Credit Cards

Posted by Ed Adams on May 23, 2007, 10:14 pm

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I realize this is a basic question to which I should know the answer, but I
don't.
Accepting credit cards without using QB merchant services. When I accept
payment for an invoice I show the full payment of the amount due. But when
I receive the funds from the merchant services account they send me the
amount less a percentage for their charges. This goes into my account by
direct deposit. What is the correct way to account for the difference in
QB?

Posted by RobertM on May 23, 2007, 10:08 pm

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Ed Adams wrote:

> I realize this is a basic question to which I should know the answer, but I

> don't.

> Accepting credit cards without using QB merchant services. When I accept

> payment for an invoice I show the full payment of the amount due. But when

> I receive the funds from the merchant services account they send me the

> amount less a percentage for their charges. This goes into my account by

> direct deposit. What is the correct way to account for the difference in

> QB?

I setup an expense account named Merchant Discount Expense.
Doing it one transaction at a time is a real pain. After a
few months of doing it this way, I asked them to deposit the
full amount and bill me once a month. It is still an expense
to the same account but a lot easier to track.

Bob

Posted by Laura on May 24, 2007, 7:23 am

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>I realize this is a basic question to which I should know the answer, but I

>don't.

> Accepting credit cards without using QB merchant services. When I accept

> payment for an invoice I show the full payment of the amount due. But

> when I receive the funds from the merchant services account they send me

> the amount less a percentage for their charges. This goes into my account

> by direct deposit. What is the correct way to account for the difference

> in QB?

An alternative method is to "receive payment" for the full amount of the
invoice. Have the payment go to the Undeposited Funds account. Now use the
"Make Deposit" screen to deposit the invoices by customer. Add another line
to the deposit with no customer name with the Merchant Fee expense account
in the "From account" column. Enter a negative number representing the total
fees withheld by the CC company. The total deposit will now match the amount
of the net check received in your bank.

Next, call up your merchant service company and have them switch you to
deduct their fees at the end of the month. They may charge a slightly higher
% fee but the time saved in entering the invoices will be greater than the
extra fees.

Posted by Ed Adams on June 10, 2007, 8:10 am

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Now, that account is going to grow over time. How do we clean it up
occasionally? Would we create an invoice and "pay" it to offset the
negative amount in the expense account?

>>I realize this is a basic question to which I should know the answer, but

>>I don't.

>> Accepting credit cards without using QB merchant services. When I accept

>> payment for an invoice I show the full payment of the amount due. But

>> when I receive the funds from the merchant services account they send me

>> the amount less a percentage for their charges. This goes into my

>> account by direct deposit. What is the correct way to account for the

>> difference in QB?

> An alternative method is to "receive payment" for the full amount of the

> invoice. Have the payment go to the Undeposited Funds account. Now use the

> "Make Deposit" screen to deposit the invoices by customer. Add another

> line to the deposit with no customer name with the Merchant Fee expense

> account in the "From account" column. Enter a negative number representing

> the total fees withheld by the CC company. The total deposit will now

> match the amount of the net check received in your bank.

> Next, call up your merchant service company and have them switch you to

> deduct their fees at the end of the month. They may charge a slightly

> higher % fee but the time saved in entering the invoices will be greater

> than the extra fees.

Posted by Laura on June 10, 2007, 10:41 am

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If you are seeing credits to the expense account then you are recording the
fees incorrectly. This is an expense to the business and not a credit. The
negative to the Make Deposit screen for the fees charged is supposed to
create a debit on the expense account. You don't owe that to anyone so there
is nothing to "pay". Its a cost of doing cc business. It will reset itself
to zero on 1/1/08 like the rest of your P&L accounts.

> Now, that account is going to grow over time. How do we clean it up

> occasionally? Would we create an invoice and "pay" it to offset the

> negative amount in the expense account?

>>>I realize this is a basic question to which I should know the answer, but

>>>I don't.

>>> Accepting credit cards without using QB merchant services. When I

>>> accept payment for an invoice I show the full payment of the amount due.

>>> But when I receive the funds from the merchant services account they

>>> send me the amount less a percentage for their charges. This goes into

>>> my account by direct deposit. What is the correct way to account for

>>> the difference in QB?

>> An alternative method is to "receive payment" for the full amount of the

>> invoice. Have the payment go to the Undeposited Funds account. Now use

>> the "Make Deposit" screen to deposit the invoices by customer. Add

>> another line to the deposit with no customer name with the Merchant Fee

>> expense account in the "From account" column. Enter a negative number

>> representing the total fees withheld by the CC company. The total deposit

>> will now match the amount of the net check received in your bank.

>> Next, call up your merchant service company and have them switch you to

>> deduct their fees at the end of the month. They may charge a slightly

>> higher % fee but the time saved in entering the invoices will be greater

>> than the extra fees.