Explain money received into your bank account
This article explains the different options that you can choose from when explaining bank transactions coming in to your business bank account in FreeAgent.
Read about the different options that are available when explaining bank transactions going out of your bank account.
Once the relevant bank transaction has been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, you'll need to explain it using the appropriate ‘Type’ and ‘Category’. You’ll need to have level 6 access or above to your FreeAgent account to explain bank transactions.
Explaining money paid into your business bank account
Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.
Choose the relevant bank account from the list of accounts.
When explaining bank transactions or entering bank transactions manually, you need to select a transaction ‘Type’. You can choose between:
- ‘Invoice Receipt’
- ‘Sales’
- ‘Transfer from Another Account’
- ‘Refund’
- ‘Bill Refund’
- ‘Money Received from User’
- ‘Disposal of Capital Asset’
- ‘Sale of Stock’
- ‘Other Money In’
Please see more details for each transaction type below.
Invoice receipt
Select ‘Invoice Receipt’ as the transaction ‘Type’ if the transaction relates to a payment for an invoice that you’ve created in FreeAgent.
Select the relevant invoice from the ‘Invoice’ drop-down menu and select ‘Explain transaction’ to complete the process. Read more about how to mark an invoice as paid.
Sales
Select ‘Sales’ as the transaction ‘Type’ if the transaction is income that you’ve received that is not related to an invoice that you’ve created in FreeAgent.
Select the relevant rate of Sales Tax and select ‘Explain transaction’ to complete the process. Read more about recording income without creating an invoice.
Transfer from another account
Select ‘Transfer from Another Account’ as the transaction ‘Type’ if the transaction relates to money being transferred from another bank account that you’ve set up in FreeAgent.
Select the relevant bank account from the ‘Bank Account’ drop-down menu and select ‘Explain transaction’ to complete the process. Read more about how to explain funds transferred between bank accounts in FreeAgent.
Refund
Select ‘Refund’ as the transaction ‘Type’ if the transaction relates to a refund for a cost of the business.
Select the relevant cost category that the refund relates to from the ‘Category’ drop-down menu and select ‘Explain transaction’ to complete the process.
Bill refund
Select ‘Bill Refund’ as the transaction ‘Type’ if the transaction relates to a refund from a supplier for a bill credit note that you’ve created in FreeAgent.
Select the relevant bill credit note from the ‘Bill Refund’ drop-down menu and select ‘Explain transaction’ to complete the process.
Money received from user
If the transaction relates to money received from an anyone who you’ve added as a user in FreeAgent, select ‘Money Received from User’ as the transaction ‘Type’.
Please note that this option won’t be available for personal bank accounts or for a user who has been allocated the role of ‘Accountant’.
Select the relevant user from the ‘Received from’ drop-down menu.
Next, select the relevant category from the ‘Category’ drop-down menu. You can choose from the following options:
Once you’ve selected the relevant category, select ‘Explain transaction’ to complete the process.
Disposal of capital asset
Select ‘Disposal of Capital Asset’ as the transaction ‘Type’ if the transaction relates to a capital asset that is being sold or scrapped.
Select the relevant asset from the ‘Disposed asset’ drop-down menu and select ‘Explain transaction’ to complete the process. Read more about how to sell a capital asset when using accruals basis accounting.
Sale of stock
Select ‘Sale of Stock’ as the transaction ‘Type’ if the transaction relates to a payment received for a stock item that wasn’t included on an invoice that you created in FreeAgent.
Select the relevant stock item from the ‘Stock Item’ drop-down menu, enter the number of units sold or scrapped in the ‘Quantity’ field and select ‘Explain transaction’ to complete the process. Read more about how to record the sale of stock.
Other money in
Select ‘Other Money In’ as the transaction ‘Type’ if the transaction relates to scenarios where money is paid into your bank account that don’t fit into any of the above options. For example, when money is received from a customer who owed the business money on your FreeAgent start date.
For the example above, you would select ‘Receipt from Initial Debtor’ from the ‘Category’ drop-down menu to reduce the trade debtor amount in your opening balances. If you assigned the balance to a contact, select the relevant contact from the ‘Contact’ drop-down menu.
You can also choose between the following categories for the ‘Other Money In’ transaction ‘Type’:
- ‘Interest Received’ for bank interest earned on savings
- ‘Realized Currency Exchange Gain’ if you’ve created a foreign currency invoice and the exchange rate has changed between the date the invoice was issued and the date it was paid.
- ‘Receipt from Other Debtor’ if you’re receiving an amount entered to ‘682 Other Debtors’ as part of your opening balances.
- ‘Receipt into Contra Account’.
- Any custom current asset, liability or equity category that you’ve added.
Once you’ve selected the relevant category, select ‘Explain transaction’ to complete the process.