How to record transactions in FreeAgent for cash that belongs to the business.
What do you mean by 'Cash transactions'?
Cash in this case is cash that belongs to the business, so a petty cash tin, or a till.
Cash out of the business owner's, or an employee's, back pocket would count as out-of-pocket expenses and need to be recorded under Expenses in FreeAgent.
'Bank' account for cash
In simple terms, dealing with business cash in FreeAgent is just like dealing with money going in and out of the bank.
Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop down menu.
Select the 'New' button and choose 'Bank Account'.
Call it, for example, 'Cash', 'Petty Cash', or 'Till'.
Then think of this account as the cash tin or till and record money coming in and going out as you would for a normal bank account. When you spend money from the petty cash tin, or the till, for example if you take £5 out of the tin to buy a book of stamps, you need to enter the transactions manually. In the example I've given, that would be a payment of £5 to Postage.
Bank-to-cash or cash-to-bank transfers
The exception to this is when you're recording cash paid into the bank account from the tin, or taken out of the bank to put in the tin.
You'd record these as bank transfers, and if you're using automatic bank feeds, or uploading your bank statements from online banking, that's when you'd explain the transfers in or out of the cash tin.
Let's look at an example.
I've taken some money out of the bank to put in the petty cash tin. I'm explaining my bank transactions and I'd show this payment from the bank as a 'Transfer to Another Account'.
There are various ways to explain your transactions. This type is for transfers to other bank accounts that are set up in FreeAgent.
The account I'll choose to transfer it to is the cash account.
So when I finish explaining that transaction and go to the cash account in Banking, I'll see the transfer in there.
I don't have to enter it manually because it's already been explained through the bank.
And if the transfer is going the other way, from the cash tin to the bank account, when you explain the receipt in the bank account use type Transfer From Another Account, and choose the cash account.
Checking your cash balance
Once you've recorded your transfers this way, and entered manually all the payments made in cash, the balance in FreeAgent in the cash account, should agree to the amount of actual cash in your cash tin or till.
You can check this by navigating to the 'Banking' tab, selecting 'Bank Accounts' from the drop down menu and choosing the cash account. When selecting the appropriate month, the balance should agree to the amount of actual cash in your cash tin or till.
If it doesn't, then you might have missed a cash payment out, or entered one with a wrong amount. Check and edit your transactions as you need to.
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