How do I correctly match documentary evidence to my bank transactions?

If you retain documentary evidence within Business Finance Assistant (e.g. invoices and expenses), it is critical that you ensure your bank transactions are correctly matched to these documents to avoid duplicate VAT entries in your VAT return.

Why do duplicate VAT entries occur:

Duplicate entries for the same transaction can only occur in accrual accounting.

Cash accounting uses the dates of transactions to create VAT entries. Transactions must be confirmed within Business Finance Assistant before an entry will appear on your VAT return.

However, accrual accounting uses the dates of your invoices and expenses to create VAT entries rather than the dates of transactions.

By confirming a transaction without attaching the correct invoice or expense, two VAT entries can be created for the same transaction: one for the unmatched invoice or expense and one for the confirmed transaction.

To check that documentary evidence has been attached correctly:

1. To confirm a transaction and ensure that the correct invoice or expense information is attached:

• Go to ‘Bank Transactions’ screen
• Select the correct bank account
• Locate the transaction and either check that the VAT, category, customer/supplier field have been populated correctly and amend it if required
• Or select ‘Split/Attach’
• Click 'Attach Document' to attach an invoice or expense manually
• Click ‘Confirm Selection'
• Click 'Done' then 'Confirm'

In accrual accounting, if you select ‘Attach Document > Invoice or Expense’ the list of available matches can contain Business Finance Assistant generated receipts as well as invoices or expenses that you’ve created.

The example image below shows a sales receipt generated by Business Finance Assistant (indicated by the yellow box in the below image) and invoices (indicated by the green box) as available matches. If you have created an invoice or expense using Business Finance Assistant, you must select this as documentary evidence rather than the generated receipt to avoid duplicate VAT entries in your VAT return.

2. An invoice or expense that is not attached to a bank transaction will show as ‘Unpaid’. In accrual accounting, if an invoice or expense has an incorrect ‘Unpaid’ status it can become a duplicate VAT entry on your VAT return.

If an associated transaction has appeared in your bank account, you should check that the status of the invoice or expense has changed from ‘Unpaid’ to ‘Paid’:

Invoices with an ‘Unpaid’ status appear in 3 separate places within Business Finance Assistant:

• The ‘Incomings’ widget on the dashboard
• The ‘Outstanding’ section of the ‘Incomings’ page
• The ‘Unpaid’ tab of the ‘Invoices’ page

Expenses with an ‘Unpaid’ status appear in 3 separate places within Business Finance Assistant:

• The ‘Outgoings’ widget on the dashboard
• The ‘Outstanding’ section of the ‘Outgoings’ page
• The ‘Unpaid’ tab of the ‘Expenses’ page

If a transaction has been matched to an invoice or expense incorrectly or an incorrect ‘Unpaid’ status is appearing:

• Go to ‘Bank Transactions’ screen
• Select the correct bank account
• Select 'Edit' next to the transaction, use the checkbox
• Click 'Actions'
• Select 'Clear selected Transactions' to clear the category in order to attach the correct invoice or expense
• Select ‘Attach document’ and then ‘Invoice’ or ‘Expense’
• In the next screen, choose the correct invoice or expense and click ‘Confirm selection’
• Press 'Done' then 'Confirm'

The transaction should now appear correctly on the VAT return according to the payment date. Check to ensure that your invoice or expense now has a ‘Paid’ status.