Legalsense has the ability to track the payment status of sent invoices. This allows the finance department, as well as other users such as the lawyers involved, to gain insight into the payment status of the billing. For example, unpaid invoices will be highlighted in red in the invoice overview and reports will show which debtors are overdue with payments.
Link to payments from the bank
The integration of Legalsense with an accounting system offers the possibility to have the payment status information flow back from the accounting system.
The default way of keeping track of the payment status of an invoice in the accounting system is to use debit. Legalsense then tracks the debit in the accounting system and adopts the payment status when synchronizing (a number of times per hour) with the accounting system, always based on the debits made in the accounting system.
In order for an invoice to be considered paid, basically 3 conditions must be met:
- The booking entry must be finalized in the accounting system;
- The booking must have been debited to a payment account. As a rule, this is the bank;
- The entry against which the invoice has been set must be finalized.
Details of the created payment
If the conditions as described above are met, a payment is created with the following properties:
- The payment has the same date as the bank entry in the accounting system;
- If a manually entered payment in Legalsense was found with the same amount as the payment in the accounting system, this will subsequently be linked to the accounting system payment;
- the description of he payment is 'Automatically created based on payment in accounting system'.
Corrections based on 'outstanding amount'
Under certain circumstances, Legalsense may not be able to derive all the correct data from the accounting system. This can happen, for example, when the entries have been written off but not finalized. Or when the entries have been made in a different journal than the bank. In such cases, Legalsense will still attempt to provide the most recent reflection of the status. The details are as follows:
- The value on the accounting system entry line to which Legalsense is looking to reconcile in this case is 'outstanding amount';
- An exact date of the payment cannot be derived; therefore, the date of when Legalsense noted that the payment had been made is used as an alternate date;
- The payment gets the description 'Automatically created based on accounting system status to correct a difference in 'open amount'';
- For invoices marked as 'Ignore Payment Status' this correction is never made;
- Only a single payment of this type is always created;
- Such payments can sometimes already be recognized by Legalsense, even before all corresponding entries have been finalized. (In particular: even before the bank entry is finalized).
(In a limited number of cases this method of correction is disabled. This is only the case if it has been decided in consultation with Legalsense).
In certain cases it can be convenient to make manual adjustments to the payment status in Legalsense. For example, if an error that has already been finalized has crept into the accounting system and has been corrected in a way that Legalsense cannot automatically recognize (e.g. through a memo entry). The following warnings apply:
- As a rule, the possibility of manual adjustments to the payment status is turned off in the case of an automatic integrations, in order to avoid confusion. Please contact Legalsense to have the option activated;
- Only manually adjust the payment status to adjust payment statuses that will not be entered into the accounting system at a later date. In that case you run the risk of 'double synchronization', whereby the invoice is marked as paid twice in Legalsense. Technically Legalsense will try to detect such double synchronizations (as described above), but this will not always be possible;
- Manually discarding the automatically created payments in essence has no lasting effect. This is because Legalsense recognizes the status in the accounting system on the basis of which the payment was initially created, and will create it again. It is better in this case to enter a separate payment (possibly with reverse sign); that will never be deleted by Legalsense.