Client Accounts and accounting software

Discussion in 'Accounts & Finance' started by ImranR, Oct 10, 2019.

  1. ImranR

    ImranR UKBF Contributor Free Member

    58 5
    Hi all.

    I just recently started my first business but have found a gap in the mark. However, for my plans to work, I need to set up a client account to hold funds separate from the business.

    I am also considering my options on accounting software in general to streamline some of my paperwork.

    I have a few questions if you guys don't mind helping.

    The client account may hold funds for 10 - 15 different projects at a time so needs to be carefully managed and regularly audited to ensure money is not lost or overspent.

    - is there a software that can link to the bank account and segregate funds for each project? And one that can also monitor how much money there is linked to each project?

    - I was looking at either Xero or Sage as a general accounting software for the business. Do any of these have tools to monitor client accounts?

    Thank you
     
    Posted: Oct 10, 2019 By: ImranR Member since: Nov 8, 2018
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    15,221 3,222
    You would need to look at how the chart of accounts is set up. Projects, departments etc.
     
    Posted: Oct 11, 2019 By: Scalloway Member since: Jun 6, 2010
    #2
  3. John Hemming

    John Hemming UKBF Regular Full Member

    157 19
    Those people who hold client money (such as solicitors) need to make sure they don't take funds from the bank account that are the wrong client's funds (by taking more than an individual client put in). That is the sort of thing you need for tracking clients monies.
     
    Posted: Oct 11, 2019 By: John Hemming Member since: May 23, 2019
    #3
  4. ImranR

    ImranR UKBF Contributor Free Member

    58 5
    John. This is exactly what I want the software to be able to help me with. You've been able to explain it more efficiently than I could.

    Any thoughts on a software?
     
    Posted: Oct 11, 2019 By: ImranR Member since: Nov 8, 2018
    #4
  5. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,653 779
    It is easy to set up client accouting on Sage50 Cloud Accounts using the customer ledgers for each client project where you can post both client receipts and project/client payments.

    If you set up the the client projects within the same grouping range via the customer coding on set up then you should be able to run a customer balance/activity report bringing in just those clients.

    The report can then be exported to Excel and reconciled to the client bank account balance held -again you can run the reports from Sage and export to Excel.
     
    Posted: Oct 12, 2019 By: UK Contractor Accountant Member since: Sep 18, 2013
    #5
  6. KAC

    KAC UKBF Ace Free Member

    1,002 224
    You need to get a formal agreement from the bank if you wish the account to be set up as a true clients' account.
    This is the guidance from ICAEW:
    "b. On opening a client bank account, a firm must notify the bank in writing that:
    i. all money standing to the credit of that account is held by the firm as clients' money and that the bank is not entitled to combine the account with any other account or exercise any right to set off or counterclaim against money in that account in respect of any money owed to it on any other account of the firms;
    ii. interest payable on the money in the account must be credited to that account;
    iii. the bank must describe the account in its records to make it clear that the money in the account does not belong to the firm; and
    iv. the bank must acknowledge in writing that it accepts these terms.
    c. For a client bank account in the UK or Ireland, if the bank does not provide the acknowledgement required under sub-paragraph (b) above within 20 business days of the firm sending the notice, the firm must:
    i. withdraw all money from the account;
    ii. close the account; and
    iii. deposit the money with another bank in a client bank account; or
    iv. as a last resort, return the money to the client"
     
    Posted: Oct 12, 2019 By: KAC Member since: May 7, 2017
    #6
  7. John Hemming

    John Hemming UKBF Regular Full Member

    157 19
    Does the system prevent the overdrawing of client accounts?

    I have written an accounting system both for solicitors and one for stockbrokers both of which operate client accounts. The key thing is to prevent the account going overdrawn for any one client by preventing a cheque or BACS payment going out. That has to be done in real time.
     
    Posted: Oct 12, 2019 By: John Hemming Member since: May 23, 2019
    #7
  8. GLAbusiness

    GLAbusiness UKBF Regular Free Member

    178 28
    You might want to look at something like Money Dashboard. This will automatically download all the transactions from your bank account. Then you could set up a category for each client, and have a full history of all transactions for that client.
     
    Posted: Oct 12, 2019 By: GLAbusiness Member since: Sep 20, 2008
    #8
  9. UK Contractor Accountant

    UK Contractor Accountant UKBF Big Shot Full Member - Verified Business

    4,653 779
    no system can prevent a client ledger balance going overdrawn.
     
    Posted: Oct 12, 2019 By: UK Contractor Accountant Member since: Sep 18, 2013
    #9
  10. John Hemming

    John Hemming UKBF Regular Full Member

    157 19
    You can have a system which warns whilst someone is posting that the ledger balance will be overdrawn if the posting goes through. If writing out a cheque or making a BACS payment depends upon the entry being made then the system can prevent the balance going overdraw (save for situations where the payment in has bounced),
     
    Posted: Oct 12, 2019 By: John Hemming Member since: May 23, 2019
    #10
  11. ImranR

    ImranR UKBF Contributor Free Member

    58 5
    Cheers everyone.

    Sage50. I did a demo earlier today and professional subscription is the one that will work but it lacks mobile access on tablets and phones. Even then, at £125 per month, it is a big sum to pay for a one man band. I can probably hire a book keeper for cheaper.

    Are there any other recommendations on software?
     
    Posted: Oct 18, 2019 at 10:00 PM By: ImranR Member since: Nov 8, 2018
    #11