Paul W. Carlson, CPA (00:00):
In this section of the course, we're going to walk through trust account transactions. The first couple of videos will focus on IOTA deposits. And the last couple of videos will focus on trust withdrawals. So before we get into posting example transactions, I want to talk through two wrinkles that complicate trust account transactions. So the first is all transactions must identify all parties related with the transaction. So an example is we received a settlement from insurance Company Z for client, Adam Smith, for Adam Smith's matter, Smith V State. So when we post this payment, we need to include all pieces of this information because when the firm is audited by the state bar, they want to see all these pieces and we can also... By capturing this information, we can click into insurance Company Z and run reports to see total payments over time and just monitor what's going on.
(01:01):
The second wrinkle is Soluno is set up to support including multiple payments into a single aggregate deposit. So it's an example. The firm received $100,000 checks for matter one, received $100,000 check for matter two, and when the checks are taken to the bank, they're included into a single deposit for $200,000. That the Soluno process is we post this payment as a single transaction, we post this payment as a separate transaction, and then there's a process for adding these two together and making the deposit. So this $200,000 ties to what we see on the bank statement. Some firms will say, "This is a lot of nonsense, we're never going to do this."
(01:53):
Soluno is set up that we have to follow this process as best practice and if the firm accepts credit card payments that they're forced into this process because the credit card company will always aggregate all the payments for single day and forward a single deposit. So let's jump over to Soluno and we're going to post an example single payment receipt. So here we are in Soluno. To record a payment receipt, we go add entries, trust in, and let's walk through these fields. So the first field is trust. We select our trust account. Most firms only have one trust account and the trust account will have a much better description than this. This is a sample file, so things are a little silly. So we pick our trust account. Date is the date the payment was received in the firm office. So IRS concept of constructive receipt.
(02:53):
So we put in the date that the check came in the office, not the day the check was deposited to the bank. Amount is a hundred thousand dollars, the transaction type, so we want to post an accurate description for this. So is it a check or is it a credit card payment or is it an EFT? So we received a check. Soluno auto deposits the receipt. Contact, so this is from insurance Company Z. You could also do search and it'll just find predictive search. Once we [inaudible 00:03:29] out of this field, it will list who it's coming from. Probably don't want to do this a lot, but you can manually type the recipient into the field.
(03:45):
But what this is going to do is you're not going to have the same consistent name across all transactions. We're going to lose some reporting. So I would only ever do this if it's for a very small payment amount and we know we're never going to get payment from that person again. And realistically we know it's not going to matter. Best practice is going to be to always have a predefined contact in the system. Memo field, we can leave blank. So file, we can again do predictive type. So we know this is the Adam Smith matter. So Smith V State. And once we click out of that field we can confirm the client name. We can also see a running trust account balance for the matter.
(04:33):
It's kind of nice. So again, notice within Soluno we've recorded that the payment is from insurance Company Z and it's for this matter. For the explanation, we can do a little note. Soluno doesn't have a place where we can put in reference numbers. So if you're looking for style points, go ahead and type in the last four or six numbers of the check that's in front of you. Again, just strengthens the audit. I would really strongly suggest that everyone do that. And with that, we have recorded the payment receipt or the trust receipt for the check that the firm received. And we just hit save and we're set and the screen comes back so we could go ahead and post our next receipt.
(05:29):
Thanks.
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