Initial money owed

If your customers owe you money - or you owe money to your suppliers - at your FreeAgent start date, you will need to edit your opening balances in FreeAgent to reflect this. Here's what you need to do.

Unless you're a new business, some of your customers might still owe you money at your FreeAgent start date. You might also owe money to your suppliers for unpaid bills. To update your FreeAgent account with this information, you need to edit your opening balances, rather than create new invoices or bills.

We recommend that you enter all the money you're owed and all the money that you owe at your FreeAgent start date (along with any other opening balances that you might need to edit) at the same time in order to bring your accounts completely up to date.

Entering money owed to you at your FreeAgent start date

To update your FreeAgent account with details of money owed to you at your FreeAgent start date, navigate to ‘Accounting' and 'Journal entries’.

Select ‘Opening balances’ from the ‘Show’ drop-down menu, then select ‘Edit opening balances’.

You will see the amount that you entered as your opening bank balance when you first set up your FreeAgent account, and a corresponding amount with the code ‘999-Suspense Account’.

suspense account

To enter the details of money owed to you, delete the ‘999 - Suspense Account’ line entry by selecting the cross-shaped icon, then select ‘Add another’.

In the new field, select ‘681 - Trade Debtors’ from the ‘Code’ drop-down menu and enter some additional text to describe the entry if you wish. Enter the amount owed at your FreeAgent start date in the ‘Debit’ column.

trade debtor line

If you are owed more than one sum of money, you can either select ‘Add another’ and repeat the process for each amount you are owed, or calculate the total amount you are owed and input this as a single line entry.

You will notice that the ‘Difference’ figure updates automatically each time you enter a line item.

Explaining the payment of money owed to you

When your customers pay you the money they owed you at your FreeAgent start date, you should explain those payments as individual bank transactions. Use the 'Other money in' type and the 'Receipt from initial debtor' category when you do this.

Entering money you owe at your FreeAgent start date

If you also owe money to your suppliers at your FreeAgent start date, select ‘Add another’. In the new field, select the code ‘796 - Trade Creditors’, enter some additional text to describe each entry (if you wish), and enter the amount in the ‘Credit’ column. You can either enter each amount you owe individually, or input the total amount as a single line entry.

trade debtor and trade creditor lines

If these are the first changes you’re making to your opening balances (i.e you owe money to suppliers at your FreeAgent start date, but no-one owes you money), navigate to 'Accounting' and 'Journal entries', select ‘Opening balances’ from the ‘Show’ drop-down menu and then ‘Edit opening balances’.

Delete the ‘999 - Suspense Account' line entry by selecting the cross-shaped icon, then select ‘Add another’. You can either create a new line for each of the amounts you owe or enter the total amount you owe as a single line entry. Remember to use the code ‘796 - Trade Creditors’, and to enter each amount in the ‘Credit’ column.

trade creditor line

The ‘Difference’ figure will continue to update automatically each time you enter a line item.

Explaining the payment of money that you owe

When you pay your suppliers the money you owed them at your FreeAgent start date, you should explain those payments as individual bank transactions. Use the 'Other money out' type and the 'Payment to initial creditor' category when you do this.

Entering other types of opening balances

Once you have edited your opening balances to reflect the money owed to you and the money that you owe at your FreeAgent start date, you should enter your other opening balances (if you have any). These might include accruals (credit code 660), prepayments (debit code 620) and money owed to HMRC for PAYE tax on staff wages (credit code 814).

If the debit and credit entries you've entered are equal to one another, your balance will read as ‘0’. If the two sets of figures do not balance, a suspense account (code 999) will automatically be created to reflect the difference.

When you've finished editing your opening balances, select ‘Save’.

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