Sometimes a client pays money that belongs in trust into your general account instead — a credit card payment being the most common example, since credit card facilities are typically set up on the general account rather than trust. This isn’t a crisis, but it does need to be handled carefully and documented clearly so the trail is always easy to follow.
There are two ways to correct this in Law App. Both are valid. The right choice depends on who will be doing the work and how your firm manages its suspense account.
Method 1 — Via the Suspense Account
This is the most common approach, particularly when a client pays by credit card and the funds land in your general account.
How it works
- Receipt the funds into a suspense GL account on the general side — either a dedicated account set up specifically for this purpose, or your firm’s existing suspense account.
- Once the money is sitting in suspense, draw it back out via a general payment from that same suspense account.
- Receipt the funds into trust in the normal way — as a trust receipt against the relevant file.
We strongly recommend creating a dedicated GL account for this purpose — something like Trust Funds Received in General Account. This is especially important if your firm regularly receives credit card payments that need to pass through to trust, as this will happen repeatedly and you want it to be immediately obvious what the account is for. A dedicated account keeps these movements completely separate from other suspense items, makes the in-and-out trail effortless to read, and removes any ambiguity at audit time. Contact support@lawsupport.com.au if you’d like help setting this up.
Proving the trail
Whether you use a dedicated account or your general suspense account, you need to be able to demonstrate clearly that the money came in and went out for exactly the same purpose. If your suspense account contains other uncleared items, this is especially important — an auditor or principal should be able to look at the account and see that these two entries cancel each other out, with no ambiguity.
Trust accounting is subject to compliance requirements. The movement of trust money — including correcting a misdirected payment — must always have a clear and auditable paper trail. If you are unsure whether your proposed approach meets your state’s trust accounting rules, check with your principal or external accountant before proceeding.
Method 2 — Through the File
This approach routes the correction through the file’s disbursements, which gives visibility at the file level. It’s a legitimate method, but it comes with some downstream considerations that are worth understanding before you use it.
How it works
- Receipt the funds on the general account as a disbursement receipt against the file — this records the money coming in on the file side.
- Create a disbursement payment out of the file for the same amount, directed to trust — this records the money leaving the file to go where it belongs.
- Receipt the funds into trust in the normal way — as a trust receipt against the file.
The disbursement complication
Because disbursements in Law App are designed to be billed and then paid as part of the invoicing process, an in-and-out pair like this sits in a slightly awkward position. The two entries offset each other, but the system doesn’t automatically know they’re connected — so they can appear on disbursement reports as outstanding items, even though they cancel each other out.
There are two ways to clear them:
- Bill them together at zero. Create a bill that includes both disbursement lines. Because they offset, the total will be zero. This is clean, clear, and easy for anyone reviewing the file to understand.
- Mark each as billed manually. Open the pencil icon next to each disbursement line and tick the Billed flag. This removes them from the outstanding disbursements ledger without creating a formal bill.
Manually marking a disbursement as billed is a bookkeeping tool for specific situations — it does not create an actual bill, and it should not be used as a general shortcut for clearing outstanding items. This approach is best reserved for users who understand exactly what it does and why it’s being applied here. If you’re not sure, use the zero-bill method instead — it’s easier to explain and audit.
Which Method to Use
| Scenario | Recommended method |
|---|---|
| Credit card payment or other situation where the general account is the entry point | Suspense account — simpler trail, easier to audit |
| You want visibility of the correction on the file’s financial record | Through the file — but use the zero-bill method to close the disbursements cleanly |
| The person doing the work is less experienced with accounting | Suspense account — fewer moving parts, less risk of the disbursement trail being misread later |
Questions
If you’re not sure which approach is right for your firm, or you’d like a walkthrough of either method, contact our support team at support@lawsupport.com.au or call 07 3040 3036.
