In ContactsLaw, funds receipted to the debtors controlled account are allocated to bills, both to relate receipts to the bill(s) they are paying, and to accurately determine the GST liability incurred. From time to time, funds may be received which do not pay bills on the file; these are termed unallocated funds.
Unallocated funds incur no GST liability. The presence of unallocated funds on a file may be unintentional (in which case the problem must be resolved or GST handled manually), or they may come about from a number of legitimate causes.
Unintentional causes
- Posting a debtor receipt (or TT) before a bill has been rendered
Reason: The receipt is not allocated to any bills because no bills have been rendered. ContactsLaw will not re-allocate funds if a bill is subsequently rendered.
Solution: If a bill is subsequently rendered - and it falls on or before the date of the receipt - use the 'Modify allocations' feature to properly allocate the funds to the bill. If the bill is dated after the receipt, post a debtor adjustment to allocate the funds and record the GST liability.
- Double-posting a debtor receipt
Reason: Once funds have been allocated to a receipt, subsequent receipts may not allocate to the same bill(s).
Solution: If possible, keep the original receipt and delete or cancel the duplicate. If this is not possible, delete or cancel the original receipt and use the 'Modify allocations' feature to properly allocate funds to the bill.
- Re-drafting a bill
Reason: Re-drafting a bill removes all allocations, owing to the fact that the bill items are likely to change.
Solution: After the bill has been finalised, use the 'Modify allocations' feature on any subsequent receipts to properly allocate funds to the bill. If the re-drafting process results in an overpayment, post a debtor adjustment to allocate the surplus funds to the next outstanding bill. If there are no outstanding bills, refund the credit balance to the client.
Legitimate causes
- Recording an overpayment
Reason: Any surplus amount received will be unallocated, as there are no bills to which it can be allocated.
Solution: Refund the credit balance on the file using the debtor refund activity or, if the amount is trivial, take no further action.
- Recording a bounced cheque
Reason: Part of the process of recording a bounced cheque is to clear any allocations from it. This allows subsequent receipts to allocate to the bill.
Solution: No action is required.
- Recording payment of a debtor opening balance
Reason: Debtor opening balances are recorded as general journals (rather than bills), meaning that funds received cannot be allocated by ContactsLaw. The GST liability is unknown and must be recorded manually.
Solution: Determine the GST liability incurred and record as necessary. The receipted funds will remain unallocated and no further action is required.
- Posting a credit note after a bill has been paid
Reason: If a credit note is issued before a bill has been paid, ContactsLaw allocates the amount of the credit note to the bill. If the bill has been paid, there is no bill to which the credit can be allocated.
Solution: Refund the credit balance on the file, or take no further action.
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