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From Pierre Smits <pierre.sm...@gmail.com>
Subject Re: How to record payment provider (e.g. PayPal) fees as operational expenses
Date Wed, 16 Dec 2015 00:13:14 GMT
Hi Morten,

Order adjustments to be able to process the difference is not the way to
go. The payment fee is operational expense (OPEX), as a result of the
business decision you (or your company) took. Changing the order, after the
customer consented to the terms, involves more than just your internal
processes. More explanation to your auditors, which leads to more
operational expense.

The way to deal with the difference is at the moment of the reconciliation
of the transaction in the financial account. De payment the customer did
(in this case via PayPal) is for 100% and the deduction incurred due to
using Paypal should be regarded as payment or financial transaction cost.
So, your AR position reduces with 100%, OPEX increases with 3% and the
balance of the associated financial increases with 97%.

In double entry accounting terms:

   - Dt 97% - gl account of the fin. account (associated with your Paypal
   fin.account
   - Dt 3% - gl account for the OPEX
   - Cr 100% - gl for AR, and in the sub ledger the invoice gets reconciled
   with the payment by the customer.

I trust the above helps.

Best regards,

Pierre Smits

ORRTIZ.COM <http://www.orrtiz.com>
OFBiz based solutions & services

OFBiz Extensions Marketplace
http://oem.ofbizci.net/oci-2/

On Tue, Dec 15, 2015 at 9:18 AM, Morten Jensen <morten@citizenme.com> wrote:

> Hi,
>
> We are using PayPal to make and take payments but we are not using the
> PayPal gateway for payments and are instead using our own order and
> payments integration flow.
>
> We typically create an order of say £100 and once the client pays we
> generate the invoice. The problem is that we may only get e.g. £97 after
> paypal fees and we need to record the £3 as an operational expense (I have
> set-up GL account 709100 PayPal fees for this) while still invoicing the
> client for the £100 - after all, the client did pay £100 (and therefore
> order adjustments don't seem to cut it either?)
>
> Our business model prevents us from asking the client to foot the actual
> fees at buyer's end. Just like what would be the case on e.g. ebay etc.
>
> The problem we face is that only recording £97 prevents the order from
> being completed because there's £3 outstanding. Recording £100 means that
> our PayPal financial account will not reconcile because it doesn't reflect
> the reality that only a single £97 payment was made - instead we would have
> +£100 and a separate compensating transaction of -£3 on the financial
> account, which doesn't seem right either.
>
> I tried to create a manual GL transaction (and also got the code for
> automatic working in the same way) on the remaining £3 on the invoice id
> and payment id to 709100 - but it's not immediately clear to me what the
> account source should be.
>
> Could anyone shed any light on how to go about this?
>
> For reference, we will be integrating with many more payment providers that
> offer payments both ways over time; and therefore this is not just a PayPal
> integration issue for us in terms of recording fees.
>
> Thanks in advance for your assistance.
>
> Best regards,
> Morten Jensen
>

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