UK Split Invoice Payments Add-on

The Split Invoices Add-on is available by request only for UK based companies.  If you would like this add-on enabled, please send an email to [e-mail].

The 2020 High Court Ruling EWHC 2461 requires that UK companies operating as Employment Agencies (ie. that introduce tutors to clients where the tutoring transaction is between the tutor and client) cannot be in control of compensation due to tutors. With this add-on, these companies can allow clients to pay tutors directly for their portion of tutoring fees. 

Alternatively, UK companies that operate as Employment Businesses (ie. the tutoring transaction is between the company and the client) are not affected by this ruling; however, they must charge VAT on the full amount invoiced to clients if their turnover is above the VAT threshold.

This add-on separates the teacher portion of lesson fees and deducts them from the invoice total that is due to your company. Clients can then pay your company for your portion of lesson fees, and tutors can collect payment from their customers independently.

Enabling the Add-on

1. Click on "Account & Settings" and then click on "Integrations & Add-ons".
2. Use the search field on the right or scroll to the section labeled "UK Split Invoice Payments".
3. Click on "Enable" under the add-on's section.

Settings

Click on "Manage" to configure the add-on.  On the "UK Split Invoice Payments" page, you can customize the following:

General Settings

• Default Teacher Payment Instructions - These are the default instructions that will be displayed on the invoice payment forms for clients to pay teachers.
  

  NOTE: Teachers can customize their own payment instructions with their accepted methods of payment on their profiles.

• Default Invoice Setting - This will set the default value for the "Split Invoice" setting when you generate new invoices.  You can select from "Don't Split Invoice" and "Split Invoice".  The setting can be overridden on the Invoice form.

Teacher Profile Settings

With this add-on enabled, Teacher profiles will include a "Client Payments" section that includes a "Client Payment Instructions" field.  This field can be used by teachers to enter their preferred methods of payment and instructions for clients. These instructions will be displayed on client invoices.

Creating a Split Invoice

A split invoice is like a normal invoice except the totals section displays a separate section for the amount due to each teacher that taught lessons included on the invoice.  You can create a split invoice by following the steps below:

1. Click on "Billing" and then click on "Create a Single Invoice" (Split Invoices are also available when creating multiple invoices at once, as well as our Invoice Autopilot Add-on).
2. Select a customer and enter the invoice settings.
3. To add lessons, select the "Add Lessons" option and then enter the start and end dates from which to draw lessons, and then click the "Go" button.
4. Select "Split Invoice" from the dropdown menu above the Invoice Totals section (if you haven't already set the "Default Invoice Setting" to "Split Invoice" in the add-on's settings page).
5. If you don't want to make the invoice available to the customer immediately, click the "Save" button. Otherwise click the "Approve" button.

When the invoice has been created, you'll see the teacher's share of the lessons will be calculated and displayed on the created invoice, as shown below:

NOTE: Invoice Surcharges and sales tax are only calculated on the company's portion of the invoice total.

When creating split invoices, you should only invoice lessons after they have been completed in order to avoid the effects of changes to lessons or the need to edit invoices.  Since split invoices include a teacher and company portion, making changes to lessons or the invoice after they have been sent to a client and/or paid for requires coordination with the tutor to ensure records are correct.

Important Information

• If lessons have multiple students, the teacher's wage will be allocated to each student based on the student's fee as a percentage of the total student fees for the lesson. (i.e. if one student pays more than another, they pay a higher share of the teacher's wage).
• A teacher's wage cannot exceed the lesson cost (If it is, the teacher's share will be limited to the lesson cost).
• When allocating a credit to an invoice, it will be limited to the company's portion of the invoice. Teachers need to handle credits for their portion of the invoice.
• Lessons invoiced through the Website Booking Plugin will not be split. You should instead accept bookings without payment and then generate a split invoice for the booked lessons.

Payment Orders

When creating Split Invoices, the teacher's share of each split invoice total is recorded in a Payment Order.  You can view a full list of payment orders by visiting the Payment Orders page, which can be found under the Employee Tab.

This table contains the following columns:

1. Date - This displays the Invoice Date.
2. Invoice Number - This shows the invoice number the payment order is associated with.
3. Customer - The customer's name that the invoice was created for.
4. Teacher - The teacher whose receiving payments.
5. Amount - The amount owed to the teacher.
6. Status - This indicates whether the teacher's portion has been "Paid" or "Unpaid".

A Payment Order can be marked as paid by the administrator or the teacher by clicking the "Status" icon in its row, as shown in the image below:

When a payment order has been marked as paid, the invoice will show the teacher's portion as paid and the invoice will no longer be able to be edited.

Tracking Invoice Totals & Balances

Invoice statuses, customer balances, invoice email merge tags, invoice reminders, and other features related to invoice totals, such as reports, are based on the amount due to your company only and do not include the amount due to teachers.

Merge Tags

By default, notification templates will only include the invoice totals for your company.  However, you can add separate merge tags to your invoice emails to display the total and amount due to teachers using the {TEACHER-TOTAL} and {TEACHER-BALANCE} merge tags.

Customer Transactions

When viewing the Customer Balances table, it will show separate totals for what is owed to teachers and what is owed to your company, as shown in the image below:

Invoice Table Filtering

You can filter the invoices table to view invoices that have unpaid teacher balances by following the steps below:

1. Using the filters at the top, select "Unpaid Teacher"
2. Click on "Go"