Enter money owed at your FreeAgent start date
This article explains how to enter money that your customers owe you, or money you owe your suppliers at your FreeAgent start date.
Please note:
- The steps below only apply if you're preparing your accounts using accruals basis accounting. If you're preparing your accounts using cash basis accounting, you wouldn't normally have opening debtor or creditor balances to enter unless you have switched from accruals to cash basis accounting.
- To update your FreeAgent account with the information on money owed, you need to edit your opening balances. You should not create new invoices or bills for this purpose.
- You should enter all the money you're owed and all the money that you owe at your FreeAgent start date (along with any other opening balances that you might need to edit) at the same time in order to bring your accounts completely up to date.
Entering money owed to you at your FreeAgent start date
Navigate to the ‘Accounting’ tab at top of the screen and select ‘Journal Entries’ from the drop-down menu.
Choose ‘Opening Balances’ from the drop-down menu in the ‘Posted Journals’ tab.
Next, select ‘Edit Opening Balances’.
You will see the amount that you entered as your opening bank balance when you first set up your FreeAgent account, and a corresponding amount with the code ‘999 - Suspense Account’.
To enter the details of money owed to you, delete the ‘999 - Suspense Account’ line entry by selecting the cross-shaped icon.
Then select ‘Add Another’.
In the new field, select ‘681 - Trade Debtors’ from the ‘Code’ drop-down menu and enter the amount owed at your FreeAgent start date in the ‘Debit’ column.
You can assign the balance to a FreeAgent contact if you wish by selecting ‘Add contact’.
You can choose to assign the balance to an existing or new contact.
Please note that a contact can only be assigned a single trade debtor balance. If you are owed more than one sum of money, you can either select ‘Add Another’ and repeat the process for each amount you are owed, or calculate the total amount you are owed and input this as a single line entry with no contact assigned.
You will notice that the ‘Difference’ figure updates automatically each time you enter a line item.
Explaining the payment of money owed to you
When your customers pay you the money they owed you at your FreeAgent start date, you should explain those payments as individual bank transactions. Use the 'Other Money In' type and the 'Receipt from Initial Debtor' category when you do this.
If you assigned the balance to a contact, select the relevant contact from the ‘Contact’ drop-down menu.
If you have switched from accruals to cash basis accounting and have used category '682 - Other Debtors' to record the opening balances, you would instead explain those payments as 'Other Money In' as the Type and 'Receipt from Other Debtor' as the Category.
Entering money you owe at your FreeAgent start date
Navigate to the ‘Accounting’ tab at top of the screen and select ‘Journal Entries’ from the drop-down menu.
Choose 'Opening Balances' from the drop-down menu in the ‘Posted Journals’ tab.
The select 'Edit Opening Balances'.
Delete the ‘999 - Suspense Account' line entry by selecting the cross-shaped icon.
Then select ‘Add Another’.
In the new field, select ‘796 - Trade Creditors’ from the ‘Code’ drop-down menu and enter the amount owed at your FreeAgent start date in the ‘Credit’ column.
You can assign the balance to a FreeAgent contact if you wish by selecting ‘Add contact’.
You can choose to assign the balance to an existing or new contact.
Please note that a contact can only be assigned a single trade creditor balance. If you owe more than one sum of money to a single contact, calculate the total you are owed and input this as a single line entry. You can then either select ‘Add Another’ and repeat the process for each contact from which money is owed, or calculate the total amount you are owed and input this as a single line entry with no contact assigned.
The ‘Difference’ figure will continue to update automatically each time you enter a line item.
Explaining the payment of money that you owe
When you pay your suppliers the money you owed them at your FreeAgent start date, you should explain those payments as individual bank transactions. Use the 'Other Money Out' type and the 'Payment to Initial Creditor' category when you do this.
If you assigned the balance to a contact, select the relevant contact from the ‘Contact’ drop-down menu.
If you have switched from accruals to cash basis accounting and have used category '797 - Other Creditors' to record the opening balances, you would instead explain those payments as 'Other Money Out' as the Type and 'Payment to Other Creditor' as the Category.
Entering other types of opening balances
Once you have edited your opening balances to reflect the money owed to you and the money that you owe at your FreeAgent start date, you should enter your other opening balances (if you have any). These might include accruals (credit code 660), prepayments (debit code 620) and money owed to HMRC for PAYE tax on staff wages (credit code 814).
If the debit and credit entries you've entered are equal to one another, your balance will read as ‘0’. If the two sets of figures do not balance, a suspense account (code 999) will automatically be created to reflect the difference.
When you've finished editing your opening balances, select ‘Save Changes’.