How are 'kickbacks' dealt with in terms of accounting?

icebergx

Hi all,
I have a fledgling Property Maintenance company and we intend to work with a particular Property Management company who can potentially put a lot of business our way. They look after properties for landlords and will be instructing us on maintenance jobs when they arise.

After a job is complete, we invoice the landlord, but it's the Property Management company that will pay us, as they hold some landlords' funds to cover such instances. Part of the deal is that they retain 10% 'kickback'/cut of the cost of the job and transfer us 90% of the originally invoiced amount.
In accounting terms, how would this work? Should they invoice us for their 10% or is there another way to treat this? The property manager said that they would send us "remittances" detailing the transaction, but I'm not sure if this is enough?

Anybody with experience of how to treat this, I'd be grateful for your insight.

00ec25

the standard way agencies operate is remittance advice lists the gross amount and itemises any commission retained by the agency. Where applicable, the remittance advice should also be the formal VAT invoice from the agency so (if you are yourself VAT registered) you are able to claim the input VAT charged by the agency.

in accounting terms you record sales of £100 and commission paid of £10 thus tying in with the bank receipt of £90

basic double entry.
In order to cause the remittance advice to be generated by the agency you yourself send them a sales invoice for £100, where that debtor is then cleared as above.

icebergx

00ec25 wrote: »

In order to cause the remittance advice to be generated by the agency you yourself send them a sales invoice for £100, where that debtor is then cleared as above.

I was with you up until this last bit... Could you elaborate/explain any further, please?
Thanks for your help, EC 😊

00ec25

icebergx wrote: »

I was with you up until this last bit... Could you elaborate/explain any further, please?
Thanks for your help, EC ��

sorry but you have been asking a lot of the most basic questions indicating you have no idea what you are doing and I have no intention of spoon feeding you every step of the way

read up on accountancy, or get an accountant

Manxman_in_exile

A good place to start would be to talk about "commission" and not "kick-backs".

theGrinch

If its a political party then its usually accounted for in honours once in power