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 serves as your guide to correctly allocating a credit note related to one ledger against an invoice linked to another ledger within your account. Handling this type of transaction can be complex, but we've broken it down into manageable steps for income and expense allocations to ensure accuracy in your financial records.
Allocating a Credit Note to Income
Follow these steps when you need to allocate a credit note related to income:
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Initiate the disbursement of funds to pay the income credit note, treating it as if you were issuing a refund. Select a Creditor Disbursement Profile and find tenancy income credit notes during this process.
- Generate a manual bank statement with a net total of zero. Record the credit note amount as both a debit and a credit. For guidance, refer to Manual Bank Statement Upload.
- Reconcile the payment from your bank statement against the prepared, but still pending, payment for the credit note.
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Reconcile the receipt entry on your bank statement against the corresponding income invoice tied to the same tenancy.
Allocating a Credit Note to Expenses
When dealing with a credit note that applies to expenses, these steps should be taken:
- Set the expense credit note as paid by accessing the credit note, selecting Allocate Credit from the menu options, then choosing Refund on the following page before confirming the received payment.
- On your bank statement, reconcile the received funds against the paid expense credit note which will appear as a deposit yet to be cleared.
- Proceed to disburse funds to settle the expense invoice, which should amount to the total of the credit note or a portion of it as necessary.
- Create another manual bank statement with a net total of zero, mirroring the previous step involving the credit note as a debit and a credit. Utilize the manual bank statement guide linked above.
- Reconcile the bank statement receipt against the unprocessed deposit you recorded earlier for the credit note.
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Lastly, reconcile the payment from the bank statement against the pending payment you created for the expense invoice.
By following these steps, you'll ensure that credit notes and invoices are marked as paid, funds are allocated to the appropriate ledgers, and the owner statements accurately reflect these transactions.