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Using transaction date in accounts allowed?

Are we allowed to prepare accounts based on transaction date instead of invoice date?

One of our client is using Quickbooks and activated the bank feed.

Instead of raising invoices and receipts for the work done and for expenses, he post them using bank feed. 

He has set up rules for each transaction so he just post them as soon as the transaction appear. He do attach invoice/receipt.

My question is that usually if you are paying the suppliers, it takes 2-3 days for the payment to appear in bank statement. So client pays to someone on 15 but the transaction appears in bank on 18th usually after 2-3 days. 

Is it ok to use bank feed to post transactions and for accounting and vat purpose or do we have to post invoices/receipts based on the date and then match them with bank transactions?

I came across few businesses using the bank feed set up which is quick and saves time but is it really ok to do that?

Thanks in advance for the answers!

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By zebaa
19th Jan 2019 15:13

What type of trader ? Sole, company etc.

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By Shahood
to zebaa
19th Jan 2019 16:09

LTD

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19th Jan 2019 15:19

I wouldn't fuss about it.

Except at the end of periods where the delay means that stuff isn't in the right quarter/year/whatever.

What's the point in automation if it just means it takes longer to do the job than it did before ?

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19th Jan 2019 15:48

It's common, but remember it's only bookkeeping. When it comes to preparing proper accounts you'll just have more adjustments to make.

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19th Jan 2019 16:09

Exactly. They will have been prepared on a cash basis, so, depending on the type of entity, you may need to convert to an accruals basis at year end.

Also depends on the type of business as to how important the adjustments are. Some businesses will have hardly any debtors / creditors, whereas others will.

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to Manchester_man
19th Jan 2019 16:17

Quote:

Exactly. They will have been prepared on a cash basis, so, depending on the type of entity, you may need to convert to an accruals basis at year end.

Not necessarily on a cash basis. They may run sales and purchase ledgers, in which case, some debtors and creditors might show even though paid. Profit not affected.

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to lionofludesch
21st Jan 2019 07:16

Quote:

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They may run sales and purchase ledgers, in which case, some debtors and creditors might show even though paid.

Per OP : “Instead of raising invoices and receipts for the work done and for expenses, he post them using bank feed. ”

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By Shahood
19th Jan 2019 16:14

They don't have any creditors as they pay in full whenever they buy something.

But again the date on the invoice is usually a day or two before than the payment.

We are managing their bookkeeping and their accountant who is a chartered accountant has advised them to use bank feeds and post them instead of posting invoices/receipts.

From my point of view, it is cash basis even though they don't have any creditors because the payment takes 2-3 days to appear in bank and that could have an effect on balance sheet.

So if we are going to make adjustment at the year end which could take more time, is it not better to post invoices/receipts?

Any bookkeepers here who came across this issue. I have noticed lots of business is using this method to avoid bookkeeping.

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to Shahood
19th Jan 2019 17:22

Quote:

They don't have any creditors as they pay in full whenever they buy somethin.

Including your fees? Do you actually mean ‘trade creditors’ or will there never be PAYE or corporation tax? No loans, no HP agreements etc. ?

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to andy.partridge
19th Jan 2019 17:32

There'll allus be summat.

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to Shahood
19th Jan 2019 20:48

Quote:

They don't have any creditors as they pay in full whenever they buy something.

Ah, bookkeepers. Bless them and their simple ways.

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to Shahood
21st Jan 2019 07:15

Quote:

We are managing their bookkeeping and their accountant who is a chartered accountant has advised them to use bank feeds and post them instead of posting invoices/receipts.

Not your problem then, just continue doing what you were advised.

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19th Jan 2019 21:52

I'd be a pedant and post invoices and payments separately, only using the direct transaction date for items that aren't invoices e.g. payroll.

Quickbooks really ought to allow bank feed transactions to be allocated a separate invoice date from payment date, the timing difference being balanced through the sales/purchases ledgers... essentially the same effect as above achieved with much less faft.

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By zarar
20th Jan 2019 14:58

Are they VAT registered?

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