Invoice processing charges

[XLMonkey]

Thanks for response - I have no VAT. The payment is for license of one library I developed, the invoice will be in USD. The contract is between me and the client - intermediate company handles payment, I actually think it will receive money in dollars - deduct its fee - and then I am free to withdraw money into my UK bank account when conversion to GBP should actually take place.

In any case any bank fees for conversion/money received should be fully tax deductible anyway?

The bank fees should be treated as services supplied to your company (so, yes, deductible). In other words, you have
1. An invoice you issue to the client for the full amount, that you enter into your accounts and treat as paid when you receive the money from the processing company
2. A bill you get from the processing company that you enter as an expense in your accounts (so that the net of the two is what you actually got)

However, I re-iterate the point about getting advice on the VAT/sales tax situation. If you are
- registered on the flat rate scheme
- effectively exporting the licence (i.e. selling it to a US company)
- not calculating or applying the sales tax applicable in the desination country

... then you could get caught out.

But, if you aren't turning over enough in the business to register for VAT, then don't worry about it, as it won't matter.

[AtW]

Thanks for response - I have no VAT. The payment is for license of one library I developed, the invoice will be in USD. The contract is between me and the client - intermediate company handles payment, I actually think it will receive money in dollars - deduct its fee - and then I am free to withdraw money into my UK bank account when conversion to GBP should actually take place.

In any case any bank fees for conversion/money received should be fully tax deductible anyway?

[XLMonkey]

The price I charge unexpected client to whom I plan to upsell more stuff later is very good already - I don't want to make him foot the bill of extra 3% when I get 97% of a very nice sum: some shops use surchage when you pay by credit card and it always pissed me off, especially if the amount is rather high. It is the cost of doing business and I have to accept it - the price I charge is good enough anyway.

Even if I did I would still have issue of processor taking its cut - my question is whether I can just ignore that figure and use in accounting the amount I actually get in my bank account -- I think that's best since its not my bank's charges that will be taken AFTER the amount of money gets into it.

I want it all to be clean and nice from Inland Revenue's point of view - don't know if they pay particular attention to payments from overseas.

You need to account for both transactions (the fees you receive from the client, plus the currency conversion fee that you pay to the credit (card?) company) in your company's books. Also, it might be worth checking your position re. VAT, as I think that the VAT rates are different for currency conversion.

The issue of whether you show the conversion cost to the client (even if the rate to them stays the same) depends on how the contracts are structured. There are two options:
1. If the actual contract is between the credit company and the client (with them taking the payment in dollars and then repaying you in pounds), then the client should definitely see the transaction, as the invoice is effectively from the credit company.
2. If the contract is between you and the client then (I think) that you have the option of showing them or not showing them, but you could just do what Tesco's does and include information about the credit processing fee at the bottom of the invoice (you'll see from their receipts that it tells you how much Tesco finance charges Tesco for the privilege of processing your card).

[boredsenseless]

How long...

until you get a response saying talk to my mate who runs an umbrella his name is ***@cHHHHDJDthcontractors (name changed to stop the free advertising) like every other post on this board.

[AtW]

The price I charge unexpected client to whom I plan to upsell more stuff later is very good already - I don't want to make him foot the bill of extra 3% when I get 97% of a very nice sum: some shops use surchage when you pay by credit card and it always pissed me off, especially if the amount is rather high. It is the cost of doing business and I have to accept it - the price I charge is good enough anyway.

Even if I did I would still have issue of processor taking its cut - my question is whether I can just ignore that figure and use in accounting the amount I actually get in my bank account -- I think that's best since its not my bank's charges that will be taken AFTER the amount of money gets into it.

I want it all to be clean and nice from Inland Revenue's point of view - don't know if they pay particular attention to payments from overseas.

[DimPrawn]

If it were me and client accepts that they should pay for the % loss in the payment processing, I would add a line item to the invoice.e.g.

2.5% processing fee

If it's too much hassle I'd absorb the cost or maybe put up my rates for this client by 5% in the future to cover costs.

[AtW]

My client is going to pay me in a way that would cost me a few % in credit card charges processing (which is fine) with automatic conversion from USD to GBP: the amount that will arrive into business bank account will already have all such costs deducted.

I am wondering whether I should account for these costs or just make up invoice for the exact amount that reached my bank account totally ignoring such costs as they will be made by a 3rd party, not my bank?

thanks

Alex