Payment to Directors

MamboMouse

Hi everyone

I have a mini dilemma. A Client has paid £110, which was banked last month. I have now been told that this was intended as a personal payment to one of the Directors, and the Director wants me to transfer this money out to his personal bank account.

He is debating with me that I can just transfer it out & it won't affect the accounts, & is arguing that such a small amount doesn't matter. This doesn't feel right. Can I do this? And if so, how should I bookkeep for it? Would I be better off refunding the money to the Client & asking them to pay to the Director directly so that I'm not involved?

Many thanks.

PS. I know a VAT invoice needs to be raised for any income. I just need someone to help bolster my argument!

burg

I would just confirm with the other directors that it was not intended for the business and it was for him personally. Explain you are not trying to be awkward and that you just don't want to act on the say so of one director without being notified prior.

If they are in agreement then adjust. If it is for the director and he wants it paid to him then the two entries should be on his DLA.

MamboMouse

Thanks Ian. No prob with agreement with the Directors.

Have I understood you correctly? So it should be (1200 Bank & 2106 DLA):

DR 1200 CR 2106
DR 2106 CR 1200

Therefore, nothing passing through the Sales Ledger & no invoice raised?

Mouse

burg

yes basically.

Technically the director introduced the money to the company (albeit through a third party) and then withdrew it again.

My point about the directors was:-

1 to protect yourself encase of any disagreement between the directors
2 to make sure the directors are aware that he also has private dealings with this customer and that there are no conflicts of interest.

MamboMouse

That's all very clear, thanks very much for your help Ian.