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Invoicing for compensation?

Invoice for supplier reimbursement/compensation - accounting treatment?

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We have recently switcher suppliers on office equipment and incurred a cancellation fee to get out of the contract. As a compensation payment, the new suppliers have agreed to settle this (in short we will pay the old supplier out,  invoice the new supplier for the early cancellation fee and they will reimburse us.) I'm unsure of the accounting treatment for this as I would need to raise it as a sales invoice through our accounting system however it is of course, not a sale. How would I post this into the accounts? 

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By johngroganjga
21st May 2019 09:47

Credit it to where the outgoing payment is debited.

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