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How to account for paypal payments

Accounting for paypal transactions when payments are split between paypal balance and bank account

Advice require please on how to account for paypal transactions.  The scenario is there is a small paypal balance in the paypal account on a regular basis.  A purchase payment is part paid from the paypal balance and the remainder via the debit card/bank account. Historically the former accountant has posted the bank transaction through the cloud accounting bank feed (on the date it hits the bank account which is two days after the paypal payment) but not the paypal balance element.  What is best practice regarding such split purchase payments please?  Should we post two separate transactions, the bank account and the paypal elements although these will have different dates?

thank you 

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23rd Nov 2018 14:48

Were I inclined to be precise about it I'd treat the paypal account as a separate bank account and any invoices with payments from both the regular account and the paypal account will just have two payments attached. Any money paid via paypal from the normal bank account would just show up as a payment from the paypal account with a corresponding bank transfer from the current account to the paypal account.

It depends what software you're using as to how practical this approach is. It's also a total pain, however you look at it, and I would suggest the pragmatic approach is possibly to treat everything as having come from the bank and just use the paypal balance as a reconciling item when doing the bank recs.

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By tom123
23rd Nov 2018 15:04

I agree with Duggimon.

One has to ask, though, why these part payments are happening. Try to at least pay complete invoice from one sort or another.

Fix the duff process first, rather than just accounting for a complete mess.

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23rd Nov 2018 15:43

Treat paypal as a separate bank account.

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to andy.partridge
24th Nov 2018 14:05

.... whilst simultananeously wishing there was a better alternative

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