A cost of sales, or an operating expense

[guysky]

Are credit card processing fees a cost of sales (and thus taken out before Gross Profit) or an operating expense (and thus not reflected in GP but in Net Profit) ? thanks for your expertise!

 

[Mike5380]

Are credit card processing fees a cost of sales (and thus taken out before Gross Profit) or an operating expense (and thus not reflected in GP but in Net Profit) ? thanks for your expertise!

We treat cc fees as an operating expense in my shop. If you treated them as a COGS, then you would be subtracting them out from your top line revenue, and unless you specifically had a line item up there to see what those fees are, then you it would be difficult to monitor them.

CC fees have been trending down quite significantly since we have been driving most of our customers to ACH/EFT. I prefer to keep them as an Operating Expense so I can see those types of trends.

Hope this helps.

Mike