For our Asia-Pacific customers, the term "Trust Account" is used, while European customers refer to it as "Client Account". It's important to mention that the Client/Trust Accounting functionality does not apply to customers in North America. For further information on regional terms, check out our Glossary of Regional Terminology.
This article will guide you through the steps to take when a tenant makes a direct payment to a property owner, thereby bypassing the Client or Trust Account. We recognize the need to keep your accounting records streamlined and accurate in such scenarios. This articles details a procedure that helps you reflect these transactions correctly within your accounts, ensuring they are up to date without impacting your actual bank balances.
Creating a 'Paid Direct' Chart of Accounts Code
To begin the process, you are advised to set up a new chart of accounts title 'Paid Direct'. Treat this as a revenue type code in your accounting software to properly categorize the transaction.
Procedure for Processing Direct Payments to Owners
The following steps describe how to process direct payments made to owners:
- Create the income invoice as you normally would.
- Once you have confirmation that a direct payment has been made to the client, do the following:
- Generate an income credit note for the same amount that was paid directly to the client.
- Apply the 'Paid Direct' code to both the invoice and the credit note to match the Revenue Type Chart of Accounts.
- Allocate the credit note to the corresponding invoice. This will mark the invoice as allocated or 'paid', without affecting the bank account.
By following these steps, you ensure that any direct payments received by owners are documented accurately, thereby preserving the integrity of your Trust or Client Account within the Re-Leased system.
Reporting and Reconciliation of Direct Payments
For the purpose of monitoring and reconciling direct payments:
- You can generate an Invoice Details and Payments Report.
- Export this report to an Excel spreadsheet.
- Utilise a filter to select transactions by the 'Paid Direct' Chart of Accounts code to generate a comprehensive list of all direct payment entries.
[Add a screenshot showing how to add a 'Paid Direct' chart of accounts code.]
[Add a screenshot of the process to allocate the credit note to the invoice.]
With this process, you can effortlessly document payments that have been received directly by the owner and provide accurate reporting. This maintains a high level of fidelity in your financial tracking and ease in reconciling accounts at the end of each period.
See these related articles for further assistance:
- Article 1
- Article 2