Introduction

Examples of Employee Non-Supplier (Vendor) type expenses include:

• Petrol expenditure
• Hotel Accommodation
• Rail fares
• Taxis

Employee Expenses do not relate to an existing Supplier (Vendor) in the Accounts Payable system.

Best Practices

The easiest way to manage them is to:

1. Set up each Employee as a Creditor in the Purchasing (AP) System. Set up these records as a separate section in the Supplier (Vendor) Accounts table, for example, with a special prefix or suffix in the Supplier (Vendor) Code. 
2. When you receive an Expense Claim from an Employee treat it like any other incoming Invoice. Enter it against the relevant Employee’s Expense Account in the Purchasing System while at the same time recording the VAT (Tax) information and the expenditure General Ledger analysis codes. 
3. Attach a scan of the Expense Claim Form and its Receipt Dockets to the Invoice or the individual Line Items. You can do this by using the Supplier (Vendor) Account screen, which will attach all images to the Invoice total, or using the Transaction Browser, which will attach individual images to each Posting Transaction.

4. Additionally, you could set up a separate Creditors Control (AP) Account for this group. To link the control account to each Supplier (Vendor), go to their Master Record and select it in the Account Settings tab. When it comes to Expense Claim payments, use the same process as for normal Creditors, such as Payment by Bank Transfer, Cheque from any of the Bank Accounts including the Petty Cash A/C.

See:

Sales Batch Invoices Credit Notes (3.4) - AIQ Academy

Employee Company Credit Cards, Debit Cards, and personal expenses

Account for employee credit card expenses by recording them together with their scanned documentation. Include VAT (Tax) and General Ledger Codes which do not appear on Credit Card Statements or Bank Statements in the case of Debit Cards. 

Each Employee with a company card should prepare and submit Expense Reports and Receipts.

Credit Cards 

Entering the expense as a Sundry Bank Payment

1. In Bank List find the bank.
2. Go to Actions and select Bank Sundry Payment. 
3. In Sundry Bank Payments, complete the following:

• GL A/C, Tax Code: Record each expense against the appropriate codes as frequently as possible to ensure greater accuracy.
• Net, Gross Amt:  If you enter the Gross Amt, the system will request the Tax Code followed by the Gross Amt of the expense receipt and will calculate the Net and Tax. If you enter the Net Amount before the Tax and Tax Code, the rest will update.

Viewing a Bank Transaction

In Bank List, click View Transactions. The Transaction Browser displays inputs as negative Overdraft transactions.

Recording and making a Bank Transfer for the expense

When the Credit Card Statement arrives, either: 

• scan it.
• use the Bank Reconciliation Program to record the expenditure, item by item, against the Bank GL Code.

To record payment to the Credit Card Company as a Bank Transfer from one of the Company’s regular Bank Accounts:

1. Go to Bank > Bank List.
2. Find the credit card bank account. The Balance on this Account represents the amount outstanding to the Credit Card Company unless the Company decides to remit the full amount to the Credit Card Company. 
3. Under Actions, select Bank Transfer.
4. Accompany the record with a real Bank Transfer with the same details. This payment will appear in the remitting Bank Account for reconciliation purposes. The Credit Card Company will have already converted Foreign Currency purchases into your Base Currency, so you only need to process the transactions in Base Currency.
5. In Bank List, click the Paperclip icon to attach a scanned image of the Credit Card Statement. Click View Transactions to open the Transaction Browser and attach individual VAT (Tax) Invoices and Receipts submitted with the Claim.

Debit Cards

Follow the same procedure as with Credit Cards (see above). The exception is that there is no need to set up a new Bank Account since the expenditure will be recorded by the issuing bank every time the Debit Card is used.
 

Employees should still record and submit their Expense Reports against the Bank Account GL Code attached to the Debit Card issuing bank. There is no need for a Bank Transfer to clear the expenses. Just perform regular Bank Reconciliations. 

Personal Purchases

If the Employee has used the Credit Card or Debit Card to purchase an item for personal purposes, then you need to recover such expenditure as the Vendor has been paid.

You cannot Reverse such a transaction in the system as this will cause errors in the Bank or Credit Card reconciliation process. Therefore, you need to correct the General Ledger Cost Accounts and Tax Accounts:

1. Set up the offending employee as a Debtor in the Sales system. 
2. Raise a Batch Invoice against the Debtor’s Account, quoting the original General Ledger Cost Account and the Net and Tax Amounts. The result is that the General Ledger Cost and Tax have now effectively been reversed and transferred to the Employee Debtor Account. 

See:

Bank Reconciliation (Manual) (6A.6) - AIQ Academy 

Bank Feeds (6B.1) - AIQ Academy 

Importing bank statements manually (6B.2) - AIQ Academy

Transaction Matching and Quick Post (6B.3) - AIQ Academy 

Advanced Posting and Matching (6B.4) - AIQ Academy

How do I Manage my Company Bank Accounts, Credit Cards, etc?‍ 

How do I Use the Bank Statement Scanning Facility (AutoRec)?‍ 

How do I Carry out a Bank Reconciliation?‍ 

How do I Use the Bank Import Facility to assist with my Bank Reconciliation?‍ 

Employee Out of Pocket Expenses: Supplier Payments

Sometimes Directors (or other Senior Employees) will purchase a large ticket item (or Stock) for the Company from a Supplier (Vendor) and settle the Account from their own funds. The Supplier may be an existing one, or, if not, may need to be set up as a new one. As the Director or Employee has settled the Account this needs to be accounted for. 

1. You can account for this expense in one of two ways:

• Set up the Director or Employee as an Internal Bank Account. Make payments (Supplier (Vendor) Payments Quick Entry) to the Supplier through this Bank Account. For accuracy’s sake keep the date of this Payment the same as the Purchase Invoice. Reimburse and clear the Director’s Bank Account with a Bank Transfer from the normal disbursements Bank account.
• Set up Director’s and Employee’s Expense Accounts as Creditors in the Purchasing System. Raise a Purchase Debit Note against the Supplier (Vendor) Account to clear the Invoice and to raise a Purchase Credit Note on the Director’s Expense Account in the Purchase Ledger. This transfers the debt transaction from the Supplier (Vendor) to the Director for subsequent reimbursement by the Company.

2. Enter the details of the Purchase Invoice, either through Batch Invoicing or, in the case of Stock Purchases, through Item Invoicing.
    

See:

Supplier Payment - Quick Entry (4.8) - AIQ Academy

Purchase Batch Invoice (4.4) - AIQ Academy

Purchase Item Invoice (4.2) - AIQ Academy

Director's Accounts, Advances, and Foreign Currency Expenses

The standard set of General Ledger Account Codes supplied with the System include General Ledger Accounts for Directors Loans. 

A more comprehensive way of dealing with Director's Loans, Expenses, and Advances is to:

1. Set them up in the Purchase System as individual Suppliers (Vendors).
2. Process their Expenses and Credit Cards as detailed previously. Directors may choose to leave the out-of-pocket expense amounts to lay on their Expense Account for some time.

You could also use a Purchase Payment to the Directors (or employee) Expense (Supplier (Vendor)) Account. In many cases, you can use these Advances to offset previously or currently incurred expenses.

In the case of Cash Advances for journeys to Foreign Currency zones, also: 

1. Set up a Director’s Foreign Currency Expense (Supplier) Account for that Currency. 
2. Enter expense claims (typically non-Credit Card items such as taxis, and tips) from the trip and any subsequent returns of any remaining Cash Advance funds. 

See:

Foreign Currency Overview (8.0) - AIQ Academy 

How do the Multi-Currency Features of the System Work?‍ 

Sundry Petty Cash Payments

For the cash purchase of small items such as Tea, Milk, Newspapers, Taxis & Couriers:

1. Set up a small Cash Box (Petty Cash Account) as a Bank account in the Cash & Bank system.
2. Use Sundry Payments for expenditure and a Bank Transfer to top up.