I am handing over admin to other band members who have set up a partnership. As a sole trader, I have previously invoiced about 30 clients in advance of their event, and most of them have paid a significant deposit (and a couple have fully paid up). I am not vat registered.
Is it possible to transfer the total amount of client funds that I hold in one transaction to the new partnership? Or, should I transfer each client moneys held separately? The partnership’s accountant has replicated all the invoices in a new Quickfile account and is happy to receive the client funds in one payment, but how do I process the transactions in my accounts? Some client payments may be locked in a previous year.
I’m obviously looking to reduce my income from handing over the advanced payments.
Personally I would transfer the funds to the new accountant in one lump sum through your bank account and then go and record the individual refunds in Quickfile ensuring they add up to the sum you transferred.
This would create two transactions in your QF bank balance which totals 160, leaving 80 left to match the real transfer of funds from your real bank account (240)
I would attempt to do the same with the prior year locked invoices, but I am not sure whether QF will let you do this to invoices in a locked period and I can’t see a reference to locked periods in the guide. You might have to send an email to support.
In the meantime, if QF won’t let you credit note locked invoices, then you might have to log a payment of 80. You could create the new accountant as a supplier, create an invoice from them for 80 and then log it as paid.
This would match the total 240 which would show as one transaction in your real bank statement but would be made up of 3 transactions in QF. The net result would be the same. It would be two refunds and one payment of an invoice.
About the outstanding 170 from locked invoices, if QF won’t let you credit that off, then I guess you could record it as bad debt, since this will never be paid to you.
Thank you @Darren_Smith for that very comprehensive reply. I now have the confidence to start the process, and hopefully all will go smoothly - I will report back…
You’re very welcome. I like to help out where I can!
I’ve been thinking about the locked invoices and the 170 outstanding.
There has to be a way of crediting that 170 in the new financial year because otherwise it will appear as unpaid in an aged debtors report, in perpetuity.
This 170 would also form part of your ‘current assets’ on the balance sheet which wouldn’t be accurate since you have no expectation of ever receiving this money.
If you find a way to deal with that 170, I’d be glad to hear how you did it.
(I haven’t had to try to credit part of an invoice in a locked period using QF and I can’t see this in the QF guide)
So, as you suggested, I made one lump payment to the partnership (totalling the 32 deposits/payments that I had received to date). I then managed to issue credit notes to all 32 invoices. Despite being a tedious exercise, I had no issue with locked invoices, presumably because I didn’t need to change/edit the existing invoices in any way.
Each credit note neatly tagged onto my Quickfile bank statement. Once I was confident that the credit notes added up to the single lump sum transaction, then I deleted the untagged lump sum entry on my QF bank statement. Finally, I reconciled with my actual bank statement and hey presto, it matched! Great relief!
So, thanks for your support - it gave me confidence to go ahead and make the changes.
