August 31, 2020September 1, 2020 Dynamic

How to transfer funds from Trust to Business

This post deals with the circumstances under which trust funds may be transferred to the business, and the procedure for doing so.

Bulk Trust to Business Transfers

When may Trust Funds by paid out?

Trust funds belong to the client. The lawyer maintains the trust on behalf of his client. Only in very limited circumstances is the disbursement of trust funds authorized. Disbursement here has the wide meaning of paying out money, and it means payment to any party not the client.

Generally,

the client may always receive payment of funds held on his behalf;
third parties, if duly authorized by the client, by receive payment from the trust;
the law firm, as payment for its professional services rendered.

This post does not deal with retainers and the point at which a retainer may become transferable from trust to business.

Where payment is made directly to the client, or a third party, this will be a direct bank transaction, such as an EFT (electronic banking) or a paper cheque. A specific beneficiary for such payment must be apparent and trust payments may not be made to unspecified (“cash“) recipients.

The ledger will merely reflect a trust debit entry.

Trust to Business Transfer

Few Transactions

For a very few law firms, it may be suitable to transfer trust funds as settlement of its bill on a one-to-one basis. In this case a simple trust payment is made, and should then be received on the same account with a business receipt.

In any busy law firm, with many active files and high transaction volumes it would soon become impossible to manage the number of files and keep accurate tabs on the current balances. This one-to-one type transfer is not recommended.

Problems associated with this method include

an increased administrative burden
additional costs (bank charges)
multiple additional transactions
increased reconciliation workload

for no apparent benefit.

Many Transactions

Dynamic is designed for trust accounting. This means that a sophisticated and dedicated trust-to-business-transfer function is available.

The trust-to-business transfer is composed to of two distinct set of transactions, (a) the Ledger entry, showing the movement of funds from trust to the business, and (b) the Banking transactions, which show payment from trust and the receipt in the business account.

The benefits of this method include

reduced administrative burden
lower costs (bank charges)
few individual transactions to track
reduced reconciliation workload

less time spent on administration allows more time for professional activities.

How Trust to Business Transfers should be done

The Bulk Trust to Business Transfer procedure

The discussion below is designed to give a complete and accurate description of the transfer procedure. It is the recommended procedure. This can be done on demand, any time, any day.

Bear in mind that Dynamic is designed to ensure compliance in a legal trust accounting environment. Following the steps outlined below will facilitate compliance. The Bulk Trust to Business Transfer procedure will ensure the integrity of the trust.

The goal throughout is to ensure that the trust cash books are always equal to the trust ledgers.

Required

Recent, accurate trust bank reconciliations.
A business Transfer Control Account, we recommend a generic account such as #99000. If separate control accounts are required for each trust account, #99001 can be used for bank 1, #99002 for bank 2 etc.

Procedure

All current transactions must be up to date.
Confirm most recent Bank Reconciliations. Unprocessed banking transactions, or outstanding transaction may present a problem. Please see elsewhere for details on the bank reconciliation procedure. If either the cash book is not up to date or there is no recent bank reconciliation, do not proceed beyond this point.
Management Snapshot prior. The purpose is to verify the integrity of the system at the start of the process. Check the trust assets and liabilities, make sure it does not report a problem. This document represents the state of the books at the start of the process. If anything is unclear, do not proceed beyond this point. Print this report.

Management Snapshot with Trust in balance

Processing > Trust to Business Transfer. This journal entry totals the current business and trust client ledger balances on a by-account basis, then typically debits trust and credits the relevant ledger. This will reduce the trust obligation, which will reduce the trust creditors. This report should be printed, but it can also be found in the diagnostic reports.

Management Snapshot post. The purpose is to find a summary of the trust funds in excess of the trust creditors. These funds have become available due to the trust to business journal entry. This document is a summary, and a detailed report such as the Trial Balance may be required in some areas. Find the trust surplus on this report. Print this report.

Banking Transactions. Process this trust surplus amount with a trust payment and a business receipt. Take the funds out of the trust banking account with a Trust Payment. Process this transaction against the Transfer Control Account. Receive this payment in Business, against the same Transfer Control Account. These transaction should show a nil balance on the Transfer Control Account once we are done. Unbalanced control accounts indicate a problem.

Management Snapshot final. The purpose is to confirm that the books balance correctly after all transactions have been processed. Print this report.

Age Analysis. Inspect the Age Analysis for Accounts Receivable at this point to ensure that Management is fully aware of the extent of outstanding Receivable accounts.

Common Questions

Sometimes we make mistakes or the unexpected happens. What happens to the trust then?

How do I recover VAT on my transfer ? No. There is no VAT applicable to the trust to business transfer transactions. VAT is calculated on transactions as they occur. This means when a Fee is processed, Output VAT is calculated and processed in the system. Similarly when a payment on an expense is made, Input VAT is processed. The cash transfer from trust to business is only that, a cash transfer, and no additional VAT should be raised on that amount.

Must we wait for month end to do a transfer? No! Dynamic is fully integrated and immediately up to date. Post all the necessary transactions and do a transfer immediately. There is no reason to wait for month end. Transfers may be done daily.

I did not do a transfer at the end of last month. Can I force transfer on a specific date? Yes. Simply select the date on which you want to process this transaction and a ledger entry will be processed on that date. Do follow the remaining steps in order to avoid creating a double transfer.

The bank reconciliation is a few months behind, or inaccurate. May I proceed with the transfer ? No. The bank reconciliation is a required preceding step. Proceeding without an up to date cash book and a recent, accurate bank reconciliation undermines the entire process.

My system shows a Trust Deficit. What do I do now? The discussion above assumes the normal position where positive cash flow is from the Trust account to the Business account. It may happen, for reasons not explored here, that a Trust Deficit arises: this is a situation where the net Trust Cash Books are worth less than the Ledger requirements. In such a situation Dynamic will clearly indicate the Trust Deficit position and banking transactions must be processed to correct this state of affairs.

Process a Business Cheque and Trust Receipt against the standard Trust Transfer Control account.
Check the Management Snapshot for the Trust Position.

The Trust to Business feature balances the ledgers. Any remaining differences between the cash books and ledger balances will be reflected by the Management Snapshot.

Also see Dynamic’s Analyzed Transfer

-Dynamic

August 27, 2019May 6, 2020 carl

Dynamic as a productivity tool

Dynamic is designed to provide a compliant, integrated Business and Trust Accounting system for attorneys. But, simply distinguishing trust and business transactions is an easy task. That can even be done manually. The truth is that basic accounting is very simple indeed. But simplicity disappears immediately once custom demands are made of the accounting records. A manual system does not immediately and accurately yield a trial balance, cash book, or ledger report on a given day. Nor can a manual system effortlessly and error free provide multiple trust-to-business transfers during a month, a week or even the same day.

Of course, Dynamic can do all these things.

But there is more.

Dynamic can produce easy to read, custom management accounting reports combining business and trust transactions into a single net balance, combined with file activity. Making it easy for management to see at a glance the state of any file.

Not only are reports streamlined on a file level, but high level overview reports provide a birds eye view, with a drill down to the individual transaction.

Whether you want to look at the data form a high level, to spot trends, or investigate a specific department, file, ledger, or transaction, this is all possible.

But there is more.

Productivity Tools

Dynamic supports a wide range of tools designed to increase productivity.

Productivity tools are designed to make tedious, repetitive tasks fast, easy, and reliable. By automating number crunching the risk of error is reduced, or even completely eliminated. Productivity here means to get more done in the time available. If the same task could be performed manually, without rework or error, in the same time, we have achieved nothing. So our benchmarks are clearly defined: speed in execution, accuracy, with no repetition or rework, and as few errors as possible.

Fee Book: Import Hours Keeper Timesheet

HoursKeeper Hours Keeper is a premier time tracking mobile app. And it’s compatible with Dynamic.

Effective time management, and eventually effective time billing is central to legal practice.

Keeping a timesheet is not enough, Timesheets should be

flexible
complement operations
easily integrate with the overall accounting system

Manual timesheets require paper, are often left on a desk in a private office and still require re-typing timesheet particulars to a billing sheet or system. The Hours keeper app makes it possible to keep accurate, up to the minute time billing sheets on a mobile device.

Dynamic makes it easy to import the Hours Keeper Timesheet directly into the Fee Book.

Hours Keeper is a market leader in mobile time keeping. Hours Keeper allows to record your daily working hours for each client, including your overtime and break time.

It current has a 3.5 out of 5 rating in the Apple App Store and 4.6 out of 5 on Google Play store for Android. Supporting both Apple and Android, makes it possible to capture accurate timesheet information on almost every smartphone. The app generates a CSV export file, which can be imported raw by Dynamic. This means without any fiddling, the timesheet can be uploaded to the Fee Book.

Speed – beats a manual timesheet any day!

100% accurate. No errors in interpretation or conversion of data from timesheet to billing!

No repetition. No rework. Once the data is captured in the app, it can be imported as is into the Fee Book. Of course, editing the CSV file is possible… But why would you want to do that?

Error free.

And, once the data has been imported to the Fee Book, it can immediately be edited, or billed to a client! Reducing the time delay between finalizing the timesheet and billing to seconds!

Timesheets may be uploaded at any time.

Search for “HoursKeeper” in the Apple App Store or in the Google Play store.

Fee Book: Import from CSV

CSV is a multi-purpose, basic text file format which can be opened by any spreadsheet application. Think of a CSV file as a basic, text based spreadsheet. All the data, with none of the tricky hidden columns or display options. What you see is what you get.

This allows the import of Fees into the Fee Book.

A common application is to circulate spreadsheet with fees for a specific matter through the office to be edited and updated by everyone who worked on the matter.

Once complete, the file may then be imported into the Fee Book. Simply select Save As… in the spreadsheet app and choose CSV as the format. Don’t worry about the technical stuff like delimiters and text separators, we have that covered.

A sample file is located in the HelpFile.

Why do we use the Fee Book? Again speed, accuracy and simplicity are the key words. The Dynamic Fee Book is flexible and easy to use, making it the ideal control point for fees originating from various sources.

Dynamic applies a strict interpretation of the ISO8601 date format. Dates are imported in YYYY-MM-DD format only. Other date formats will be rejected.

Please see the Help File for more information.

Core Accounting

Processing: Import from Fee Book

Fast, accurate and no repetition! That’s exactly what the Import from Fee Book does! Once a fee as has been captured into the Fee Book, it can easily be processed into the ledger. The design is intended to support the processing of multiple items simultaneous. No tedious re-typing or copy & paste involved. Processing directly from the Fee Book. And current VAT rates can be applied, while the original work done date will be remembered.

Please see the Help File for more information.

Processing: Import from CSV

This allows the import ledger journal type transactions directly into the ledger. Suitable for Opening Balances.

A sample file is located in the HelpFile.

This feature uses the same CSV format as the Fee Book, but supports more transaction types, including Trust Journals.

Please see the Help File for more information.

UDT: User Defined Transactions

UDTs are lists of transactions defined by the user, to be used in dropdown selectors, such as the Fee Book, to quickly and accurately process transactions. The main application is in the Fee Book. Think of each UDT Plan as a menu of Fee Items available to select from.

UDTs can be managed from the Core module, using Config: Manage User Defined Transactions. The workflow is as follows:

Create a new UDT Plan. Each Plan has a name: John’s Corporate Fees
Add items to the Plan, eg Drafting Memorandum of understanding
Use the items from the Plan in the Fee Book
Import Items for a Plan from CSV. This CSV uses a simple format exactly like that displayed on screen:
- Type, which must be BFA,
- Narrative of up to 200 characters,
- a Debit amount,
- a Credit which must be 0,
- Cascade value, set to A and
- Order value of 1. Cascade and Order have not yet been implemented.

UDTs are defined in the Core module and activated by Refresh in the Front Desk.

Please see the Help File for more information.

Tasks: Reconcile Cash Book – Advanced

This amazing feature allows semi-automated processing of CSV transaction history from the bank. Transactions are automatically allocated based on user selection.

Each bank uses their own format. The basic seven column import format is

Date, ACNO, VAT, VOUCHER, Description, Amount, Balance

These files must be edited by the user before import.

The columns ACNO, VAT, VOUCHER, may be left blank, but must be inserted into the source file.

A handy little tool is the CSVConvert application. This can be used to modify the raw file received from the bank into a format more import friendly. CSVConvert is available from our Download page.

Dynamic applies a strict interpretation of the ISO8601 date format. To accommodate different date formats, either dd-mm-yyyy or YYYY-MM-DD (ISO8601), Dynamic allows a date format specification. Please see the Bank Account settings.

The ability to pre-set VAT selection on ledger accounts is not only a great time saver, but also prevents processing errors.

Direct processing from bank transaction history to cash book!

Accurate ledger allocation!

Pre-set VAT selection!

No fuss, easy and accurate bank reconciliation. Exactly what you expect.

Please see the Help File for more information.

February 28, 2017March 1, 2017 carl

Process discrete transactions

DynamicLTA uses both a pre-defined Chart of Accounts and a pre-defined set of transaction types.

The following explains some of the concepts used:

Client gives us a deposit (retainer) to be kept on trust until work is done.
Professional work is done.
Funds transferred from Trust to Business.

In order to fully and accurately capture all these events and obtain final ledger reports which reliably indicate the full audit trial, each transaction has to be isolated. Each distinct transaction has to be captured separately. At least the following must be captured:

Trust Receipt. Deposit belongs in the trust. A trust receipt is issued and processed as such, updating the client trust ledger and the trust cash book. Credit the ledger, debit the trust cash book.
Business Fee. The trust is not subject to fee charges. Work done must be charged to the client’s business account. Debit the client business ledger and credit the revenue account used for Professional Fees. Simply transferring funds from the trust account and calling it a “Fee” does not make it so.
Transfer. There are two options when it comes to transferring money from trust to business.
1. Individual transfers. On the client ledger account, process the trust payment out to the business account. Debit client trust ledger and credit the trust cash book. Now receive the money in the business account: business receipt. Credit the client business ledger and debit the business cash book. This works well for few accounts and relatively large sums. but becomes an administrative burden when managing many accounts. This method is generally discouraged.
2. Bulk Transfer Procedure. Use the Dynamic transfer journal option. This will generate a “Transfer Journal” transaction on each eligible ledger, debiting the trust ledger and simultaneously crediting the business ledger. Individual ledger entries are allocated. This ledger entry reduces the trust creditors, but does not affect the trust cash book. This creates a global difference between the total trust cash book balance and the client trust ledger balance. The difference is then processed as a single bulk bank payment. Process a transfer payment against a transfer control account: debit trust on transfer control ledger and credit the trust cash book. Directly after credit business on the same transfer control ledger and debit the business cash book. This method is recommended. See more below.
The clients ledger (combined trust and business) shows the full audit trial of all transactions processed.
Each individual transaction has now been processed and is clearly distinguishable from other transactions.

The Bulk Transfer Procedure is is shown in the images below.

Transfer Journal report identifies individual ledgers and exact amounts

Bulk Transfer Control Account shows trust payment and business receipt

The Bulk Transfer Procedure discussed above is also discussed elsewhere. From the top down, the main features are as follows:

The Bulk Transfer Control account (normally #99900) reflects the amounts paid out from trust and received into the business. The same amounts should reflect on the trust and business cash books and bank statements. Control in place? Check
The Transfer Journal listing identifies each individual ledger and the exact amount debited or credited at that time. The total here should be what is paid between the cash books. Total transfer valued determined? Check. Individual ledgers identified? Check. Exact amounts to transfer determined? Check.
The Ledger History Report on any given client ledger will reflect the discrete transactions and indicate how Dynamic determined the transferable amount. Compliance achieved? Check.

Please note that on Dynamic, as on all bookkeeping systems, transactions should be entered accurately and as up-to-date as possible. Bank reconciliations should be done frequently, preferably up to current month. No transfer system, manual or otherwise, can be accurate where the underlying transactions or account management procedures are not accurate or up to date.

-Dynamic

August 16, 2016March 31, 2023 carl

Regulation requires Compliance: FAQ

Does your accounting software comply with regulatory requirements?

We understand that local jurisdictions may have different requirements, but certain questions get asked repeatedly. We have tried to formulate the questions as accurately as possible, and provided clear, direct answers. If you have additional questions, or an answer does not appear clear, please contact us?

Please feel free to share this page

Question: What does the name DynamicLTA mean?: DynamicLTA is an abbreviation for Dynamic Lawyers Trust Account software.
It is a niche accounting software product, designed specifically to provide for business and trust accounting in a single product, with an integrated ledger, IFRS statements and management reports.
Smaller and start-up legal firms typically do not have the multi-user, simultaneous access requirements of bigger, more established firms. These smaller firms however are subject to exactly the same regulatory framework as bigger firms.
Dynamic ensures compliance for small firms.
The system is designed for a single user environment, it is not designed for concurrent users, but provides extensive scope in terms of the transaction amounts or number of accounts.
Bench marking indicates that a typical DynamicLTA installation can accommodate 30 000 individual ledger accounts, with up to 500 000 discrete transactions, without an apparent impact on performance.

Question: Who should use DynamicLTA ?: DynamicLTA was developed specifically for lawyers who require a combined business and trust bookkeeping application. If it is a standard lawyers trust account, or an IOLTA account, DynamicLTA is the solution you need. Different labels apply in different areas, a legal practitioner may be described as a solicitor, attorney, lawyer or advocate. If you are responsible for client money, DynamicLTA is the integrated software solution to keep business and trust transactions in one set of books. It was not designed to meet estate or fiduciary trust requirements.; Long term record retention is provided by the continuous ledger format, which means that historical transactions are not archived. The transaction history is not disrupted with Balance Brought Forward entries.

Question: How does DynamicLTA distinguish trust and business?

DynamicLTA provides for separate trust and business transaction processing, automatically posting to the ledger, which maintains this distinction. A typical ledger display will contain clear columns for business debit and credit, and separate trust debit and credit. Business and Trust bank accounts and cash books are maintained separately. All reports clearly indicate the distinction between trust and business entries.

- Separate, unique accounts for each matter
- Separate Business and Trust ledgers and cash books
- Easy Reconciliation: Cash books & Trust Ledger

Question: Does DynamicLTA support Three Way Trust Reconciliation?

Yes. DynamicLTA allows:

- Compare trust cash books to trust ledger
- Detail trust cash book to bank account reconciliation
- Client trust ledger balance analysis

Question: Does DynamicLTA balance the trust?: DynamicLTA understands the requirements of reconciling the trust ledger with the trust cash book, at the same time facilitating easy to use balancing of the trust and business books. Easy to read reports indicate the state of the trust at any given point in time, any trust-to-business transfer transactions and the surplus or deficit status of individual client accounts or the trust as a whole. The system reflects user input and does not link to any online bank application for automated bank transactions.

Question: How is DynamicLTA licensed?: DynamicLTA is never sold. The right to use is set out in the End User License Agreement (EULA). Licensing is through non-transferable, monthly user based licenses, payable in advance.

Question: Does DynamicLTA come with after sales support and documentation?: Yes! After Sales support is available. DynamicLTA comes with an extensive Help File and the Home Page contains extensive additional resources. In addition, the system comes with an built in AnyDesk Remote Support module for internet based remote support.

Question: DynamicLTA is a Desktop app, but it is cloud based?: DynamicLTA uses a traditional Microsoft Windows user app, for a familiar, easy to use experience. The data is stored on a cloud server, which means that it can be accessed from anywhere. Why word from the office, if you can #workFromAnywhere? Our Desktop app also allows easy integration with Microsoft Outlook for Windows, which allows the fast and easy creation and sending of email through Outlook.

Question: How does DynamicLTA ensure the validity, accuracy and completeness of accounting data?: DynamicLTA is an integrated double-entry accounting system. When a transaction is processed, the user selects the transaction type, enter the relevant account number and amount, and the system processed the relevant debit and credit. The user selects the transaction type and there is no need to indicate the debit or credit. Various time-stamped reports validate the transaction: ledger, type detail, type summary and automated system checks confirm that all entries sum to nil.

Question: What are the risks of confidentiality and what physical security measures are used?: DynamicLTA by default requires an access PIN. Restricting access to this PIN number will prevent unauthorized access to the system. Physical security includes restricting access to the computer on which the system is installed.; Internet access is only available using a user password.

Question: Should source entries be independently totaled prior to processing?: This is a user function. DynamicLTA allows for direct processing without batch totals. Transaction are individually posted to the relevant ledger or cash book. Since no batches are posted, no record is kept of batch totals. DynamicLTA does not provide for batch processing.
Diagnostic reports allow for printing of historical entries.

Question: How does DynamicLTA indicate the source of a transaction?: Provision is made for both a Voucher Reference and Contra Account Reference in addition to 200 character transaction narrative in addition to internal system protocols.

Question: Are audit trails distinguishable?: Transactions are categorized to facilitate distinction, and can be viewed by these categories to diagnose problems, or trace entries. In addition each entry has a unique identifier, a batch-sequence-member identifier and a system date feature.

Question: Are regular reports available?: Realtime, live reporting is available. The system is fully integrated. As soon as a transaction is processed, the results are visible throughout the system, eg. a receipt will update the relevant ledger account, as well as the cash book. Accurate, up to date reports may be drawn at any time, there is not reason to wait for the end of the month before a report will be up to date. Flexible reports, for any overview, eg. daily, weekly, monthly, quarterly, annually or user defined are available. In addition, reports have default overviews, and can be customized by the user at run time.

Question: How can the accuracy of reports be confirmed?: Reports can be drawn showing only totals, totals by account or detail by account. Typically a report will include the relevant ledger account number, transaction date, transaction description, amount and a balance. In addition, these individual reports can be verified by comparing the transaction type, with its corresponding double-entry.

Question: Do I need additional software to use DynamicLTA ?: Yes. The good news is that simple data report browsing happens in the application, with no further software required. Generating external reports require additional software. The good news is that the additional software required is either free, or generally already present on the computer where DynamicLTA is installed. DynamicLTA generates all output reports as portable document format (.PDF) files. Any PDF Reader compatible with Adbode Reader 5.0+ will work with DynamicLTA . DynamicLTA PDF exports have been tested and works with Adobe Acrobat Reader and Foxit Reader.; Most reports can also be exported as character separated value (.CSV) files. CSV files are text files and can be opened with any text editor, such as the Notepad application on Windows. However, the purpose of the CSV export is not to browse the text data. These CSV files can be opened with spreadsheet software such as Microsoft Excel, where the data can be manipulated, sorted and printed. DynamicLTA CSV exports have been tested and works with Microsoft Office Excel and OpenOffice Calc. If the correct software is installed, reports will automatically open when clicked.

Question: How green is DynamicLTA?: DynamicLTA uses one of the smallest and most reliable databases available today. In addition all reports generate as PDF documents, allowing the user to peruse and decide if printing to paper is really necessary. Most reports can also export to on-disk character separate value (.CSV) files, which can open in spreadsheet software. Generally, this obviates the need for hard-copy paper printouts. Certain reports must be printed for compliance purposes, but printing stacks of paper is not the DynamicLTA way. This makes DynamicLTA very green indeed.

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If you have any additional questions, please do not hesitate to contact us.

-Dynamic