Managing Credit Card Accounts

To keep on top of expense management, it is important to validate and reconcile the business credit card account on a regular basis. Credit card statements are often entered into bookkeeping systems as expense invoices, but this is not a recommended procedure.

Creating a separate credit card bank account within EBMS is a much better management method and is recommended whenever a business credit card is being used.

Complete the following steps to set up and manage a business credit card account:

Create a bank account. A general ledger account classified as a Bank Account should be created within the current liabilities section of the Chart of Accounts. (Review the Adding a Bank Account section for instructions to add a credit card bank account.)

Enter credit card purchases. Enter an expense invoice for the vendor that was paid using the credit card. Go to Expenses > Invoices and PO's and select an invoice to open the expense invoice window as shown below:

1. Enter the Vendor ID that was paid via credit card. This expense invoice should be entered at the time of the purchase, rather than at the time the credit card statement is received.
2. Enter the purchase Invoice number.
3. Enter the Date of the credit card purchase.
4. Set the Payment option to Manual and select the credit card Bank Account. (Review the Adding a Bank Account section for instructions if the credit card account does not show within the bank account drop down list. Enter a date or a different transaction ID within the Check # entry field.
5. Enter expense invoice purchase detail. Review the Entering a New Vendor Invoice section for more details on expense invoice details.
6. Process the expense invoice. Review Processing an Expense Invoice section for details on how to process an invoice.
7. Repeat these steps for any additional expense invoices paid with a credit card. The credit card account balance will increase each time an expense invoice is processed.
Create a credit card payment by entering an expense invoice for the credit card bank vendor:
1. Enter the credit card bank vendor into the Vendor Id field.
2. Enter a date as a fictitious invoice number.
3. The invoice Date should be dated on the day the credit card is to be paid, rather than the date of the credit card statement. A credit card statement payment should not show within general ledger as a receivable.
4. Set the Payment option and select the Bank Account checking account that is used to make the credit card payment.
5. Enter the detail and payment amount as shown above. Review the Entering a New Vendor Invoice section for invoice entry details.
6. The G/L Account on the detail line must equal the credit card bank account. Go to Expenses > Bank Account and select the credit card account. Use the account numbers that prefix the credit card account description. This account should be classified as a bank account and recorded in the liability section of the general ledger.
7. Process the credit card payment invoice. Review Processing an Expense Invoice section for details on how to process an expense invoice.
Reconcile the credit card account. Note: The step for processing the credit card payment should be completed before proceeding with this step. This step should be completed when the credit card statement is paid in full. Go to Expenses > Bank Account Reconciliation and open the credit card account as shown below:
1. The Statement value should be blank, rather than entering the bank account statement balance. The balance of the statement after the payment is posted can be entered if the credit card account was not paid in full.
2. Click on the Deposits tab and select all the credit card payments. This tab lists all the credit card payments made to the bank vendor.
3. Click on the Checks tab to view all the credit card purchases as shown below:
4. Select all the purchases listed on the credit card statement. All purchases that are listed on any credit card statement should be toggled ON with all the more recent purchases disabled.
5. Review the Difference value. This amount should be zero. If this value is non-zero, the payment or purchases are not properly selected, or the statement balance is not set properly. Note that all payments in the Deposits tab including the current payment should be selected. The purchases within the Checks tab should be selected if they show on the current or previous credit card statement. The Statement balance value on the Controls tab should be zero if the statement is paid in full or reflect the balance after the current payment is posted. Review the Account Reconciliation Overview section for more details on reconciling bank accounts.
6. Click the Reconcile button to complete the reconciliation.