Trust accounting¶

This page is for the attorney or office manager who looks after client money held in trust. It covers how to record deposits and withdrawals, what each balance means and how it is worked out, and what Kosmos does not do for you.

Whose money it is¶

Every trust transaction is recorded against a client (a contact), never against a matter. A client has one trust balance, and all of that client's matters share it. If Elena Rivera has two matters, both show the same trust figures, and unbilled work on either one lowers Trust Available on both. Kosmos keeps no separate balance for a matter. To show which matter a deposit or withdrawal relates to, say so in Description.

Who can see and record trust activity¶

You need the Financial permission for the Trust tab and everything on it. Ask your administrator. Every user with that permission can record, edit, confirm and delete any trust transaction.

One trust figure is shown without that permission: Trust Available (Pending) on the time entry form, to every user who can open the matter. A contact's Trust tab needs the Financial permission like the rest. Low Trust Available (Pending) on the Dash is shown to administrators only.

The Trust tab¶

Click Invoicing in the sidebar, then Trust. The tab has three views: Summary, History and a single client's ledger.

Summary¶

Summary has one row for each client, 50 to a page.

Click the sort button beside any column except Client ID to sort by it, and again to reverse the order. The list starts sorted by client name. There is no search or filter on this view.

A client is listed while its Pending Balance or Confirmed Balance is not zero. A client whose money has all been paid out stays on the list until every one of its transactions is confirmed, then leaves it.

The Total row adds up every client in the list, not only the page shown.

History¶

History lists transactions for all clients, newest first, 50 to a page. It opens on 30 days. Click 60 days or All for a longer period. The columns are Client ID, Date, Client, Description, Method, Deposit, Withdrawal and C (confirmed). Pending Balance and Confirmed Balance under the table are for the whole trust ledger, whichever period is showing.

A client's ledger¶

Click a client's name on Summary or History. The ledger lists every transaction for that client on one page, oldest first, with Date, Description, Method, Deposit, Withdrawal and C. Under the table are the client's Pending Balance and Confirmed Balance. The client's name in the toolbar opens the contact.

Record a deposit¶

1. Click Invoicing in the sidebar, then Trust.
2. Click the plus button at the left of the toolbar, then Add Transaction.
3. Choose the Client and leave Type on Deposit.
4. Check the Date and Method, type a Description, enter the Amount and click Submit.

The form closes and the view refreshes with the new figures.

Good to know:

• To record a transaction for a client who is not in the Client list (one whose only matter is Pending, or a former client), open that client's ledger and add it there. If the client has no transactions yet, open the matter's Ledger tab and click the amount beside Client Trust Balance (Pending).

Record a disbursement or a refund¶

Kosmos has no separate types for a payment to a third party, a refund to the client or a transfer of earned fees. Each is a Withdrawal, and Description is where you say which.

1. Open the client's ledger and click the plus button, then Add Transaction.
2. Set Type to Withdrawal, fill in Date, Method, Description and Amount, and click Submit.

The withdrawal appears in the Withdrawal column and the balances drop.

Good to know:

• Kosmos does not compare a withdrawal entered here with the client's balance. A withdrawal larger than the balance is saved, and the balance then shows as a negative amount.

Pay an invoice from trust¶

This records a transfer from trust to your operating account in payment of an invoice. The invoice must be Sent or Deferred. See Invoicing for how to find and open an invoice.

1. Open the invoice and click + Trust beside its status. Add Payment opens with Payment method set to Trust and Detail set to the invoice number.
2. Check Date and Amount. Amount starts as what the invoice still owes.
3. Click Submit. Kosmos takes you to Payments.

Kosmos records two things together:

• A payment on the matter, with the date, method, amount and detail from the form. It is applied to the invoice, up to what the invoice still owes. An invoice paid in full becomes Paid.
• A trust withdrawal for the matter's client, with the payment's date and its whole amount. Its description is the payment's Detail, or "Payment" and the payment's number if Detail is empty. It has no method and is not confirmed.

Kosmos refuses the payment in two cases:

• The amount is more than the client holds in trust. The form says "The client holds $500.00 in trust, which is less than this payment.", with the client's own balance. The balance it checks is the client's Pending Balance, which counts deposits that are not confirmed yet.
• The matter has no client. The form does not open, and Kosmos says "This matter has no client, so there is no trust balance to pay from. Set the client on the matter first."

The rule follows the payment's method, not the button. A payment by Trust entered under + Card, or in Add Payment on the Payments tab, records the same withdrawal and meets the same checks. A payment by any other method records no withdrawal, even under + Trust.

The withdrawal stays linked to its payment. When you edit the payment, the withdrawal's date, amount and description change to match. When you change the payment's method to something other than Trust, or delete the payment, the withdrawal is deleted. See Edit or delete a payment.

Good to know:

• Voiding the invoice does not undo the payment. The payment stays on the matter, unapplied, and the withdrawal stays on the client's ledger. Delete the payment if the money is to count in the client's trust balance again.
• Make corrections on the payment, not on the withdrawal. If you try to edit or delete the withdrawal on the client's ledger, Kosmos refuses with "This withdrawal was recorded by a payment from trust. Edit or delete the payment (Invoicing, Payments) and the withdrawal follows." You can still mark it confirmed.

Pending and confirmed¶

Each transaction is either confirmed or not. Confirmed is a mark you set, meant for a transaction that has cleared the bank. Kosmos does not check it against anything. There is no separate "pending" mark: Pending Balance counts every transaction, and Confirmed Balance counts the confirmed ones only.

To confirm a transaction, click the box in the C column on History or the client's ledger, or set Confirmed to Yes in the form. Click the box again to undo it. The change is saved at once, with no question asked. It changes Confirmed Balance wherever that is shown. It does not change Pending Balance or Trust Available.

The three figures¶

For Trust Available, Kosmos takes the client's Pending Balance and subtracts, across all of that client's matters:

• What is owed on invoices. For each invoice that is not Draft or Approved: its total, less the payments and credits applied to it. Invoices marked Deferred, Void or Uncollectible are not subtracted.
• Work in progress. Time, expenses and flat fees that are not marked Comp and are either not on an invoice (and not marked Entered) or on a Draft or Approved invoice, less any discount on those invoices. Matters with Deferred Fee Arrangement set to Yes are left out of this part.

For example, Elena Rivera has $5,000.00 in trust. One sent invoice has $1,200.00 unpaid, and $800.00 of time on Rivera v. Northside Logistics is not billed yet. Her Trust Available is $3,000.00, on every one of her matters. A matter with no client shows $0.00.

Good to know:

• Trust Available counts deposits that are not confirmed yet. It can be higher than the money that has cleared.
• On Work in Progress, every matter of a client shows that client's whole balance. The Totals row counts each client once, so it can be less than the column added up.

Low-trust warnings¶

Kosmos warns by colour and by a list on the Dash. The warnings never stop you recording time, an invoice or a withdrawal. The one thing Kosmos refuses is a payment by Trust for more than the client's balance: see Pay an invoice from trust.

• Overview, Ledger and Summary: the trust available figure takes a warning colour when it is below 25% of the client's Pending Balance (under $1,250.00 for a $5,000.00 balance), and an alert colour when it is below zero. The colours depend on your theme.
• The time entry form: the figure takes the alert colour when it is below zero.
• The Dash: Low Trust Available (Pending) lists up to ten matters, lowest first, with negative figures highlighted. A matter is listed when it is Open and billable, has unbilled time or expenses, is not a deferred fee matter, has no Deferred invoice, and its client's Pending Balance is above zero with less than $1,000.00 available. Click a matter to open its Ledger.

Online trust deposits¶

If your firm takes payments online, click the plus button on the Trust tab, then Request Deposit, to email a client a link for a deposit. Without online payment the option is not shown. Payments covers the request itself.

When the client pays, Kosmos adds a Deposit to the client's ledger. Its Method is Card or ACH, and its description starts "Online trust deposit". It counts in Pending Balance and Trust Available at once. As a rule it starts unconfirmed, and Kosmos confirms it when the payment processor reports that the money has reached the trust bank account. Edit Transaction shows the processor's Transaction ID.

Good to know:

• If the payment is later returned and the deposit is still unconfirmed, Kosmos deletes the deposit. If the deposit was already confirmed, it stays in both balances, with a Returned badge beside its description on History and on the client's ledger. The money is not in trust: record the correction yourself. Either way, the deposit request goes back to Sent on the Requests tab.

Edit or delete a transaction¶

Anyone with the Financial permission can edit or delete any transaction, confirmed or not, including an online deposit.

1. On History or the client's ledger, click the transaction's Description. Edit Transaction opens with the same fields as Add Transaction.
2. Change the fields and click Submit. Or click Delete, then confirm "Are you sure you want to delete this record?".

A deleted transaction is gone from every list, balance and export. A contact that has trust transactions cannot be deleted. See Contacts.

Good to know:

• No screen shows who recorded, changed or deleted a transaction. Kosmos keeps that history internally, and the person who runs your Kosmos server can retrieve it.

Export the ledger¶

On History, click Download CSV. The file holds the whole trust ledger, whichever period is showing, oldest first, with Client ID, Date, Client Name, Description, Method, Amount, Type and Confirmed. Withdrawals are negative amounts, so Amount adds up to the Pending Balance of the whole ledger.

Trust on a contact and on a matter¶

A client's contact page has a Trust tab showing Confirmed Balance and Pending Balance, with View Full Trust Ledger to open the client's ledger. The tab is there only if you have the Financial permission. A contact with no transactions shows "This contact has no trust account activity."

A matter's Ledger tab shows Client Trust Balance (Pending) and Trust Available (Pending) beside the matter's own totals. Both are the client's figures, shared with the client's other matters. Click the balance to open the client's ledger. See Matters.