Transfer from bill payment to funds

My client was closing their year and asked me to bill for all unbilled work that was pending on one particular project and also to bill an estimate of the cost of the last portion of the project. So, to use round numbers, say my bill went out for $1,000, of which $900 was already worked and $100 was based on a billing slip for the estimate of future work. I then had an A/R of $1,000. Their check came in, for $1,000, which I applied to the matter. Now the A/R is zero, and everyone should be happy. Except that $100 really has not been earned yet, so for both ethical and practical reasons I need to deposit it in my trust account and apply it to the next bill, regardless of whether that next bill is $90, $100, or $110.

I thought I could simply transfer the $100 from the received money to my trust account in TM/BM 8 Pro (SR2A), but there did not seem to be a way to do this. There seems to be no problem with the approach conceptually or in QuickBooks, but I cannot figure out how to deal with it in TM/BM. I would appreciate any help.

There are probably several solutions and perhaps some others can chime in. My suggestion is to void the original deposit, void the original payment, void the original invoice. Re-invoice only $900. Apply the payment of $1,000 to the account leaving a $100 unapplied portion. Re-create the original deposit. Now go to the matter and going to the A/R tab select transfer to funds. This should cut a check from your operating account ready to be deposited into your Fund account. You can at some point when the $100 is earned billed out an invoice for the $100 and pay it with the balance in funds.

 

Jeff Wyatt
Abilene, Texas

Some other suggestions in addition to what Jeff recommended  ....

The difficulty that you've gotten into is due to the fact that you created a billing slip for the "guessed at" amount and billed for the entire amount.  I can see why you did that, but to BillingMatters, the payment you then received is for the exact amount you billed, so you can't take $100 and apply it to funds, because there is nothing left over to transfer.

You will need to get rid of that $100 from your bill; Jeff's approach works fine.  But if you want to keep the invoice as it is (because the client has already paid that invoice), something else you can do is to issue the client a credit against the invoice in the amount of $100.   (You will still need to first delete the deposit and the payment, as Jeff indicated.)  Then when you record the payment, you will have an unapplied $100, and you can do a Transfer to Funds in that amount.

Another approach to handling the funds portion of this transaction (and recommended by most state Bars) is to take the entire payment from the client, deposit it into Funds (using Pay to Funds) and then do an Apply Funds to A/R transaction.  This pays off your $900 and leaves the $100 in trust.   The reason state Bars like this better is because this approach means you never have client money you have not earned in your operating account.    Yes, very picky, but I have been told by our Bar auditors in Florida that that is what they prefer.

Hope that helps.