Payable Credit Card Transactions in On-site

Payable Credit Card Transactions in On-site

This video covers managing and using credit cards for business expenses and paying bills within the On-site system. It provides a detailed walkthrough of handling payable credit card transactions, explicitly focusing on the payables side and excluding receivables (customer payments). The guide elaborates on best practices, setup nuances, and procedural considerations to optimize credit card usage within the On-site framework.

Prerequisites

Before proceeding, ensure you have a solid understanding of:

• The On-site system in general: Familiarity with navigation, basic functionalities, and overall system architecture.

• The chart of accounts within On-site: Understanding how different accounts are categorized and used for financial tracking.

• Vendor setup: Knowing how to add, modify, and manage vendor information within the system.

• Entering and paying payables: Competence in creating payable entries, processing payments, and managing vendor invoices.

Separate videos are available for brushing up on these topics to ensure a comprehensive understanding before diving into credit card transactions.

Two Main Approaches

Two primary methods for handling payable credit card transactions:

• Method A: Using Credit Card Liabilities: This approach treats credit card charges as liabilities, directly impacting the credit card vendor account.

• Method B: Treating Credit Cards as Ledger/Bank Accounts: This method involves setting up the credit card as a bank account within On-site, allowing for direct payments and debit transactions.

You can use both methods simultaneously for different credit cards, tailoring the approach to suit specific business needs and card usage patterns.

Method A: Credit Card Liabilities

Vendor Setup

1. Go to the vendors section and select or create a vendor for your credit card company (e.g., American Express). Ensure all basic vendor details are accurately entered.

2. Enter address information, vendor abbreviation, and vendor type. This ensures proper identification and categorization of the credit card vendor.

3. Disable purchasing setup since you don't issue purchase orders to the credit card company. This prevents any accidental creation of purchase orders for the credit card vendor.

4. Crucially, enable the setting "Is this vendor a credit card company?" This activates credit card liability transactions, ensuring charges are correctly categorized as liabilities.

5. Set payment terms as desired. This defines the payment schedule and terms associated with the credit card.

6. The GL account isn't critical, as charges will vary. Set it to a common expense account like office supplies. This account is required but will be frequently overridden with specific expense allocations.

Employee Access

1. Navigate to Utilities > Employees and select the employee. This step ensures you are modifying access settings for the correct user.

2. In Access > Accounting > Payables, ensure "Access Payables" is enabled. This grants the employee the ability to use credit card liability transactions, allowing them to manage and record charges.

Recording Credit Card Charges

Consider when you'll record charges:

• As charges are made (less common): Entering charges immediately after they occur provides real-time tracking but can be cumbersome.

• When the statement arrives (more common): Recording charges from the statement simplifies reconciliation and provides a comprehensive overview of monthly expenses.

Three how options for recording charges exist. Choose one method and consistently apply it:

• Single transaction with splits: Consolidating all charges into one transaction and splitting the total across various GL accounts.

• Multiple transactions entered manually: Entering each charge as a separate transaction for detailed tracking.

• Multiple transactions downloaded and imported: Downloading transaction data from the credit card company and importing it into On-site.

Single Transaction with Splits

1. Add a new payable and change it to a "Credit Card Liability."

2. Select the credit card vendor (e.g., American Express).

3. The payable date is the statement date, not individual transaction dates (e.g. 09/27/2017). This ensures the payable aligns with the billing cycle.

4. In the "Charged To" field, indicate "Multiple Charges." Then enter the total amount due from the statement (e.g., 2549.57). This represents the cumulative charges for the billing period.

5. Click "Default." The system will initially allocate the entire amount to accounts payable.

6. Use splits to allocate the charges to various GL expense accounts. For example:

   • 1234.56 to Computer Expense.

   • 500 to Website Marketing (Google AdWords).

   • 334.17 to Meals and Entertainment.

   • 480.84 to Trade Shows.

Add up the charges, categorize them, and enter the splits accordingly. This detailed allocation ensures accurate financial tracking.

Advantage: Only one transaction per month, simplifying data entry and reconciliation.

Disadvantage: Limited detail within On-site. Detailed charge information remains on the credit card statement, which may require additional record-keeping.

Multiple Transactions Entered Manually

1. Add a new payable and change it to a "Credit Card Liability."

2. For each individual charge, enter a separate transaction. This provides granular tracking of each expense.

3. Use "Add Same" to retain the credit card vendor. This streamlines data entry by pre-filling the vendor field.

4. Enter transaction date, vendor name, and amount. This ensures each charge is accurately recorded with relevant details.

5. Assign the appropriate GL account using default or manual entry. Proper GL coding is essential for accurate expense categorization.

Example: Pizza Hut charge of 45.50 on 09/27 to Meals and Entertainment.

Advantage: More detailed records, including specific vendor information. This provides better insight into spending patterns.

Disadvantage: Increased data entry, which can be time-consuming for large volumes of transactions.

Multiple Transactions Downloaded and Imported

1. Download transaction data from the credit card company (e.g., American Express) in spreadsheet format. This saves significant time compared to manual entry.

2. Modify the spreadsheet:

   • Add a column for "ID Vendor" and populate it with the vendor ID from the On-site system (from the vendor page). For Amex it was 7009.

   • Add the corresponding GL codes. Consult your chart of accounts to classify each expense. Proper GL coding is essential for accurate expense tracking.

   • Total the expenses to match the statement total for verification. This ensures all charges are accounted for and accurately reflected in the import.

3. Save the spreadsheet as a CSV file. This format is compatible with On-site's import function.

4. In On-site, go to Accounting > Import Payables and select "Credit Card Liabilities". This initiates the import process for credit card transactions.

5. Map the columns in your CSV file to the corresponding fields in On-site (Date, Vendor Charged To, PO Number, ID Vendor, GL, Amount). Accurate mapping is crucial for successful data import.

6. Import the data. The system will highlight any errors in red.

7. Correct any errors, typically incorrect GL account numbers. Address errors by editing the GL account. Correcting errors ensures data integrity and accurate financial reporting.

8. Errors in red must be amended. Pay close attention to highlighted errors for prompt resolution.

9. Delete header rows and any blank rows. Removing extraneous rows prevents import errors.

10. Release the transactions. This creates the payables in the system, reflecting the imported credit card charges.

These payables are now regular payables linked to American Express. When you pay for it later on, you can pay the bills as you would do normally.

Advantage: Less Data Entry, saving time and reducing the risk of manual errors.

To pay the credit card bill: Accounting > Pay Bills. Choose printed check or EFT. Choose your operating account, then the American Express vendor. You can pay the whole amount of the total due, or perform partial payments. Flexibility in payment options allows for better cash flow management.

Limitation of Credit Card Liabilities

The main drawback is with paying vendors for purchase orders using a credit card. If you have payables to SanMar and you paid it with American Express card the original invoice will automatically create a credit card liability. In order to make your purchases as a credit card liability, you must manually go through each payable transaction and changed them. This manual adjustment can be time-consuming and prone to errors.

If the accounting periods are closed, you are locked out of making changes. Either unlock them or change your accounting periods. Adjusting accounting periods allows retroactive modifications, which can impact financial reports.

Credit card liability method (method A) is best used for expenses, where detailed vendor tracking isn't critical.

Method B: Treating Credit Card as a Ledger/Bank Account

Use this method if the card is used for vendor purchases. This approach is particularly useful when you need to track payments to specific vendors via credit card.

Chart of Accounts Setup

1. Go to Chart of Accounts and examine existing checking accounts. Understanding existing account structures aids in proper credit card account setup.

2. Add a new liability account for the credit card (e.g., Barclays Credit Card - 2500). Proper naming and numbering ensure easy identification.

3. Activate the account and ensure it's not marked as a sales tax card. Activation is necessary for the account to be functional, while preventing sales tax marking avoids accounting errors.

4. Enable "Checking Privileges" for the account. Even though it's a liability, this is necessary for the method to work. Do not add account or routing numbers. This step is crucial for treating the credit card as a payment source within On-site.

Employee Access

1. Go to Utilities > Access Controls and select the employee (Jay Markinson). Assigning access rights ensures only authorized personnel can manage credit card transactions.

2. In Bank Accounts, grant access to the new Barclays account. This allows the selected employee to view and use the credit card account.

3. Disable Manual Checks. Do not do printed checks for this account. This prevents erroneous check generation from the credit card account.

4. Enable Debit Card Transactions (you’ll see why later). Debit transactions are essential for recording charges made on the credit card.

5. Disable Bank Deposits and Bank Transfers. This limits the account's functionality to credit card-related activities.

6. Enable Paying of Bills and Reconciliations. This allows the employee to pay vendor bills and reconcile the credit card account.

7. Configure similar settings for all employees who need access to the credit card account. Consistent access controls ensure uniform security and accountability.

Paying Bills with the Credit Card

1. Go to Payables > Pay Bills. The Barclays card will appear as a payment option.

2. Select the Barclays credit card as the payment method. This designates the credit card as the source of payment.

3. Choose the vendor (e.g., SanMar) and the payables to pay. This specifies which vendor invoices are being paid with the credit card.

4. SanMar calls, and you have a payable, but you can say, I am paying with my Barclays card. No changes need to take place in the transaction to do this. This flexibility streamlines the payment process.

5. Choose electronic payment and the credit card account. Electronic payments ensure efficient and traceable transactions.

6. Process full or partial payments as needed. You can also change partials. Payment flexibility allows for customized cash flow management.

7. Finish the payment process. Completing the payment finalizes the transaction and records it in the system.

After paying bills, examine the Barclays card in Bank Accounts > View Balances. The transactions will show a negative balance reflecting the amount now owed. This provides a real-time view of the credit card balance.

Entering Other Charges (Debit Transactions)

Since importing is not supported in On-site for credit card ledger accounts, you need to enter the charges manually. Manual entry ensures all charges are recorded, even without direct import capability.

Do to Accounting > Debit Transaction. Choose Barclays card. Enter pizza hut and google. To make the connection, you make a debit to your Barclays credit card. Debit transactions properly record expenses charged to the credit card.

Advantage: You now have runnings balances, offering a real-time view of available credit and outstanding debt.

1. Go to Debit Transaction.

2. Select the Barclays credit card.

3. Enter the date, vendor (e.g., Pizza Hut), and amount (e.g., 25).

4. Select the appropriate GL account (e.g., Meals and Entertainment). Accurate GL coding ensures proper expense categorization.

5. Add additional debit transactions for other charges (e.g., Google Marketing - 500). All credit card charges must be recorded as debit transactions.

6. View balances to see a running total of the amount owed on the card. Consistent balance tracking provides a clear picture of credit card debt.

7. For all other charges to the card such as Google, you would use these debit transactions. This ensures all expenses are properly recorded and categorized.

Paying Off the Credit Card

1. Set up the credit card company (Barclays) as a vendor (Vendors > Barclays). This step allows the credit card payment to be processed as a regular payable.

2. The GL account needs to be the Barclays liability account for Barclays credit card. This links the payment to the соответствующий credit card liability.

3. Then go to Accounting > Payables, and add a payable. You will be adding a regular payable, and not a credit card liability. This ensures the payment is correctly recorded against the credit card balance.

4. Enter 1500 as a partial payment instead of the 1890 dollars due. Partial payments offer flexibility in managing credit card debt.

5. Click on default/ The accounts payable will increase, while the liability will decrease for the Barclays credit card. This adjustment reflects the payment's impact on both accounts.

6. Pay the bill electronically, Just like normally. Electronic payments streamline the payment process and ensure a clear audit trail.

7. After paying the credit card bill, examine the Barclays card in Bank Accounts > View Balances. This confirms the payment has been applied and the credit card balance adjusted.

Combining Both Methods

You want to see your accountant regarding best practices. Consulting with an accountant ensures compliance and optimal financial management. Both debit and credits will show up on your running balance when performing method B to your credit card liability. This 통합된 view aids in comprehensive financial analysis.

Credit card liability vs Ledgers

Method A: For smaller firms that don't care too much about tracing the expenses. Simpler tracking makes this method suitable for firms with less stringent reporting needs.

Method B: Recommended for paying product vendors that exist in the system. Direct vendor payment tracking provides better visibility into spending patterns.

Methods can be used simultaneously with different credit cards. This allows for tailored credit card management based on specific business needs.

Summary

• Method A (Credit Card Liabilities):

  • Vendor Setup

  • Decide when/how to record charges

  • Enter Transactions

  • Pay Credit Card Company

• Method B (Checking Ledger):

  • Create Liability Account with Checking Privileges

  • Enable Employee Access

  • Set Up Vendor

  • Pay Other Bills with Credit Card

  • Enter Debit Transactions (for other Expenses).

  • Pay Off Credit Card

Procedural Considerations

Consider using both methods to maximize their advantages. Integrating both methods offers a comprehensive approach to credit card management. Method A is good for expenses, while Method B works for paying purchase orders. This optimized allocation provides better insight into financial transactions. Always consult your accountant regarding best practices for managing credit cards and preventing employee fraud. Professional guidance ensures compliance with regulations and helps safeguard company assets.