This issue commonly arises when a supplier issues a statement/invoice that contains a credit relating to a previously paid cost recovery - e.g. HMLR refunds.
Scenario:
- The cost recovery is paid
- The cost recovery transaction is reconcilied in the bank reconciliation in Xero
- The cost recovery is invoiced
- The invoice is paid
Issue:
It is not possble to post the credit refund as a negative cost recovery.
Solution:
| Action | Where |
|
Mark all cost recoveries on each matter as paid (as per the statement) |
Smokeball |
|
The refunded cost recovery will need to be posted as a credit to an income or expense account in Xero. (This enables the statement agree with Xero/bank rec balance). This will be debit the office bank |
Xero |
|
Post a Payment (Dr journal entry) from an firm GL expense Account (previously credited) this will update office bankand balance out the credit in the previous step. & transfer money from physical office account to client account. Transfer money from the physical office account to client account. |
Xero |
|
Post a Deposit funds entry to the Smokeball matter |
Smokeball |
|
Post a Payment to client entry from the Smokeball matter from client account |
Smokeball |