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Credit Card Payments

Does anyone have a definitive system for handling tracking of costs/invoices paid by American Express or other credit cards?

When an invoice comes in - and you know you will pay this via credit card - what should be entered as an AP or project cost - the invoice or the credit card statment charge? How do you recommend entering the costs so they don't get entered twice?

Any help would be greatly appreciated.

Joseph Notovitz Notovitz Communications

We designed a Credit Card Charge form to record whenever something is charged to a credit card. There is a place for a job # (if applicable), as well as what was ordered, who authorized it, etc. If the expense is related to a particular job, I enter the amount using the EXPENSE function of Clients & Profits. That way the amount gets charged to the job immediately. I make a notation on the Credit Card Charge form that this item has been "Expensed" to the job. All the Credit Card Charge forms are held in a file until the credit card statement arrives. Then I just reconcile the charges to the forms and input each line item from the statement with it's proper GL code (and job #). This will NOT charge the job twice.

Dorinda Sample Operations Manager Janzen IdeaCorp

We issue POs (to AMEX) for internal use only which place the cost on the job and assists also with the allocation of the statements.

Janice Young

I enter credit card invoices as a payable for that card (ex: AMEX) and then distribute the invoice total among as many accounts as apply. If any costs are job related, the cost can be itemized and billed to that job just as would be done for a dirct A/P entry. It's really quite simple - enter the credit card A/P as a job cost invoice if it includes job costs or as an overhead invoice if no job costs are included. Hope this helps.

Cynthia Hobbs

Set up an unique G/L code for each credit card. It will also serve as the A/P control account. Every purchase should have a receipt or authorization form with appropriate signatures. Enter these receipts as they occur (...debit expense or project cost credit the credit-card-A/P code...).

Enter only from original receipt or signed form. Then when the card statement comes, the majority of the charges will already be entered. You can pull an aging just for that credit card. Add whatever is necessary to balance. Then pay (...debit credit-card-A/P code credit cash...)

Roxanne Cowan

We have all employees who use our number do a PO to AMEX and I put them in a folder to be reconciled when the AMEX A/P comes in and entered in then. Does this answer your question?

Tina Hawkins Fricks/Firestone Advertising

I use a generic form called PURCHASE REQUEST-CREDIT CARD I pre number the generic form with consecutive invoice #'s example C238, C239, C240 etc.. I also have a vendor set up in my system called Visa. When ever the credit card is used for a purchase this generic form gets filled out (even if it is for an online purchase). I then enter the generic form into accounts payable the same way I would an invoice from a vendor. When I get the Visa invoice I match it up with the generic invoice in the system and flag them to be paid. This gives me a hard copy for my records and keeps us from entering the purchase twice. If you would like you can send me your fax number and I can fax you a copy of the generic invoice that I use. I can also give you a more detailed description of how I track credit card purchases.

Lynn Ebben Marketlink

Every time an employee uses the card, he fills out an expense report detailing all charges - regardless if the charges are billed to the agency or client. Employees must do separate expenses for credit card charges and cash. In addition, they cannot combine clients on one expense report - they must do separate ones for each client.

When the expense report for the credit card charges come through (the employee marks the expense as "Credit card"), they are filed in a folder to await the credit card statement.

When the statement comes in, the expense reports are matched up to charges on the statement. THEN, we enter the charges based on the credit card statement. At this point, if the client is being billed, we make a copy of the expense report for the job file (we send back-up documentation on every AR invoice to a client).

If we don't have an expense report when the credit card statement comes in, we notify the employee and he has three days to produce one. If he doesn't produce it, we bill the charges to him personally.

Keep in mind that the IRS does not accept expenses listed on credit card statements unless you have the actual receipts.

Mary McMurtrey

All credit cards have a person's name associated with them. That person has to fill out an expense report. Then enter the expense report and either pay the person (who then pays the card company), or change the check name to the card company and pay directly. You can't use the statement from the credit card company, the IRS doesn't like it. You must use the receipt (as back up to the expense report).

Shelly Constantz

We use our American Express regularly for certain vendors. (great perks from AMEX for all the points!) When we get the vendor's invoice, I enter under the vendor AMEX and use the vendor invoice #, etc. I put the vendor name in the description of the A/P so when I show a list of "AMEX" charges I can easily find specific invoices. You can still pull up the cost by the actual vendor's invoice number. Continue on with A/P as usual by entering all the necessary job information.

On overhead expenses I wait until the AMEX bill comes to break down those charges by account number. I highlight any charges that have already been entered and all the others get added up and I do a separate A/P for them by choosing "distribute to many accounts". That might not be the correct prompt but I'm sure you'll get the idea. If you have a few job costs on the AMEX bill that have not been entered, be sure to choose job cost A/P and not overhead. For all the overhead costs use "None" for the job number.

Once all the costs are entered and posted, we draft a check. Now the invoice numbers that print on the check stub might not mean anything to AMEX, but it is a way for you to click on all AMEX charges and have them link to the appropriate job or expense account. You'll end up clicking on all the vendors that you had been entering as their invoices came in as well as the one AMEX entry for the difference that you broke down by account when doing the A/P.

I'm sure that this sounds more confusing than it actually is. It was the only way that we could link the credit card charges to their appropriate job/account without making it look like the vendor had never been paid (that's what it looks like when you enter the vendor invoice and then pay with AMEX - no way to put them together).

I hope this helps. Maybe I'll even learn of a new way to handle these charges from other readers. Good luck.

Lisa Alexander Shea-Campbell, Inc.

I am very careful to issue a P.O. for anything that we will pay with a credit card. Then there is a record on the job of the anticipated expense. I don't enter the actual expense until we get the American Express bill, but we frequently will pre-bill from the P.O. if we need to.

Then when the Amex bill comes in, you enter the expense as usual, but be sure to check the WIP page of the job ticket afterwards. You have to manually change the status of the pre-billed expense that has come in on the Amex to "billed." It generally won't do this on its own. Then there is no risk of billing it twice. I keep a list of P.O.s that have been pre-billed, and when I get in the vendor invoices I am careful to change the billing status on the WIP page of the job ticket.

I have suggested to C&P in the past that they set up a credit card entry feature like QuickBooks has, where you can enter the expense directly from the receipt and it will post to the job. Then when you get the bill, you "reconcile" it like you would a bank statement. I think that would be a lot better than the fancy footwork that is required now.

Good Luck!

Catherine Colangelo The Phillips Agency