How To Track Operations In Accounting Software

Tax regulations require you to keep detailed records of cash flow - income and expense - and specifics regarding each. You are not required to keep all that information in one place or in one system, but must be able to report details on demand.

Collect! tracks all information, both income and expense that is directly related to your clients and debtors and tracks commissions for your collectors. Collect! does not keep track of your hydro bill, rent, etc., nor does it do your payroll or calculate financial statements.

The most basic of accounting software packages will handle these basic needs not related to your collections. What you do need from Collect! is a few magic numbers to be entered on a monthly (or more frequently, depending on your needs) basis.

Accounts Receivable

In your accounting package you have a segment known as accounts receivable. This segment has a number of accounts attached to it.

Create a new attached account called Collect! accounts.

Create a revenue account possibly called collection income.

Enter the amount on the total of your Accounts Receivable summary printed at your month end from Collect! as a posted entry.

It might look like the following:

This entry is the starting entry and will display an entry of $8,000 due to you in your financial statements. With each update or new set of invoices generated in Collect! that figure needs to change.

Assume the next month your Accounts receivable total is $10,000. To alter the accounting system, figure enter the difference.

This is known as an offset entry, one which affects the balance of your accounts receivable.

The posted entry might look like the following.

When you print your financial reports now, the accounts receivable figure for Collect! will display $10,000 owed to you. To reduce the display amount in your financials, post the difference from last month's balance to this month's balance as a debit to your Collect Revenue account.

Accounts Payable

In your accounting package you have a segment known as accounts payable. This segment has a number of accounts attached to it.

Create a new attached account called Collect! accounts.

Create a expense account possibly called collection expense.

Enter the amount on the total of your Accounts Payable summary printed at your month end from Collect! as a posted entry.

It might look like the following.

This entry is the starting entry and will display an entry of $8,000 owed by you in your financial statements. With each update or new set of invoices generated in Collect! that figure needs to change.

Assume the next month your Accounts Payable total is $10,000. To alter the accounting system figure, enter the difference.

This is known as an offset entry, one which affects the balance of your accounts receivable.

The posted entry might look like the following.

When you print your financial reports now, the Accounts Payable figure for Collect! will display $10,000 owed by you. To reduce the display amount in your financials, post the difference from last month's balance to this month's balance as a credit to your Collect! Expense account.

Collector Commissions

To track commissions, using the Operator Commissions report, enter the amount of commission into the income area of your accounting or payroll system for each operator.

Check Record

To track your trust bank account for reconciliation purposes use the Daily Cash Report from Collect! You will want to report on a monthly basis to your accounting package so the balance in your trust account displays in your financial statements.

Create a new account in Current Assets possibly called Collect! Trust. Use the Collect! Revenue account you created for your accounts Receivables for the offset entry.

To bring forward the current month end account balance post a transaction as follows.

At each successive reporting period, credit the amount of the difference to increase the account balance, i.e. if the new trust balance is $800, post the entry as $200 debit to Collect Trust and $200 credit to Collect! Revenue. If the new trust balance is $400, post the entry as $200 credit to Collect Trust and $200 debit to Collect! revenue.

These items for month end entry in your accounting system are the bare minimum and implementing them rather than re-entering all information processed in Collect! can save you a great deal of time.