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A/R Platform Fees

So we perform tech services and one of the ways we get business is with two sites, Field Nation and Work Market.  Field Nation charges a 10% "platform fee" on every assignment, which is deducted from the invoice total

 

Work Market charges 2% for "fast funds" (so we can choose to expedite the cash receipts for invoices instead of waiting for the duration of the terms)

 

It seems that my options are:

Income + Discounts/Refunds Given (which I don't like because it's not voluntary)
COGS + Cost of labor - COS 

 

Essentially on my P & L, I would like a separate line item as A/R Adjustment
 

Question: What should the COA acct be used for these fees?  Of the two I mentioned above, which is the better choice?  Or would one recommend "Door #3", an option I have not presented?

Thanks in advance

1 Comment
Established Community Backer ***

Re: A/R Platform Fees

This is not an AR adjustment nor a discount to customers. It's your Fee expense, separately. It's part of your Banking process, not changing sales and not affecting AR.

 

Like this:

 

The customer pays in full, but you don't get all the funds. You have a Settlement agent. Make a Bank account for each settlement agent. Sales made through them get the payment in full (gross sale) deposited here. Now you enter the Fee here as an expense for the settlement agent as payee name. Now this bank has the Net you got in reality, as settlement to real checking = Transfer, from Agent bank to real bank. This is not Income, here. This is Banking.

 

And with this one date, the Settlement agent bank would be 0. That's why this is called a Clearing account. Of course, with this as an ongoing method, you will have overlap with ins and outs, but the process should still reconcile every time, the same as a real Financial institution handling your funds and charging you fees.

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