Initial money owed

What's the issue here?

As at your FreeAgent start date, unless your business is new, some of your customers might owe you money.  And you might also owe money to your suppliers, for bills you haven't yet paid.

How to enter that into FreeAgent?

I wouldn't recommend putting in the individual invoices and bills, because they'll be dated before your FreeAgent start date.

Instead, add up all the money your customers owed you, including any VAT.

Then, as you enter your opening balances, put this figure into code 681, Trade Debtors, as a debit entry.

Add up all the money you owed to your suppliers, including any VAT, and put that as a credit entry opening balance to code 796, Trade Creditors.

What about when payments are made?

When your customers pay you what they owed you as at your FreeAgent start date, explain those receipts with type Other Money In and category Receipt from Initial Debtor.

And when you pay your suppliers what you owed them as at your FreeAgent start date, those payments would have type Other Money Out and category Payment to Initial Creditor.

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