Presentation: account receivable vs cash in transit - money to be received from payment processors

Question

Hello,

we are a re-sale company currently implementing IFRS. 

We are selling online to our customers, who may choose several payment methods. Based on the payment method chosen they are then redirected to the respective payment processor. Money from our customers are then collected by these payment processors (also called acquiers) and then sent to our company reduced by some fee belonging to the payment processor. 

We would like to know whether the money not send by our payment processors as of the year end and relating to the sales prior to the year end should be classified either as account receivable or cash in transit?

We were analyzing IAS 1, however no guidance found. Could please someone provide us with the correct classification of these or at least with the reference to the correct guidance?

Thank you,

Answer 1

Hi

You will not find any specific guidance relating to this matter in any manual, however practically what industries are doing to account for these type of transactions is:

I) Since amount receivable from payment collectors and not from "Buyers" therefore this amount cannot be classified as "trade receivables"

ii) As the amount is not in "Cash" as usually this amount is directly credited in bank account by receiving parties. Therefore this amount should not be classified as "Cash in transit"

iii) This amount should be classified in "Other receivables" with an explanatory note in notes to the financial statement.

Comments

Hello,

thank you for helpful reply.

Jiri