I am a learner bookkeeper who has been doing the job for a few months now but I am short of people to ask 'technical' questions, so am hoping that someone on here can help.
Obviously I am using an inherited system of accounting on Sage but do wonder why some of the outgoings which are paid for by Direct Debit are not entered on the purchase ledger. They seem to only have one 'invoice' coming in every 12 months e.g. for 'Office Insurance' then the Direct Debits are recorded as Bank - Payments.
Sorry if this is not too clear but I barely know how to explain it, Sage confuses me so much :(
What if I needed to know how many Direct Debit payments had been made to the 'Office Insurance' I can't check on the 'activity' tab like I would do with a supplier? Or can I???
Puzzled Poppy!
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Replies (24)
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SAGE
Hi,
As Insurance is an overhead and not a purchase it shouldn't (technically) be included in the Purchase ledger - the only way of checking payments made would be to go to the nominal account for Insurance and looking at it there. Alternatively when you get to year end, set up the Insurance Company as a Supplier and use the account as a supplier (just make sure when setting up the supplier you allocate the insurance code to it and not purchase).
Theer is a SAGE forum on this site and a brilliant lady called Witch Queen who knows EVERYTHING about SAGE!! Have a look as that forum will definitely be the place to search for help with SAGE.
Hope this helps!
Direct debit postings
Purchase ledger is not suitable for every type of outgoing. My personal preference is to keep monthly direct debits for insurances off the purchase ledger as they are more in the line of credit agreements. I would do the same for leases of vehicles and equipment which either have a monthly invoice raised against the direct debit or an annual schedule of payments. Some people may find it easier to deal with such things through the purchase ledger - but such items would not normally be shown as trade creditors in the annual accounts so you could end up with various adjustments to your purchase ledger every year end.
To answer your last query, no you cannot check an activity tab like a supplier but you could pull up a nominal ledger activity report for the nominal account that you post the direct debit to. Provided you have been consistent with your posting you should be able to see each direct debit (net of VAT if applicable) posting in the nominal account.
Also you could always scroll through the activity tab for the bank account, but you would be picking the information out from far more transations than the nominal ledger report.
Good luck.
Two choices
Hi Poppy
There are two ways of recording expenses on Sage.
The first is to record a purchase invoice and then pay it off via bank>supplier. The second is to record it as a straight bank payment without touching the purchase ledger.
What you have described is a purchase invoice (presumably posted to te purchase ledger) and then monthly bank payment (presumably being coded straight to an expense account). If this is actually what is happening then you will get double the expense and a creditor still due at the year end.
If the supplier invoices at the beginning of the year and then takes monthly DDs to clear it, you want to enter the invoice on purchase ledger and then do a bank>supplier payment for every DD until its clear. If the is no initial invoice, you can just do a straight bank payment for each DD each month.
If you just enter bank payments, then the easiest way to see how many payments have been made is to look at the Nominal Activity for Insurance and do it that way.
What should go on the purchase ledger?
In my view, anything purchased on credit terms should go through the purchase ledger.
If you intend to put instalment direct debits through a supplier account I think you are doing the right thing.
I am a learner bookkeeper who has been doing the job for a few months now but I am short of people to ask 'technical' questions
Sorry to sound Harsh - but who are you learning from? surely they should be the first point of call for such basic questions.
And also surely you should have sorted out such basic issues in the first fortnight of you doing the job - not leaving it for months. It appears you are doing a job you have no idea how to do - with little or no support from someone experienced - this is surely a recipe for disaster!!!
to answer your question - No, Not all outgoing should be on the purchase ledger e.g. wages and bank charges Corporation tax ..etc. - these would be recorded as bank payments.
However where you have an invoice - even where it is one invoice to cover 12 installments I believe it should go through the Purchase Ledger, and the payments should be posted to the supplier account.
VAT
I know that you can process bank payments including VAT just as you can process invoices including VAT on a purchase ledger, but one possible rule of thumb is to put anything with VAT through the purchase ledger and anything without VAT as a bank payment. In this case, I would enter direct debits for insurance as bank payments, not least because you often do not get an invoice for insurance, and save myself the two stage process.
Thanks everyone!
What a great set of responses, thank you so much everyone!
In answer to the Big Bad Wolf!!! who said
'Sorry to sound Harsh - but who are you learning from? surely they should be the first point of call for such basic questions.
And also surely you should have sorted out such basic issues in the first fortnight of you doing the job - not leaving it for months. It appears you are doing a job you have no idea how to do - with little or no support from someone experienced - this is surely a recipe for disaster!!!'
A 'proper' accountant comes in once a month to do month end and management accounts so she keeps an eye on how 'disastrous' things are getting! She has been satisfied with how I am performing so far,I do sometimes email small questions to her but she doesn't have time to go into anything 'in-depth' like on here. I am learning sometimes by my mistakes but that is often a good way (getting to know my way around file-maintenance on Sage!!!)
I had a months 'cramming' with the previous bookkeeper before she left. I manage to raise all the sales invoices/credit notes, record the purchase invoices coming in, record and reconcile all the bank entries, keep a close eye on the cashflow with an excel sheet and make bacs payments through an online bank account. I also record staff expenses and enter them on Sage and prepare the Payroll sheet to go to the agency bloke who works out the deductions, then I enter it all onto Sage when he returns it. I also do the credit control.
I am supervised by a director but she knows even less about accounts than I do! Things are gradually sinking in and I can always rely on some great support on here so thanks again everyone!
Not quite so puzzled Poppy!
@Big Bad Wolf & @Monsoon
BBW - You are living up to your name, a bit harsh!
Monsoon & OP - Don't forget that if you (unnecessarily in my view) post the annual invoice at the start you will, if you prepare interim management accounts, have to show the residue as a prepayment.
I always threw the invoices into a dedicated folder and posted all the payments as cash payments, direct to P&L/VAT. When the VAT man came round I just gave him the folder and he was overjoyed that they were all in one place.
Swings and roundabouts
I always threw the invoices into a dedicated folder and posted all the payments as cash payments, direct to P&L/VAT. When the VAT man came round I just gave him the folder and he was overjoyed that they were all in one place.
Richard, your method won't help anyone a) on standard invoice accounting for VAT or b) preparing interim management or year-end accounts that do not show trade creditors.
Swings and roundabouts maybe but both will cause you to fall and hurt yourself if you don't hold tight.
Re The Big Bad Wolf
yes, we all have to start somewhere and, words of encouragement cost nothing. Were you not once inexperienced?
There is a phrase, from my part of the world, "the more the monkey climbs the tree, the more you see its a**e".
Go and chomp on a Bison!
@time for change?
yes, we all have to start somewhere and, words of encouragement cost nothing. Were you not once inexperienced?
There is a phrase, from my part of the world, "the more the monkey climbs the tree, the more you see its a**e".
Go and chomp on a Bison!
So you would be happy for someone calling themselves a plumber to come in to your home and fix your pipes - but had no idea what they were doing and botching up your existing plumbing? you would be happy to pay them and encourage them - knowing it would cost you more to fix it later?
"Go and chomp on a Bison!" - is that supposed to some sort of insult?
Wrong analogy
So you would be happy for someone calling themselves a plumber to come in to your home and fix your pipes - but had no idea what they were doing and botching up your existing plumbing? you would be happy to pay them and encourage them - knowing it would cost you more to fix it later?
If your hypothetical plumber asked their question on plumbingweb.co.uk, a website set up for the purpose of supporting and engaging the online plumbing community they might be a bit mystified if the correct answer was that they shouldn't be a plumber.
I'll keep this brief
I am a learner bookkeeper who has been doing the job for a few months now but I am short of people to ask 'technical' questions, so am hoping that someone on here can help.
Poppydew hasn't made a claim that she is anything other than a "learner book-keeper". She's asked a simple question and, respectfully, asked for help. (The key here is carefully read the question!).
At my age I enjoy passing on some of my experience and relish seeing people develop and evolve. In my view, encouragement costs very little but can bring a sense of wellbeing.
I'm sorry if your "harsh" reply (your words not mine) has brought about a response which you didn't expect and, yes, if I thought the young plumber was capable of fixing my pipes, I would be pleased for him to do so. I might even enjoy watching him and offering words of advice and support.
Finally, yes, the final paragraph was intended as an insult.
For goodness sake, kindness costs nothing.
I'll keep this brief
Finally, yes, the final paragraph was intended as an insult.
For goodness sake, kindness costs nothing.
I was not trying to discourage Poppy - nor was I hurling insults like you!
I was merely trying to point out he/she needed to address the training/support issue as they will not be able to learn or progress very far without the adequate training or support network - and I really don't think asking questions on Aweb is a substitute for proper training. I was hoping that my comments would spur Poppy to address that situation by speaking to their employer or finding a suitable course to go on.
Right Analogy - Wrong conclusion
If your hypothetical plumber asked their question on plumbingweb.co.uk, a website set up for the purpose of supporting and engaging the online plumbing community they might be a bit mystified if the correct answer was that they shouldn't be a plumber.
I didn't say that Poppy should not be a bookkeeper - i was merely pointing out that he/she was out of their depth in the job they were trying to do - with no support from colleagues - hardly an ideal environment for learning/training - Poppy is basically trying to do the job without basic training or support - surely that is a recipe for disaster, as is a pipe wrench in the wrong untrained hands?
@ Andy et al
This is an extract from HMRC on the subject: -
'
Reclaiming VAT when you make payments on instalments, deposits or buy on credit
If you want to reclaim VAT on payments you've made to your suppliers you need to have a valid VAT invoice or receipt.
If a supplier gives you an invoice that covers several payments - or perhaps an invoice showing monthly payments due in the forthcoming year - you can only reclaim the VAT on the date each payment's due or the date you send the payment, whichever happens first.'
I rest my case.
I'm with Richard where there is no VAT Invoice
IE Rent Rates Insurance some hires where you get a schedule and the tax point is the payment
Recurring payments ...
... if you set up recurring payment in the bank module when you get the insurance payment schedule, and set it for the number of payments to be made, you can just check at any point through the year to see how may payments you have made to date as it keeps a running total of these in the right hand column of the recurring entries screen.
I think you should ask the accountant
Frankly if you were working for one of our clients I would be disappointed if you did not feel that you could ask me the silliest question. I need you to be correct, confident and happy in your work so that I get complete accurate and timely information from you, so it is very much to my advantage to help you as you learn.
Try and develop an open relationship with the accountant, they then may in future think of you when you are looking to progress and they have a client who needs a good bookkeeper.
Couldn't agree more
Frankly if you were working for one of our clients I would be disappointed if you did not feel that you could ask me the silliest question. I need you to be correct, confident and happy in your work so that I get complete accurate and timely information from you, so it is very much to my advantage to help you as you learn.
Try and develop an open relationship with the accountant, they then may in future think of you when you are looking to progress and they have a client who needs a good bookkeeper.
I enjoy queries from clients book-keepers, rather that than sorting it out 12 months later when no one remembers anything. It can also show dedication and an enquiring mind, and sometimes it causes me to go off and research and expand my own knowledge, and sometimes I even find new fuctions I didn't know about, like the one I found the other day in SAGE (bear in mind I am an accountant who deos a bit of book-keeping and who doesn't "get on" with user manuals or training courses!) whereby if you highlight all the nominal accounts you want included in a jouranl, then open the journal link, all you have to do is pop in the amounts and description!
@ BBW - Not quite!
It seems to me that you likened Poppy's position to that of your hypothetical plumber - ie. Poppy is calling themselves a bookkeeper when your implication is that they aren't, has no idea what they are doing, makes a complete botch-up of their work and so shouldn't be paid or encouraged.
The medium Poppy has used in an attempt to improve themselves seems to me an entirely valid one given the purpose of this site.
If you are now suggesting Poppy is merely struggling and should seek further advice then that is a much softer position than stated in your plumber analogy.
I'm content
to leave this with andy.partridge, who seems to have the theme well covered!
Keep posting the questions Poppy, and, doesn't the Big Bad Wolf live up to his name?
PURCHASE LEDGER
CAN I CREATE A PURCHASE LEDGER ACCOUNT REFERENCE TO USE FOR THE MANY
ONE OFF SUPPLIERS INSTEAD OF CLOGGING UP DATA BASE??