Can I record gross sales when paid commission from a manufacturer?
Hello- I own a retail furniture business. The majority of our sales are billed by invoicing the customer directly, the manufacturer bills me and I keep the difference as my net profit. Lately we have started to do more business on state contract in which our company makes the sale as normal, but the customer cuts a PO to, and is billed directly by, the manufacturer. We are required to submit our customer's PO and our own PO (for the same $ amount) to place the order with the manufacturer. Then I receive a commission check from the manufacturer. So I have a few questions:
1. How do I record the sale? I want the gross $ to reflect in my top line revenue as it does for all other orders. Otherwise, if I only record the commission income, it will skew my numbers by showing lower gross sales and a higher income. If the physical cash does not run through my bank account, is there a way to still record it as a gross sale?
2. What do I do with the PO that I send to the manufacturer? I will never be billed for it, but we will receive the product.
3. Side note: I do have items and sales accounts specific for State Contract already created.
Re: Can I record gross sales when paid commission from a manufacturer?
It's good to hear that you've already created your sales accounts, KVLiuzziWC.
For your first question on how to record the sales. The process is still the same, however, you'll have to enter those bills as billable. Since your customer can directly purchase to your manufacturer. This helps you put a markup on those expenses.
Here's how to set up the billable expense:
Go to the Edit menu then, select Preferences.
Click Time & Expenses then, go to the Company Preferences tab.
Put a check mark on the Mark all expense as billable box.
Then, enter the Markup Percentage and the Markup Account.
When you enter the bill, you'll have to make sure that it is billable to the customer.
On your last question, you can mark as closed those purchase orders. This will not affect your account since these transactions are non-posting transactions.
You can pull up the Profit & Loss report to check your total expense and your net income.
This information will help you record your sales and your purchase orders. I'm just a post away if you still need more help.