Raising a fee note against money held in trust, and settling it from trust

Money in trust becomes the firm's only when it settles a fee note the client has been sent. That single rule keeps the firm's income right (counted once, with VAT where it applies) and gives the client a statement that says what every fee was for.

Step by step

• •On Money held for clients, find the client's ledger and press Bill this client from trust (it is also on the client's Ledger page).
• •The new fee note opens for that client, remembering the ledger. Add the work and amounts as on any fee note and save it.
• •Send it: press Mark as sent — I'll share it myself (or send it from the fee note). A fee can only be taken from trust against a fee note the client has been sent; a draft shows "Send this fee note first".
• •On the fee note, the panel Settle it from trust now shows what is held on the ledger and what is still owed. Choose the Trust ledger and Trust bank account if there is more than one, fill in What work is this fee for?, and check Date it left trust.
• •Press Settle … from trust. The fee moves out of the client's trust ledger into the business and the fee note is marked paid. Nothing is counted as income twice.

The date of the transfer

Set Date it left trust to the day the transfer left the trust bank account — it starts on the fee note's own date, so dating the fee note to the transfer usually does it. The client's ledger, the fee note and the bank statement then all carry the same date, even when you record an old fee today. When you find the transfer on an imported trust statement, the fee line tells you which day it was.

When less is held than the fee

Only what is held can be settled from trust. If the ledger holds less than the fee note, settle what is held; the rest stays owing on the fee note and the client pays it in the ordinary way.

Common mistakes

• •Recording the fee as Paid out on the client's instruction. That takes the money out of trust but leaves the fee note unpaid and the firm's income missing.
• •Typing "Invoice 114" into a note instead of settling the fee note. The fee note stays unpaid in the books. Settle the fee note itself.
• •Marking the fee note paid with Record payment AND settling from trust. That counts the fee twice — settle from trust only.