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Bookkeeping For Utility Bills

It can be the biggest pain in the neck ...


Posted by Alison Mead on 28/05/2024 @ 8:00AM

One of the biggest pains in the neck when bookkeeping is to account for the payments to utility companies. You know the ones, where what they are billing you for or charging seems to have no relation to the money they took out of your bank account on direct debit ...

Credits, debits, the amount taken not the bill amount. Bookkeeping for utility bills can be a real pain in the neck!

Credits, debits, the amount taken not the bill amount. Bookkeeping for utility bills can be a real pain in the neck!

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Gas, Electricity and Water all seem to fit this bill with some suppliers as I often see issues where payments have been missed and a bill has a brought forward amount on it. This could be either a credit or a debit, which means the amount taken isn't the bill amount, but takes previous bills or credits into consideration.

To do the bookkeeping for these you have two options. You can either:

  1. Not bother entering any bills or credit notes at all, and when you see payment going out of the bank just do a 'Create' in Xero or a Bank Payment in Sage and allocate to the utilities account or nominal code and use the VAT amount shown on the invoice (5% or 20% or exempt depending on what utility it is for).

    The only time this won't work is if you have varying gas or electricity supplies through the year meaning the VAT rates vary between 5% and 20%. Below a certain level, you get charged the lower VAT rate. If this happens you need to choose option 2) or the VAT you are reclaiming could be incorrect.

  2. Alternatively, when you get the bill create a bill in Xero or an invoice in Sage for the supply on the invoice each time, but be sure not to include any brought forward amount as that should still be showing as outstanding on the account from previous bills.

    If you are entering everything correctly you should be able to log a payment and click on multiple outstanding bills in order to allocate the full payment.

If your utility bills have got into a mess in your supplier accounts sometimes it is easier at the end of your financial year to just write off any excess that is not due and just make sure what shows as owing at the year-end matches your latest bill so you can start with a clean slate in the next year.

This can be the case especially if you are taking over a bookkeeping job from someone who didn't fully understand the account previously and it has got into a bit of a mess.

If you need support to help you figure out the utility bills in your bookkeeping then you could arrange a 1-2-1 handholding session with me to support you in working out what is going on. Sometimes a fresh pair of eyes looking at the issue is all you need.

Until next time ...



Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 01604 217365 and let's see how I can help you.

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About Alison Mead ...


Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.

She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.

Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.

You know what they say: if you want something done well ask a busy person!


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