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QUESTION:
How do we bill – invoice net negative disbursements on a final invoice? What do we do when we need to issue a final bill – invoice for a matter with net negative disbursements so we can include them into the final bill invoice to reduce he amount the owed on the invoice?
RESPONSE:
Negative disbursements are the result of anticipated or pre-billed disbursements included in a previous invoice for the affected matter, or the processing of overpayments as a credit to the matter. The below includes options on how to clear these values during the invoice process.
Negative Disbursements Due to Anticipated or Pre-billed disbursements: These negative values are handled once the actual disbursement is recorded against the affected matter so both the negative and positive values netting to zero can be included in an invoice and removed from WIP once the invoice is posted. In this case, if the net value is negative, the user can override the actual disbursement record to match the absolute value of the anticipated (pre-billed) disbursement creating a gain and a net value of zero.
Overpayments Processed as Credits Against Affected Matters: The latter, requires that the next invoice have enough positive disbursements to bring the total amount of disbursements to be included in the invoice to zero. If the matter will not have additional new disbursements to offset the negative disbursement value in full, complete a transfer to trust so the funds are available to trigger an invoice payment from trust, thus reducing the amount the owed on the invoice by the client.
Process to Transfer Negative Values to Trust: To transfer the negative disbursement value to trust, create a quick payment payable to the firm in trust for the absolute value of the overpayment, and apply it against the affected matter using the same disbursement code used when the negative value was added to the affected matter. Deposit quick payment into the affected matter’s trust account, to make the funds available for selection as a reduction of amounts owed during the invoice process that includes the positive and negative disbursements netting to zero. If the invoice is already prepared and posted, once the quick payment and trust deposit are processed, write-off both disbursement entries netting out to zero and use the right-click contextual menu option “Invoice Payment from Trust” in show trust payments, to trigger a reduction of the receivable by the overpayment value.