Recording Trust Accounting Entries

Modified on Mon, 16 Sep at 10:10 AM

Overview

Once your account is set up and ready to go and you have a list of all your historical transactions imported generally transactions are recorded individually against the property. For a general explanation of adding purchaser payments and deposit records see the introductory section on adding, editing and removing purchaser payments.

Adding A Trust Accounting Entry

Adding a Deposit

The starting point of adding deposits and purchase the payments is generally done on the property page under the Payments tab. You can only add deposits and purchase a payments once there is a sale attached to an existing property.

Navigate to a property with a sale
Click the third tab Payments
Click the + button under the Purchaser Payments section
Fill in the required information
Click Save

Adding a purchaser payment entry will automatically set the trust accounting fields required once you enter in the amount that date receipt transacted and the type of deposit.

The debit and credit ledger entries are typically automatically generated based on the type you choose. However, in some instances such as entering a general journal entry, you will need to manually select which debit and which credit ledger you would like to transfer deposits from and to.

Explanation of Types

Money Received Types
Trust Deposit	Money received and generally held in a trust account.
Reservation Deposit	Sometimes hold or reservation deposits are taken on a project and not taken into a trust account.
Land Deposit	Shown when capturing different deposit types to distinguish between deposits received typically on a house and land contract.
Build Deposit	Shown when capturing different deposit types to distinguish between deposits received typically on a house and land contract.
Progress Payment	A progress payment is intended for any payments made after an initial deposit and before the completion or settlement of a property. This may be more related to house and land style projects when progress payments may be more common.
Deposit Transfer From Another Sale	This is used if you want to create an entry where a deposit is transferred from another sale trust ledger. This is commonly used when a purchaser may want to change their original purchase from one property to another, so the deposit held can be transferred from this sale ledger to the other. In this scenario, you will need to search through the debit ledgers to find the sale you would like to transfer from.
Purchaser Interest Earned	Signifies money received for purchaser interest earnt.
Purchaser Settlement Payment	A purchase a settlement payment is when money is made towards the contribution of the settlement of a property typically around the time of settlement
Money Sent Types
Refund	A refund is when money is paid from the vendor or the person holding deposit back to the original purchaser. This is usually when they purchase the cancels an original reservation.
Deposit Transfer To Another Sale	This is used if you want to create an entry where a deposit is transferred to another sale trust ledger. This is commonly used when a purchaser may want to change their original purchase from one property to another, so the deposit held can be transferred from this sale ledger to the other. In this scenario, you will need to search through the credit ledgers to find the sale you would like to transfer to.
Settlement Payment To Vendor	A settlement payment to vendor relates to when money comes from a vendor's solicitors trust account into the vendors bank account.
Payment To Vendor's Solicitor	A payment to vendor's solicitor Is usually done after the receipt of a deposit into an agents trust account and where the movement of money then goes into the vendors solicitor's account. This allows an agency to track money going out of their account and into the vendor's solicitor's account.
Settlement Payment To Commission	Sales commission due to sales agents may often be paid out of the original deposit monies held in trust. For example if an original $10,000 is held within an agents trust account and $2000 of this is commission due to the agent as commission, then we may see a $2000 transaction paid to commission and an $8,000 transaction paid to the vendor.
Deposit Investment Transfer	Used for signifying where funds have been moved out of the trust bank account into an external deposit account.
Other
General Journal Entry	Used to create any general journal entry with freedom to choose which debit and which credit ledger to transfer funds between.
Deposit Bond	A deposit bond is a financial instrument used in real estate transactions, typically in Australia, as a substitute for a cash deposit when purchasing a property. It acts as a guarantee to the seller that the buyer will pay the deposit amount at settlement. Instead of paying the deposit upfront in cash, the buyer obtains a deposit bond from a provider, which promises the seller that the deposit will be paid if the buyer defaults.
Bank Guarantee	A bank guarantee, in the context of paying a deposit on a property, is a financial instrument issued by a bank on behalf of a buyer, ensuring that the seller will receive the deposit amount in case the buyer defaults on their obligation. It serves as a substitute for an upfront cash deposit during a property transaction. Here’s how it works: Issuance: The buyer requests a bank guarantee from their bank, which involves the bank assessing the buyer's financial situation to determine their ability to cover the deposit. The bank may require the buyer to provide security, such as cash or other assets, to issue the guarantee. Guarantee: The bank then issues the guarantee to the seller, promising that it will pay the deposit amount if the buyer fails to meet their contractual obligations, such as completing the property purchase. No Immediate Cash Outlay: Similar to a deposit bond, a bank guarantee allows the buyer to avoid paying the deposit in cash upfront, which can help with cash flow management. Seller's Security: The seller receives a guarantee that the deposit will be paid if the sale doesn't go through due to the buyer's fault, providing financial protection to the seller. At settlement, the buyer must still pay the full purchase price of the property, including the deposit amount guaranteed by the bank. If the buyer defaults, the bank pays the deposit to the seller, and the buyer must reimburse the bank.

Editing Or Deleting a Transaction

You are able to edit transactions which get created up until the point that they are locked. You can do this by clicking the edit pencil against the transaction.

When a transaction is in this draft state and it has not been locked you can only generate and review draft receipts.

You're also able to delete transactions if they have not yet been locked.

Locking A Transaction

To lock a transaction, click the lock transaction link.

Once a transaction is locked you cannot edit or delete it, and you can generate the final receipt for sending. You'll need to ensure that transactions are locked before you issue a receipt.

Reversing A Transaction

Once a transaction is locked the only way to undo any mistakes is to reverse the transaction.

This allows you to create a new transaction which offsets the original transaction. This will show in all reporting and should balance out the original transaction which may have been entered by mistake or for other various reasons.