Practice CS: Entering beginning balances

Alerts and notices

If you are setting up your Practice CS database from scratch or have done a Setup information only conversion you will need to enter your clients' beginning Work In Process and Accounts Receivable balances.

Before you start, you need to be familiar with the process of entering time and expense transactions and receipt and adjustment transactions. If you need help with those processes, see theTime and Expense Entry WalkThrough and the Accounts Receivable WalkThrough.

Work In Process Balances

Client WIP balances are entered as WIP transactions in Time and Expense Entry. When entering these transactions, the dollar amount may not calculate to the exact WIP balance. To resolve this, you can override the calculated amount by simply entering the desired amount in the Amount field. Note that the amount will turn red to denote that the calculated amount was overridden and it will not recalculate if you change any other variable on the transaction.

If you will not be assigning the beginning balances to particular engagements and activities, you may want to use a default engagement and create a Beginning Balances activity to be use. You may also want to create a Beginning Balances staff member if you do not want to associate the beginning balances with particular staff.

Note that whatever method you choose, you may also want to consider separating out the portion of the WIP balance that is progress billing and entering that separately as progress bills in Practice CS. Outstanding progress bills effectively act as a charge against future WIP transactions, and as such create a negative WIP balance. If a client has outstanding progress billings, and you don't enter them separately, then the outstanding WIP transactions are effectively reduced by the progress amounts (i.e., the progress bill amounts are too low, as are the outstanding WIP transaction amounts). Example: If a client has $300 of unbilled WIP transactions, as well as an outstanding $100 progress bill, the net ending WIP balance is actually $200. If you enter $200 as a beginning WIP balance, you have lost the true picture that there is really $300 of WIP and a $-100 outstanding progress bill. If this is a concern, then you should enter the actual WIP transaction amounts and then the progress billing separately, which will net to the proper balance.

Single balance for each client

Enter a single transaction for the current WIP balance dated as of the date you will begin entering time and expenses in Practice CS.

  • Advantages: Least amount of effort
  • Disadvantages:
    • Balances are not aged
    • Billing the WIP might be difficult since the transaction may be comprised of time and expenses from multiple engagements and activities

Single balance for each client for each period

Enter a transaction for the WIP balance for each of the last five aging periods dated on the end-date of each period.

  • Advantages:
    • Relatively small effort
    • Balances are aged
  • Disadvantages:
    • Billing the WIP might be difficult since the transaction may be comprised of time and expenses from multiple engagements and activities

Balance for each client for each engagement (with or without aging)

Enter a transaction for the WIP balance for each engagement. If you want the balances aged, you would enter a transaction for each engagement for each period. Aged WIP balances by engagement is the recommended best practice for entering beginning WIP balances.

  • Advantages: Billing the WIP may be easier as it is now associated with the engagement or type of work which is the most common level of detail at which work is billed.
  • Disadvantages: Greater effort as this will potentially require more transactions per client.

Balances for each client for each engagement and activity (with or without aging)

Enter a transaction for the WIP balance for each engagement / activity combination. If you want the balances aged, you would enter a transaction for each engagement / activity combination for each period.

  • Advantages: Billing the WIP may be easier if you bill at the Activity level.
  • Disadvantages: Significantly greater effort to enter the transactions.

Break down any of the above levels by staff.

Enter the transactions as described in any of the levels above but break them down further by Staff. Breaking down the fourth level above by staff is equivalent to entering every transaction individually.

  • Advantages: Enables calculation of staff productivity and realization after the WIP is billed.
  • Disadvantages: Significantly greater effort to enter the transactions.

Accounts Receivable Balances

Client A/R balances are entered as accounts receivable adjustment transactions in Receipts and Adjustments Entry.

Single balance for each client

Enter the client's balance as a debit memo (for debit balances) or a credit memo (for credit balances) dated as of the first date on which you are going to use Practice CS to perform A/R activity such as billing, service charges, and receipt entry.

  • Advantages: Least amount of effort
  • Disadvantages: Balances are not aged

Single balance for each client for each period

Enter a debit or credit memo for each of the last five aging periods dated on the end-date of each period.

  • Advantages:
    • Relatively small amount of effort
    • Balances are aged

Transaction for each open debit and credit

Enter a debit memo for each invoice dated with the date of the original invoice and a credit memo for each outstanding prepayment with the date of the original prepayment. Entering Transactions for each open debit and credit is the recommended best practice for entering beginning A/R balances.

It is strongly recommended that the Reference field be used to indicate what the adjustment transaction represents. Invoices should include the word "Invoice" and the invoice number and prepayments should include the word "Payment" or "Prepayment", as you prefer. This way when these adjustment transactions appear on the client's next statement, they will know what the adjustments actually are:

  • Advantages:
    • Balances are aged
    • Statements clearly identify previous invoices and prepayments
  • Disadvantages: More effort than the choices above but only by a small amount.