Personal Finance & Money Asked by Dave Smith on March 29, 2021
How would I keep a record of payments with an insurance supplier (Zego if that helps) if they bill on the basis that the account gets topped up with credit, then they deduct from the credit on a pay as you go basis?
I.e: Top up so you have £100 credit, they then deduct £x here and there when the vehicle is used, then when the credit falls below £5 you would top up again.
To further clarify this is for working with Deliveroo/UberEats in the UK among others, on a sole proprietor basis
One simple way would be to keep a loan account (in your accounting package) in the name of the supplier. Put the account in an Asset or Liability register (check with your accountant which they prefer) so that it isn’t treated as an expense account.
When you send money to the supplier, you record it as going from your bank account to the loan account.
When you incur a usage fee, you record it as a payment coming out of the loan account.
By creating the account in an Asset or Liability register, you are effectively treating the account like a bank account. The accounting package should therefore consider the balance of your loan account as part of your net worth. Funds are treated as expenses only when you record your usage fees.
Answered by Lawrence on March 29, 2021
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