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Thread: Collecting money on behalf of third party

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    Collecting money on behalf of third party

    Good day ya all!

    I am using Pastel Partner and need to know what the correct entries would be when you collect money on behalf of a third party. This money does not form part of the company income. Example collecting the rent on behalf of property owners, we send file to the bank to debit tenant account, if the debit order is successful the money is then transferred to the owner of the flat, we charge a fee for the collection. What would the correct contra be since this is not part of taxable income, current liability? Thanks in advance!

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    You would debit your bank account and credit a liability (Funds held in trust).
    Once paid simply debit the liability account

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    Thanks Clive, much appreciated!

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