Processing transactions through Loft automatically generates the accounting entries in Xero. The following descriptions show you the results of Loft activities in your Xero accounting records.
When you post a deposit to Loft you will see the following entry in Xero. All Loft transactions will post with a link to the deal in the Loft application so you can quickly view the detail for the deal.
This entry debits the bank account selected and posts the credit to the offset account you specify during the initial setup. For Trust funds the credit is allocated to the Trust liability account. For commission or general accounts the credit is allocated to commission payable.
You will be able to reconcile the bank entry to this transaction when it comes through the bank feed.
Transferring Funds From an Escrow or Trust Account
When you transfer money between your bank accounts in Loft, we create two entries in Xero. One, to record the transfer out of one account and the second, to record the deposit to the receiving bank account. The following screenshots show the entries made when transferring funds from a Trust account to a Commission Trust Account. You will need to transfer the actual funds through your online banking system. Loft produces a transfer report to show you the amounts transferred between bank accounts to summarize the activity.
- We create a bank transaction for spending money, which will credit your bank account and debit the offset account specified on set up.
2. We create a bank transaction to receive money to the Commission Trust account which will debit the bank account and credit the specified account on set up.
Payments to Outside Brokers or Internal Agents
As per Trust rules, payments made to external Brokerages or companies will be released from the Trust account. Loft gives you the option of letting us know which bank account you would like to use for various payments. We’ll help you get it set up the right way during initial on boarding.
As part of on boarding we will set up various deductions and split fees that apply to your agents. Each deduction type is set up with a corresponding general ledger account (s). You can also specify if a deduction is a payable in which case Loft47 will create a bill for the amount to be paid out.
We record the commissions earned and paid out as well as post all deductions to their allocated general ledger accounts. This entry also clears all the payables set up from the deposit.
Here is the corresponding paystub for this agent that can be found in Loft from the Deal.
The bill posting will create the payable entry so you can pay via check or one of the many digital payment solutions that integrate with Xero. You will find these transactions under the Bills Awaiting Payment section in Xero.
Transferring Income from the payout bank account to the general operating bank
If you use a different account to pay agents or brokers Loft will automatically create the entry to move the Brokerage income to your operating account specified on set up.
Once an agents payout is posted two additional transactions will post to mark this transfer.
- A bill gets created to the Brokerages name to be paid out of the bank account with a clearing offset account. The end result is a Debit to the clearing account and a Credit to the bank.
- A Receive Money transaction gets posted to the general account with the offset of Misc clearing. - Credit the clearing account & debit the bank