RESERVED FUNCTION IN LEGALSUITE

 

 

Author:                   Cindy Kruger

Date:                      May 2007

Audience:             Bookkeeping

Summary:              How to use the reserved function in LegalSuite

 

 

CONTENTS:

 

·                     Introduction

·                     Matter reserved settings

·                     Reserving Trust Funds

·                     Un reserving Trust Funds

·                     Trust Payment directly from reserved

 

 

Introduction:

 

Reserved funds are when funds are to be kept in Trust for a specific reason (i.e Advocates fees or Transfer Duty), and may not be transferred against Business debits. Often a client will request a separate invoice with all the Fees and disbursements and a separate statement which displays all the monies received and payments made, if this is the case then the reserved function in LegalSuite will allow you to accommodate your client’s request. There are various methods you can use to reserve your funds, you can set the reserved function per matter or you can reserve the funds as the receipts are captured on your system.

 

Matter Reserved Settings

 

When inserting a matter, you can set the matter up to reserve funds. The reserved settings on a matter allow the person who is in charge of the file to set the reserved settings and leaves less room for error.

 

There are 4 different types of reserved matter settings, they are:

 

1.       Reserve all Receipts - When funds are to be kept in Trust for a specific reason (i.e. Advocates fees or Transfer Duty), and may not transferred against Business debits.

2.       Reserve Up to an Amount – When a specified amount must be kept in Trust.

For example, if R1000.00 is received when opening the Matter and you are aware that R500.00 is going to be used to cover fees that will be charged at a later stage, but in the meantime the remaining R500.00 must be utilised, then select this option and enter the R500.00 in the Amount field

3.       Reserve up to Claim Amount - When an arrangement has been made with the Client that all moneys received from the Debtor will be paid to the Client first, until the debt is settled, and only then can fees be taken

4.       Reserve Percentage – When an arrangement has been made with the client that a percentage of every debtor receipt will be allocated to reserved

 

 

 

Reserving Trust Funds

 

There are 2 ways to reserve trust funds:

 

  1. When capturing the Receipt :-

 

When a receipt is captured the money can be put directly into reserved. Many users get confused and they set the “Received From” field as “Reserved, this is incorrect. The received from field is used to record who the money was received from i.e. Client/Debtor. The section to change on a receipt is at the bottom of the capture screen, to the right of the Payment Method. If the Matter has been set up to reserve receipts, then this option will automatically be set to reserved. (Fig 1)

 

Fig 1: Capturing a receipt

 

  1. Payment to Reserved: -

 

If money has already been receipted into Normal and the funds need to be reserved, the money can be moved from normal to reserved by using a trust payment. On the batches screen, go to the payments tab and select the Trust payment option. When capturing the Trust payment the Payment From must be set to Normal and the Payment To must be set to reserved. This will not affect the bank reconciliation at all, it simply moves the trust funds from normal to reserved. (Fig 2)

 

              Fig 2: Capturing a Trust Payment to Reserved

 

 

 

Un-reserving Trust Funds 

 

When Funds are available to be utilized then you have to unreserved the money. In order to unreserve the funds you use a Trust receipt, now under the received from option you will select RESERVED because you are receipting money from reserved. This transaction will not affect your bank reconciliation; it will simply transfer the funds from reserved to normal. You can either unreserved the entire amount in reserved or only a portion of the money. Remember to never unreserved more than the amount currently reserved. (Fig 3)

 

Fig 3: Capturing a Receipt from Reserved

 

 

Trust Payments directly from reserved

 

If funds are available in reserved you have 2 option to either unreserved the funds to go against any outstanding business debits or you can pay the money directly out of reserved to the client. You can either pay out the whole amount sitting in reserved or only a portion depending on what is required. Remember to never pay out more than what is available in reserved as this will overdraw your trust funds and cause a reverse transfer on your matter. (Fig 4)

 

Fig 4: Capturing a Payment from Reserved

 

 

Conclusion:

 

The reserved function in LegalSuite is a very useful feature which will assist you in keeping Trust funds separate, you can then manage the funds and either with draw monies from reserved to cover outstanding business debits or you can pay the client all the money held in trust and invoice them for any outstanding amounts.