How to Record a Consultancy Contract Payment for Technical Expertise on a Program
Paying an external consultant for specific technical deliverables on a grant-funded project.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Program Expense: Consultancy Fees | Expense (+) | 6,000.00 | - |
| Cash / Accounts Payable | Asset/Liability (-) | - | 6,000.00 |
💡 Accountant's Note
Consultants provide specific technical skills for defined deliverables. Their fees are a direct program cost. Withholding tax obligations apply in Jordan.
Practitioner & Systems Framework
💻 ERP Architecture
Use a written consultancy contract for every engagement regardless of amount. The contract should specify: deliverables, timeline, daily rate, total fee, and payment schedule. Pay upon delivery of agreed outputs — milestone-based payments are preferred. In Jordan, withholding tax (5% for residents, higher for non-residents under certain conditions) must be deducted from consultancy payments.
⚠️ Audit Flags
Auditors test that consultants are genuinely independent (not disguised employees). An exclusive, long-term arrangement where the consultant works full-time only for the NGO with fixed hours and NGO-provided tools may be reclassified as employment — creating payroll tax and SSC liabilities. The deliverable-based contract and evidence of independence are key defenses.
📄 Required Documentation
Consultancy contract (scope, deliverables, rate, timeline), CV confirming qualifications, deliverable report or output confirming work was done, payment authorization, bank transfer confirmation, withholding tax deduction and remittance records, and independence certification.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.