However I dont think that this solution actually fits your problem.

From your post I understand that you post credit card purchased to a supplier account within the purchase ledger, which is ultimately cleared when the credit card is paid when you would then allocate the payment against the outstanding transactions on the supplier account.  Not the ideal way to do it but I can understand why it has been done this way. As the credit card has been used to pay off another supplier, as far as I am aware you cannot 'contra' between two supplier accounts (why would you need to in real life) so I would suggest the following as a solution -

Either set up a new bank account or use an existing dormant one and use it sepcifically for posting this sort of transaction.  Call it somethng appropriate.
Pay your supplier using this bank account - reference it accordingly - and allocate as normal. 
Then from the supplier screen select 'supplier refund' from the list on the left and post a refund to your credit card account using the same bank account, this will post a purchase receipt to the credit card account effectively increasing the balance owed. Remember to reference the transaction so it is traceable.

the end result should be -
Purchase Payment to Supplier (debit)
Purchase Receipt to Credit card (credit)
corresponding credit & debit entries on the chosen bank account resulting in a zero balance.
 
This is not ideal but I think it should solve your problem. I would consider settling your credit card up correctly as a bank account especially if this is going to happen often.

Also carefully consider Stuart's post above.

Hope I've understood the problem correctly and that this helps
  • 160 posts
  • # 70465

Hi Blacksheep,

my take on this is that Mastercard in those accounts is classed as a supplier, which is quite right becuase mastercard is supllying its services. So when something is paid on it the transactions would be dr bank, cr supplier/creditor account.  I hope that this helps,

Kind Regards

Paula Welsh 

  • Hello all,

    i just noticed we have a forum, just poking around the members area.  My name is Paula welsh and I have been a member since 2005, starting with Associate member and now a full member


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  • Member PM.Dip
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  • # 70467

Stuart Wildman said:

“Hi Jayne

Not to be picky but should you even be doing this as you do not apear to be a cb.cert therefore it is my understanding that you are not qualified to do computerised bookkeeping and should only be doing manual.

Sorry to be a pain but you could be breaching the terms of your practice licence and you will also not be covered under your PI insurance.

Kind regards
Stuart”


Hi Stuart,
I'm an employee and have a varied role - the bookkeeping entry on Sage is only part of the job. I went on a Sage course at a local college and don't usually have too much trouble with it.

I have not yet applied for my practice licence as I am aware that I have to also be a cb.cert. and wish to have more knowledge and expertise before I consider self-employment.

I don't think you're being picky and you're right to point this out.

kind regards 

Jayne
 
  • Member PM.Dip
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  • 4 posts
  • # 70468

annepebo said:

“Hi Blacksheep

I think Sarah's  solution to handling creadit card transactions is the best way, it's how I've always treated credit cards, and wouldn't have considered any other way.  However I dont think that this solution actually fits your problem.

From your post I understand that you post credit card purchased to a supplier account within the purchase ledger, which is ultimately cleared when the credit card is paid when you would then allocate the payment against the outstanding transactions on the supplier account.  Not the ideal way to do it but I can understand why it has been done this way. As the credit card has been used to pay off another supplier, as far as I am aware you cannot 'contra' between two supplier accounts (why would you need to in real life) so I would suggest the following as a solution -

Either set up a new bank account or use an existing dormant one and use it sepcifically for posting this sort of transaction.  Call it somethng appropriate.
Pay your supplier using this bank account - reference it accordingly - and allocate as normal. 
Then from the supplier screen select 'supplier refund' from the list on the left and post a refund to your credit card account using the same bank account, this will post a purchase receipt to the credit card account effectively increasing the balance owed. Remember to reference the transaction so it is traceable.

the end result should be -
Purchase Payment to Supplier (debit)
Purchase Receipt to Credit card (credit)
corresponding credit & debit entries on the chosen bank account resulting in a zero balance.
 
This is not ideal but I think it should solve your problem. I would consider settling your credit card up correctly as a bank account especially if this is going to happen often.

Also carefully consider Stuart's post above.

Hope I've understood the problem correctly and that this helps

”
Hi annepebo,

Yes, you've understood my problem perfectly. I wouldn't have had any problem with this if the Mastercard was set up under the bank but as you rightly point out, it's a supplier paying another supplier scenario and I couldn't fathom out how to post a contra entry for this or even if I could.
In the past, if I get stuck on Sage (being manually taught) I usually just jot down on scrap paper what I'd do in a manual bookkeeping system with any necessary journal entries and relate it to Sage. This has always worked to date.
I understand your solution and it makes sense so will try this next week when I'm back in the office.
Thank you very much for this and I'll let you know how I get on.

I've posted a reply to Stuart's post

kind regards and thanks

Jayne aka Blacksheep
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