Frequently Asked Question

Processing Payments for a Partner in a Partnership Company
Last Updated 3 months ago

All payments made and credits received in a Partnership Company are posted against the Partnership. At the end of a Period, the final balance is distributed between the partners, based on the percentages set in Company Partnership Maintenance.

This creates a challenge when dealing with credits or debits made by a single Partner against his share of the Partnership. If the Expense were to be entered in the normal way, it would be split between the Partners and not be processed against a single Partner.

Payments by Partners must therefore be processed via the Payment On Account screen (Main Menu > Supplier Maintenance > Pay on A/C). POA allows a single Partner to process payments without affecting the Partnership balance.

Pay Creditors screen must be used to process the final payment after a Closedown has been run. Do NOT pay any partner the amount shown on the Closedown Summary. Pay only the balance shown on the Pay Creditors screen.

Example A – Credit or Debit

A Partner has paid into the bank a credit of £5K in anticipation of a large expense. Enter -£5,000 amount on the POA screen. A POA posting for -£5K will be posted to be reconciled immediately with the credit from the Partner. A second POA entry for +£5K will also be generated, to be added to the payment due to the Partner. The Pay Creditors screen will show the final balance for the Partner, as it includes the unpaid +£5K.

The same approach can be taken to transfer money to a Partner in advance. In this case, enter a positive amount on POA to reflect the outgoing payment.

Example B – Regular Mortgage Payments

Manual entries can be made for each mortgage payment via POA, by selecting the Partner as supplier, with the actual bank transfer being made to the mortgage company. A more flexible approach is detailed below.

To automate these payments, a similar approach can be taken using the Auto-Payments system (Main Menu > General Maintenance > Auto-Payments (DD/SO)). Two Auto-Payments entries should be created with same term and similar amounts (one positive and the other negative), with the Partner selected as supplier on the credit entry.

This approach also allows flexibility regarding the selection of specific analysis codes on either entry and the selection of supplier on the debit entry (Partner or mortgage supplier).

Care must be taken when making changes to ensure that the two entries remain consistent.

Note: The above notes need to be followed precisely. Make sure you understand what you are doing.

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