Paper-free book-keeping advice (using Sage One)

[FleurNancy]

Hi all.

I'm a sole trader and I use Sage One for my book-keeping. In previous years I have kept all my invoices in folders but I have pledged to go paper free for this tax year so have ear marked today so go through all my paperwork so far and upload images to the relevant cashbook entries. What I am struggling with is the two suppliers who send an invoice/delivery note each day they deliver (can be 7 days a week during peak periods) but only take payment once a month using a monthly statement.

In the past I have kept all the daily invoices/delivery notes and then filed them with the relevant statement. This was on the advice of my book-keeper who is a friend and a bit old school in her approach (ie likes everything printed and filed in a folder). If I go paper free I'll only need to upload the statement to the relevant transaction each month but that doesn't give any breakdown of what was ordered, just the overall figures. Do I need to retain these delivery notes/invoices for accounting purposes and if yes, how is best to retain them digitally?

[horizontalis]

The statement from the supplier is not a legal document that you need to keep. You need to keep each individual invoice - they are the official documents.

Most firms just pay their suppliers once a month, and add up the total of all the invoices and double-check that there aren't any missing by checking the total shown on the statement. The supplier only sends you the statement to remind you to pay them.

[Kazzyhoward]

Or are you saying that I should delete the automatically pulled through total batched payment and replace it with however many individual entries to total the same amount?

Yes. You enter each invoice as a separate invoice under the supplier purchase ledger account. The automatically imported payment then gets posted to that supplier puchase account and allocated against the individual invoices.

[FleurNancy]

Or are you saying that I should delete the automatically pulled through total batched payment and replace it with however many individual entries to total the same amount?

[FleurNancy]

Oh well that's interesting as I ended up calling my accountant and spoke to the VAT lady and she said much the same except without the MTD part (which I am signed up for). I'm on the flat rate scheme though so don't actually pay much attention to the VAT as I'm pure retail so just calculate based on my sales. So if a statement has say 25 individual entries on it totalling the figure paid (which is automatically pulled through from my bank account) do I need to break that payment down within the entry to 25 individual lines?

[Kazzyhoward]

Yes, you do need to keep the individually invoices, either on paper or electronically.

You shouldn't really be entering just the statement as a single entry - you should be entering the individual invoices separately, then you'd have an entry to match each one against.

That's best practice generally, but if you're VAT registered and liable under the new MTD, the MTD rules specifically prohibit the use of "batching" entries and require individual invoices to be entered separately.