What is the accounting best practice for banking fees?

Q. (cont.) For example, we receive a wire from a customer for an $100 invoice, but the bank sends only $90 due to the $10 fee. Should we book $90 against AR and $90 to cash? Or should we also account for the bank fee? And let the customer aware of the shortpay?

A. In the case of your example, you would book $100 against AR, $10 against the bank fee, and $90 against cash. If you were to book $90 against AR, you would be left with $10 in AR that would not be cleared.

It would be best to not contact the customer at this stage, as the customer did not actually short pay the invoice. They paid the required fee for the wire transfer and sent the $100 to your bank. However, some banks charge an additional fee to the payee for receiving a wire transfer, but this fee is described in the terms established with the payee, not the payer. In other words, the bank is charging for a service performed for you, not your customer.

If you would like to prevent this situation in the future, you may want to consider including wire transfer stipulations in your payment terms when establishing a contract with a customer. Without this, it would be difficult to recover the money you paid for the receiving fee, and you may damage the relationship with your customer in the process.

 

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