How Bank Charges Are Accounted

You can deduct bank charges from payments to cover the fees for transferring funds from your disbursement bank to the banks of your suppliers. The process that accounts for the payments automatically creates accounting entries for the bank charges.

Settings That Affect Accounting for Bank Charges

Accounting entries for bank charges affect the liability account and the cash account. The accounting entries use the predefined journal line rules for discounts. As a result, the setting for the Discount Allocation Method option on the Manage Invoice Options page affects bank charge accounting.

How Bank Charges Are Accounted

You can account for payments individually or through the scheduled process.

Example

This table shows the accounting entries, both automatic and manual, for:

• An invoice of 100 USD

• A bank charge of 5 USD

• A discount allocation method of single distribution

Transaction Description	Transaction Type	Account	Debit (USD)	Credit (USD)
Create the invoice	Automatic	Expense	100
Create the invoice	Automatic	Liability		100
Create the payment	Automatic	Liability	100
Create the payment	Automatic	Cash		95
Create the payment	Automatic	Discount		5
Record the bank statement charge	Manual	Discount	5
Record the bank statement charge	Manual	Cash		5