Credit Card Control

Some suggested methods of handling and controlling Credit Cards:

The following maintenance should be performed:

1.  Credit Card Control Account/s

create a General Ledger (GL) account in the Liabilities section for each Credit Card to be controlled

2.  Credit Card Cost Centre/s

create a Cost Centre (CC) for each Credit Card in the General Ledger or Balance Sheet CC Bank, and link it to the corresponding GL Credit Card Control Account

3.  Credit Card Supplier/s

create a Supplier relevant to each Credit Card

Posting Credit Card entries:

Method 1 – Paying the full amount of the Statement:

From the Credit Card Statement, post invoice (INV) entries for each item and code these to the appropriate Jobs and Cost Centres; the Supplier will be the credit card provider.  Use the Reference or Comments field to record the actual Supplier's code for cross-reference purposes.  The invoices are then selected and paid up to the desired amount.  n.b. GST should be recorded accordingly against each invoice entry.

Method 2 – Paying by instalment:

From the Credit Card Statement, post an invoice for the total value of entries and code the invoice to the Credit Card Supplier; the GENLED Job and the Credit Card Cost Centre (and GL Credit Card Control account).  The total GST Paid Tax Credits should be recorded accordingly.  Then select the invoice and split the Gross Amount in the Payment screen to result in the value of the instalment.  Pay the instalment amount and the unpaid portion of the invoice will remain unpaid.  Post Journal entries for each transaction on the statement (excluding GST) and the offsetting total (typically a credit balance) to the Credit Card Control account, e.g.

               Job                Cost Centre                GL A/C                        Debit                Credit

               97013                20H (FitOff H/W)        5.11 (Cost of Sales)        155.00

               97026                16B (Sand)                5.11                65.00

               GENLED        PEABC123                4.6011 (MV Petrol)        45.00

               GENLED        BCH                        4.13 (Bank Charges)        12.00

               GENLED        PLANT                        1.35 (Plant & Equip)        1000.00

               GENLED        CCVISA                2.161                        1277.00

Note that the Credit Card Control account in the General Ledger should always be zero and the amount owing on the card will be reflected in the Creditors Control account balance (details available through Supplier reports).

It would not be appropriate to use a Standard Withdrawal item in the Bank Reconciliation module if instalments are to be made by Direct Debit.  The approach must be by posting an invoice and splitting it in the Payment screen.

Method 3 – Credit Card as a BANK

Another approach is to create a BANK for the company credit card, thus requiring an Asset and a Liability GL account.  Post the entries as per the credit card statement as invoices using the Credit Card Supplier, recording the appropriate Job, Cost Centre, etc and GST accordingly.  Once again it is recommended to use comments to record the actual Supplier.  Immediately PAY these invoice entries using the Credit Card Bank, thus resulting in an outstanding balance showing against the Credit Card Bank.  Payments against the Credit Card, whether in full or by instalment are achieved by doing a Posting – Transfer between the eg. Trading Bank account and the Credit Card Bank.  Enter the cheque number in the Reference fields.  The balance of the Credit Card Bank accurately reflects the current balance owing on the Credit Card.

These are suggested methods of handling credit cards in the system and do not necessarily represent all possible approaches.  Method 3 is probably the most effective and flexible approach.

End of Document