Use the auto-reconcile button to quickly reconcile money received or paid against single invoices in your ledgers. It is not as comprehensive as using the Cashbook, but much simpler and faster. If you are paying or have received a sum of money that covers more than one invoice then you should use the Cashbook instead.
To auto-reconcile an invoice in either the “Sales” or “Purchase” ledgers, starting from the “Accounts Menu”…
Client Details Section (for Cash in Advance)
The auto-reconcile button can also be used to record money received or paid before the relevant invoice has been created, for example, when a client pays a sum in advance as a retainer….
This will generate a cashbook item to record the amount that has been received (or paid) in advance. If you know for absolute certain that the money is for an insurance policy that already exists on your system, even though the invoice doesn’t yet, then you could also tick and use the “Pre-allocate” facility to dedicate this money to that particular policy.
When you use this facility, ensure you enter the date the money was actually received or paid. The system will default to (i.e. automatically suggest) the current date, which could easily be wrong, particularly if you’re processing a whole batch of receipts retrospectively.
Ensure you enter the exact amount you have actually received or paid. The system will default to (i.e. automatically suggest) the amount of the invoice. Where the sum entered is less than the invoice the system will automatically settle just part of the invoice. Where it is more than the invoice the system will settle the invoice and then retain the remainder as cash in advance, available for settling subsequent invoices. When this occurs, you’ll be prompted “Do you really mean to over-reconcile by £nn.nn?” If you click the “Yes” button, then use the auto-reconcile button again on another invoice for the same name, and for example, re-set the amount to zero, then after you click “OK” button the system will make available for settlement all money held in advance. A little window pops-up showing the amount you’ve just received (zero in this example) plus all currently held money in advance from the same person, which you can then choose to use for this settlement, via a tick-box beside it.
This field will be greyed-out unless you’ve specified in the accounts set-up that you want to enter reference numbers for the type of payment in question (e.g. for cheques). Typically you’ll only be asked for the reference number of your own cheques, written to pay your suppliers. This is useful, as it’ll subsequently allow you to reconcile your chequebook stubs. Giro, direct debit and standing order references might also prove helpful. However reference numbers on cheques received are not helpful, as quite often cheques received from entirely different customers may have the same number. Hence recording received cheque numbers may actually cause confusion.
The cashing-up method will be one of the following…
1. Will be grouped item in bank statement
2. Will be individual item in bank statement
3. Doesn’t appear in bank statement
4. Cash-up now as individual item in bank
Use the first for receipts, where you’ll be taking them (i.e. cashing-up) to the bank later. Use the second for payments, where you’re writing a number on the same day. Use the third for post dated cheques, which can’t be taken to the bank yet. Use the last as a shortcut, where you’ve just got the one payment or receipt to process that day.
You can also use the “Auto Reconcile” dialogue to make Cashbook entries for money paid in advance (i.e. where no invoice exists yet), as shown below…
Subsequently when you use the “Auto Reconcile” dialogue, for example because you’ve received Aaron’s remaining £150 towards a £450 invoice for which he previously paid £300 in advance, illustrated above, then after you’ve entered the new receipt of £150 you’ll get a prompt, like that shown below, which will allow you to also include the previously received £300.
Pre-allocation takes this a step further, but only applies to insurance related work. It allows you to pre-allocate money-received-in-advance to a policy, for example to eventually settle its renewal premium, for which there isn’t yet an invoice, as illustrated below…
See also “Reports, Accounts, Commission Allocation”.