If a Deal Collapses and you are holding Deposit/EMD funds for a buyer and need to now transfer them to the new Deal this can be done in the following way.
Firstly you will need to 'Release Deposit' from the old Deal by selecting release Deposit option.
Using the sample screenshot above you can now follow the steps -
- Make sure you select the correct amount for the Trust Release
- Be sure to select ' Other' as reason as this is NOT a refund.
- Select the correct Account ie 'Trust'
- Be sure to reference the new Deal file number that the funds are being transferred to.
- The release date should be the same date as the date the Deposit/ EMD was to be transferred to the new deal.
Once you have 'Released Deposit' you now have to go into the new Deal and simply ' Add Deposit in the normal way using the ' Add Deposit' function, however be sure to follow these steps -
- Make sure the Deposit date matches the actual date you received the Deposit/EMD funds.
- Be sure to reference the file number that the funds came from in the reference bar.
The screen shot below shows how the new Deposit should look -
You have now successfully transferred your Deposit/EMD funds to your new Deal in Loft.
There are now two steps to complete your bank reconciliation in Xero as Loft will create two entries. Since you are not removing the funds and re depositing them to the bank account you will need to manually reconcile those transactions.
- The Release of funds creates a "Bill to be Paid" in Xero. You'll need to enter a payment against that Bill for the date of the collapse.
- You will now have a deposit transaction and a payment sitting as unreconciled in your bank transactions. You can open those transactions and select options to "mark them as reconciled"
Your bank reconciliation is now clean and the funds are recorded against the correct transaction in the Loft subledger :)