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> Accounting, Agents, resellers, clients, suppliers
lightman
  Posted: November 18, 2007 01:29 pm
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In order to clear up a few misconceptions, I shall try and define what phpCOIN is (and isn't) designed to do and how to handle the various accounting transactions on behalf of the scenarios below.


CLIENTS

Client A client is someone you sell a product or service to. You invoice them for the product or service and they pay you and you record the payment against the invoice. phpCOIN was designed to handle this type of transaction and automate a great deal of it.

Reseller A reseller is also a Client. You invoice them for an amount of space, a service you provide or goods you supply and you record the payment against the invoice. You have no interest in what the reseller does with the space/service/goods you sell to him, nor do you care who he sells on to. phpCOIN was designed to handle this type of transaction and automate a great deal of it.


SUPPLIERS

Agent An agent is someone who sells on your behalf for a commission. You invoice the end user (client) directly and pay the Agent a commission on receipt of an invoice from the agent. phpCOIN was never designed to handle this type of transaction or record supplier invoicing or payments.

Supplier A supplier is someone that provides you with a product or service (your datacenter or the electricity company for instance) - they invoice you and you pay them - phpCOIN was never designed to handle this type of transaction or record supplier invoicing or payments.


So, is there any case that a client could also be a supplier ?

Yes - if you have a client that, for instance, buys webhosting from you, AND that acts as an agent on your behalf. phpCOIN was only really designed to treat this case from the perspective of the Client part - with a bit of imagination one could integrate the clients sales commissions into their account but you must be aware of local accountancy practices that might make this sort of transaction a violation of statutes.



Before you all shoot me down and tell me thats not how it works, here are some thoughts about resellers and agents:

Case 1) You own/rent a server, or part of a server. You split the available disk space up into 4 parts and sell those parts to 4 different resellers. You are not interested in the domains that each reseller puts within their space nor who their clients are, how much they are billing or how they are billing - frankly it is non of your business. All you do is invoice each of the 4 resellers for the space they have bought and count the money as they pay you smile.gif

Case 2) You own/rent a server, or part of a server. You have Agents who go out and sell on your behalf. They pass you the details and you invoice the end client directly . Since you are dealing directly with the end user. you record all their details, domains, invoices, transactions etc.
The Agent will then expect to be paid the commission you promised them for generating a successful lead that resulted in new business for you. Using whatever method of tracking the commissions due to your agents (a custom built program down to the back of a cigarette packet - whatever you find convenient) you tell the Agent what you expect to be invoiced, and, on receipt of the invoice you pay the Agent just like you would pay any other supplier.

Any other type of transaction or business practice (such as you are invoicing on behalf of someone you call a reseller (or vice-versa) is probably illegal. I know of no countries that allow you to generate invoices on behalf of (unless you are in their employ), or in someone else's name.

Examine your business model carefully, if in any doubt, take the advice of a qualified accountant or lawyer before entering into business transactions or agreements with resellers or agents - it could save you a world of aggravation biggrin.gif

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Whilst this forum is NOT the place to be learning general accounting – here are a few examples of the sort of transactions that you may want to use phpCOIN to record. This is in no way intended as a definitive guide, nor is it any substitute for a sound knowledge of your country/state accounting policies and practices.
(Please note: the examples I am giving are the purest and most fiscally transparent ways of recording your movements – many countries do not require strict adherence to them)

A simple transaction
* You create an invoice for $100 – the client balance shows him owing $100
* The client pays you $100 – you make a payment against the invoice and mark the invoice ‘paid’ -the client balance shows zero

A complex transaction
* You create an invoice for $100 – the client balance shows him owing $100
* The client pays you $50 – you make a payment against the invoice for the amount received and the client balance shows him owing $50
* The client then pays you another $50 – you make a payment against the invoice for the amount received and mark the invoice ‘paid’ and the client balance shows zero.

A complex transaction with deposit
* You receive $50 as a deposit for a product/service you have not yet supplied – you make a ‘Credit Note’ (essentially a ‘negative’ invoice) for the $50 and the client balance shows -$50
* You supply the goods to the value of $100 and generate an invoice for $100 - the client balance shows $50 still owing. (You can cross pay the credit note against the invoice at this stage to keep the payment transactions clean)
* The client then pays you another $50 – you make a payment against the invoice for the amount received and mark the invoice ‘paid’ and the client balance shows zero.

A complex transaction with refund
* You create an invoice for $100 – the client balance shows him owing $100
* The client pays you $100 – you make a payment against the invoice and mark the invoice ‘paid’ -the client balance shows zero
* At this stage the client backs out and you need to refund the money – you make a ‘Credit Note’ (essentially a ‘negative’ invoice) for the $100 and the client balance shows -$100 (You can cross pay the credit note against the invoice at this stage to keep the payment transactions clean)
* You make a negative payment against the invoice for -$100 (which represents the refund to the client) and the client balance shows zero.

(Some countries allow you to simply annul or even delete an invoice if it becomes invalid due to a refund etc - this saves having to generate credit notes etc but is harder to audit at a later date !)

Do remember that, if you hold funds on behalf of a client (a deposit or provision of funds or a refund) - strictly speaking that money doesn't belong to you and some countries may even require you to hold such funds in full in a separate bank account to ensure liquidity )

I hope some people might find the above information useful - remember it is only a guide and you should always consult your fiscal authority for the correct procedures to make regarding recording your transactions.


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***** Unless otherwise stated, all replies refer to the following *****
====================================================================
--- The latest unmodified version of phpCOIN available from the phpCOIN download page on the date and time of this post.
--- All relevant HotFix files applied - One of the four included unmodified themes - The original language files .
--- Help will be given to install/configure/use phpCOIN, but not programming help to modify phpCOIN operations. If you are competent enough to make programming changes, you should be competent enough to read the source code and figure things out :)
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