Splitting transactions - How and why should you use this feature?
Creation Date: November 1, 2023
Created By: David Franz
How to split a transaction on the Ember App
1. Click on Transactions
2. Click on the transaction that you want to split
3. Click on the dropdown menu
4. Click on Split category
5. Click on Choose a category
6. Select or type the name of the first category
7. Click on the first category
8. Click on VAT options
** If VAT Registered
9. Select the appropriate VAT rate
10. Type the amount you would like to allocate to this category
11. Click on Add category
12. Click on the second 'Choose a category'
13. Click on Choose a category
14. Select or type the name of the second category
15. Click on the second category
16. Click on VAT options
If VAT Registered
17. Select the appropriate VAT rate
18. Click on Amount to allocate
19. Click on Add category
20. Click on Mark as reviewed
When should you split a transaction in Ember?
Foreign currency invoices
You may find when you receive payment for an invoice that the amount you receive is now higher or lower then when invoiced. To correctly account for this you should split the transactions between the invoice amount (assign against the unpaid invoice) and assign the difference to "exchange rate variance".
Multi-Item Sales and Purchases
When a transaction involves multiple items or services that fall into different categories or accounts, splitting the transaction facilitates precise allocation of amounts to the correct categories, as illustrated in the example of an Amazon purchase with varied item categories.
Combined Payments
In cases where a client settles multiple invoices with a single payment, the split transaction feature allows for the accurate allocation of the payment against each invoice, ensuring correct reconciliation and outstanding balance tracking.
E-commerce Transactions:
With e-commerce platforms like PayPal and Shopify, the gross sale amount and the net amount received after deductions such as platform fees often require a split transaction to accurately reflect the sale and the associated charges in the accounting records.
Bank and Payment Processing Fees:
Transactions involving bank or payment processing fees can be split to separately account for the fees and the net amount, which is fundamental for precise expense tracking and financial reporting.
Sole trader expenses - split between personal and business
You may pay for an expense as a sole trader that has a personal element. You can split the transaction by assigning some of the expense to "Personal" and the rest of the transaction against the business expense category most applicable to that transaction.