How should we account for expenditure where the cost is covered by or shared with another organisation?

On occasion, your charity or church may be responsible for administering the payment of shared expenditure with another external organisation. For example, you may be running a joint event and sharing the costs, or even share an employee with another organisation, paying the employment costs together. 

In these situations, the required payments (whatever the purchase type) are likely to be paid by one organisation, with the other organisation contributing to or reimbursing their share of the costs. As your organisation is purely administering the payment on behalf of both parties, you may choose not to account for their contribution as income to your organisation, and equally, you may not want to show their proportion of the costs as your expenditure. 

Assuming it's your organisation that is administering the payment (which you are then being reimbursed or part reimbursed for), then you need to follow these steps:

1. Process the outgoing payment, and reconcile the expenditure as usual (as if your organisation was covering the whole cost)

2. When you receive money from the other organisation to contribute to their share of the costs, instead of recording the incoming bank transaction as income, you should select the Supplier Refund option, which will create a negative expenditure against the expenditure category. To do this, once you have uploaded bank transactions, on the Match Transactions screen, click on this incoming amount on the left-hand table, and in the popup select the Supplier Refund option.

This will reduce the level of expenditure in that category and account for the receipt of money, without recording it as income.

To better understand the Bank Reconciliation module, please view the module overview video here.