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. Add in the first amount to allocate, selecting the appropriate category and VAT rate by clicking on each button. Then click the Add category button to save.
6. Click on the second 'Choose a category'
7. Add in the second amount to allocate, selecting the appropriate category and VAT rate by clicking on each button. Then click the Add category button to save.
8. 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.