I am receiving the payment through paypal and they charge me 4.4% per transaction and we include this amount in bill and collect it from customer, so for billing purpose what I did I have created the paypal handling charges under the sales tax and charges on net total 4.4% but when I receive the amount and I see the ledger of that payment it shows me paypal handling charges as it is on the credit side on the ledger.
Now my question is how I can manage this automated way means when I receive the amount it should automatically go to the debit side of the paypal handling charges and credit the debtors.
Please note I have made the separate charts of accounts under the Indirect expenses section and linked paypal handling charges to it.
Please let me know that what is the best way to achieve it.
I need the suggestions for managing this since I am not from core account field
I will tell you the whole story.
Lets assume my client has given me the order of 100$ and I have delivered him the job.
At the time of invoicing I will charge him 100$ + 4.4% i.e. 100 + 4.4 = 104.4$
I have created separate paypal handling charges account under the Indirect Expenses.
and created a charge template under the Tax option with the name on paypal handling charges and the account which will effected is Paypal handling charge. So if I will submit this invoice and go to General ledger to see what happened, it shows me Under the debtors head my client name and 100$ debit side, under the Paypal Handling charges $4.4 credit side.
Now when I receive that amount I will actually receive 100$ only because paypal will deduct the rest as transaction charges not 0.3 conversion charges will be there as business expense or indirect expense.
So now if I will go to the invoice and make it pay it will mark the full invoice paid against the debtors i.e. 104.4$ but the problem is I have never received the 4.4$ since it is transaction charges and paypal will deduct that before transferring the amount to me.
I have tried one alternate method, while creating the invoice I used the write off option and entered the 4.4$ which is paypal charges against the paypal handling charges account since I am not going to receive the amount. Then it shows me the actual amount received and also debit the paypal handling charges. But is this the write way to do it ?
Since I am marking these payments manually and erpnext developers have given the paypal integration which is great feature and I must appreciate that.
If I will use this integration then how it will work ? in my case.
Please suggest ? Your response will be appreciated.
First of all I am afraid to not having the experience with the accounting in ERPNext and how to set this up yet. All I am confident about here actually is how PayPal charges for transactions received (business PayPal account, it’s different if you have a personal PayPal account I believe)
I don’t think that is calculated correctly It’s 100/(1-4.4%)+0.3=104.90251
I assume you truly want to put all charges applicable to be paid by your customer (of course if you want to make it more clear to understand and are willing to take some of the charges out of your own pocket you still can stick to 100+100*4.4%)
also not correct I think I you customer pays 104.4 you will receive 104.4 - (104-4*4.4%) -0.3 = 99.5064.
The 0.3 USD are transaction charges per transaction, not currency exchange related costs.
Well I Understand that the above calculations on which we are charging is not correct there will be some loss which we have to bear even though we will charge the client because on 104$ paypal will charge us on 104$ + 4.4%, we are doing review of that loss every quarter.
But the question remains still same, how I can do this in invoicing and at time of receipt of payment.
Because on invoice it is mentioned that on 100$ 4.4% is paypal handling charges. but when I mark invoice as paid my paypal charges account is not debited.