[PrintOwners] How do you handle postage???

[Jeff Daghir]

We have an "Actual Postage" charge  in PrintSmith called that is
recorded in a  non-sales category called "Customer Postage". When we
do a mailing we include the postage as a separate line item on the
invoice. The customer pays for the postage by writing out check made
out to us just like they do for the other products/service. We do
require that the postage be paid before we will take the mailing to
the Post Office. The Customer Postage sales category is recorded as a
separate account in Quickbooks and when we pay postage for a
customer's mailing the payment is debited against the Customer Postage
account.  The balance in this account should normally average out to
zero and postage does not show up in our sales figures. We also have
another charge in PrintSmith called "Postage Markup" that is recorded
in the Mailing sales category. Any markup on postage gets applied with
this charge and is recorded as a sale.

For example we charge the customer $600 for the postage on the
mailing. Actual postage is $550. In PrintSmith we would have a
separate line item called Postage with two hidden charges in the line
item - $550 in the Actual Postage charge and $50 in the Postage Markup
charge. When we do our daily close-out and transfer our sales figures
to QuickBooks $550 would should up as non-sales income and be credited
to the Customer Postage account while $50 would show up as sales
income and be credited to our Sales account (in the Mailing
sub-category of Sales). When we write the check for $550 to the
Postmaster it would be debited against that Customer Postage account.

Advantages to this approach - Profit on postage correctly shows up as
sales while actual pass-through cost of postage does not. Also since
the postage shows up on the invoice you have documentation that
customer actually owes you for the postage and you have a check made
out to you that you can collect against if the check is bad. If the
check is made out to the Post Master and isn't a good check I would be
afraid you would be up sh*t creek without a paddle. You have no
written documentation that the customer owes you anything nor do you
even have a bad check written to you to try to collect on. And the
Post Office will try to collect from the Permit Holder (you) first
before they worry about who actually wrote the check.  And once the
Post Office has received their payment from you they would have no
motivation to go after the person who wrote the check. Admittedly this
probably wouldn't be a problem with an established customer but it
could happen. Also it seems my customer prefer to see the total cost
of a mailing (printing + mailing services + postage) as a lump sum -
it makes it easier for them to evaluate the cost of the mailing.

Disadvantage to this approach: Some states, especially those that have
adapted SSUTA (streamlined sales tax) regulations might consider the
postage subject to sales tax if it shows up on the invoice.

-- 
Jeff Daghir
MPS Printing, Inc.
"The Ink & Paper People"
Madison, IN
www.mpsprinting.com
jeff_daghir at mpsprinting.com


Mike said:
> I know this topic has come up before, but how is postage being handled from
> an accounting/ sales standpoint?