Asset debits that aren't Income

epitoma

My company pays an expense for a monthly subscription CRM that charges $100 on the 15th of every month. A friend requested user access for their (different) company through my subscription and offered to contribute half of the cost. They want to pay me on the 1st of every month.

I feel like I'm overthinking this. I'll create a recurring invoice for this to their company. My invoice will come first which is going to bill them but I'm not sure what to enter for the "Income Account" in the invoice maker. Their contribution isn't income and will sit in my business checking account that I use solely for operating expenses until the 15th, where it will be used to help pay the bill. I don't know if it's really a Liability account I'll need to make because they have immediate and uninterrupted access to the subscription service and aren't waiting for me to "deliver" on a product or service.

What would you do here because I'm at a loss?
Thank you!

Samd

Hey @epitoma that is a really good question. I think you're going to want to account for this as a reimbursable expense essentially on the recurring invoice you're sending out. So if you generate an Other Income account under Accounting > Chart of Accounts, which you can name something familiar (Subscription Reimbursement?). Then head over to Sales > Products & Services, and either create or edit an item for this cost, and ensure that it is being paid into this account as it's income account.

For the payment itself, you'll want to head to the transactions page and edit the expense transaction for the subscription. Because you're only being reimbursed for half, you'll want to split the transaction, and set the category as: Refund for Income > Reimbursed Expenses. This should balance everything out!