Client accounts in Sage

Client accounts in Sage

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I am setting up Sage for a debt collection agency. They have a client account into which the debts collected are paid. They invoice the "owner" of the debt their commission fee on all collected monies.

I'm not too sure how to work this on Sage. I will set the client account up as a separate bank account, and enter all monies received.What nominal code should I use as this money isn't turnover, or even the debt collection agencys money, where in the balance sheet should I put it?

The invoice for commission I will post as a customer invoice to a sales code of 4000.

Now here comes the tricky bit. When the collected money is paid over to the "owner" of the debt, the commission fee is netted off for some clients. How do I deal with this in order to mark the customer invoice as paid and keep the bank straight?

Thanks for your help

Replies (6)

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By twj4789
09th Jul 2012 19:13

Current systems

 How is the client currently managing the client account? In theory they should already have a system for monitoring incoming funds and their "owners".

We had a similar client who used an excel sheet, as money came it it was put as a positive against their customers column, as it was paid out it was entered as a negative. All the columns would add up to the bank balance to reconcile. If fees were deducted from the client a/c then the invoice reference would be entered and a negative amount in the relevant customers column.

When we set-up a bookkeeping system for them we decided to exclude the client account. To have it entered correctly would mean hundreds of "loan accounts" to the relevent customers (to contra the bank as an asset). They stuck with the excel sheet, when fees / commission is invoiced and taken from the client account it is just entered as "paid" on the accounting system with the bank transfer being relevantly marked to reference the client a/c transaction. 

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Replying to L Chamberlain:
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By bluetin
09th Jul 2012 21:47

Yes, it is all being held on an excel spreadsheet. It seems to work, but is a bit cumbersome. The invoicing is done from here too.

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By twj4789
10th Jul 2012 13:05

It is a pain

...but I would suggest sticking with Excel for the client account. I really haven't found a good way of managing it on SAGE (or any general accounting system).

I don't know if any specific packages for clien accounts but it may be worth looking into? SAGE should be great for the bookkeeping and reports for the trading part but probably not best for the client account.

If anyone does know any software packages specifically for client accounts or a simple way of making SAGE work for this purpose it would be good to hear from you!

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By Jimess
10th Jul 2012 13:12

Set up a client account

You need to set up a client account in the creditors section of your nominal.  Post the monies received from debts collected to there and have individual customer/debtor accounts on a spreadsheet as you have discussed above which record the monies in/monies out for each debtor/customer.

When the monies are paid over to the customer you would pay the net amount after fees billed to the customer (post payment from client bank selecting client account nominal and update your spreadsheet) and pay the value of the fees billed to your clients office account and pay off against the bill raised (post payment to client bank and select client account nominal, then post customer receipt to office account and match against bill and update your spreadsheet). That should clear the customer/debtor balance down to nil.

If your client is running this on a very large scale they probably would be better investing in some  legal accounting software that will enable automatic posting of transactions to client accounts (don't have to spend huge sums of money), that way they will always have a clear picture of what balances are sitting in client account and it cuts out the human error issue of ensuring the spreadsheet reconciles with the client account balance.  

I hope this helps.

Kind regards

 

 

 

 

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By JKnight
10th Jul 2012 19:52

Customer accounts?

How about:

Set up the debt owner clients as customers in Sage. With a separate bank account for the client account.

Post money recovered as a customer payment on account using the client bank account.

Raise a sales invoice on the client's customer account for the commission.

Then issue a customer refund for the amount to be paid back to the client. The refund will be raised against the client bank account (I assume), and will reduce the customer payment on account.

Then go to customer receipts and allocate the sales invoice against the remaining balance of the payment on account (they should be for the same amount). This will clear the customer account.

 

One problem: this method may give rise to a credit balance on the Debtors Control Account. But if you edit the Balance Sheet chart of accounts to have the Debtors Control as a "floating" nominal then it will appear as a Liability when in credit and as a Current Asset when it has a debit balance.

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By twj4789
11th Jul 2012 20:37

Issue could be
That should the company be showing the client account as an asset? In reality if the company failed, the client account could not be called upon to repay the company's debts.

The money is held in trust and i assume is designated as a client account by the bank. Ignoring this I think JKnights suggestion stops the use of excel but avoids the duplication jimess's suggestion.

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