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ACH and Credit Card Fees Related to Customer Sales - Classify as COGS or G&A?

Where are folks posting credit card and ACH fees that the bank charges related to collections on customer invoices. Thank you, Deb


Lyle Newkirk
Title: CFO
Company: Corrigo Incorporated
(CFO, Corrigo Incorporated) |

We treat ours as a G&A item on the grounds that it is part of the cost of collecting AR. Our auditors have never challenged that treatment. But, I have often felt that it had characteristics of a COGS item, especially in a company that relies heavily on credit card and ACH payments. It will be interesting to see other viewpoints.

Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

Credit Cards, ACH/Wire Fees, etc are banking/factoring fees.

Just because one may incur ACH fees for a sale, the same holds true for a payment. Why do you treat them differently?

I have seen some people put the charges for Credit Cards into either a contra-sales account or sales expenses. It is my belief that these too are also being mistreated.

Reasoning is the same as Lyle's statement, they are are cost of collecting AR.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

What if the fees don't relate to AR collection (which presume the sale was on credit terms) but for payment with order? If my customers order via e-commerce and pay on order, is that a really collection admin cost? I think it's more a sales cost (because at 2.75% or more, those card fees are important factors in pricing).

Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

While I agree, those fee's are definitely part of pricing, they are however, factoring fees. Factor fees are effectively interest and part of the EBITDA calculation.

If we really want to muddy the waters, how about EDI fees? They are part of the sales process. Shouldn't they treated the same way?

(CFO/Board Advisor) |

My two cents:

1. These are not reductions of revenue, and should not be netted against sales.
2. There is no consistent recording of these fees by public companies:
- Some record as cost of sales;
- Some record as "Fulfilment" expense below Gross Profit;
- Some record as Selling expenses;
- Some record as G&A expenses.
- Some record as financing expenses.

AMZN records these as Fulfillment expenses, along with their Warehouse and Customer Service costs. So does

Personally, I think they should be separately stated on the face of the Income Statement, or in a footnote. One of my biggest pet peeves is that there is no consistency in reporting, as such, it is very difficult to compare results between companies without digging deep into the MD&A to find out where these are recorded.


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