Control Account Reconciliation

Follow some best practice guidance on how to reconcile your Sonovate transactions on your accountancy package

Who is this guide for

"Time and Fund" or "Total Funding" customers i.e. those who are using Sonovate timesheets and invoicing.

Introduction

This guide lays out some best practice that can be used to reconcile your accounts in relation to Sonovate.

1. Control Account Reconciliation – this ensures your bank account and Sonovate transactions are reconciled within your accountancy package.
2. Aged Debt Reconciliation – this ensures that the balance of the aged debt in your accountancy package matches the aged debt report that you receive from Sonovate

1. Control Account Reconciliation

Control Account Reconciliation (also known as bookkeeping) is the process by which you will ensure that your Sonovate sales, bill and payment transactions are reconciled with payments into your business bank account.

(This guide will show the process on Xero, however, it will work in a similar way on most common accountancy packages).

This approach involves running Sonovate as a bank account or “control account” in your accountancy system.

What you will need:

• Sonovate set up as a bank account (“control account”) in your accountancy system.
• A list of liability transactions for the period that you wish to reconcile. Your liability is the amount that you owe Sonovate at any one time. Once imported, these will be the “bank account transactions” in your Sonovate control account.
• Billing documents for the period you are reconciling (sales invoices, supplier self-bills and Sonovate fee bills).
• Cash allocations, which show how the Sonovate credit control team has allocated payments from clients.

Reconciliation steps

i. Setting up a control account:

• Create a “control account” in your accountancy software to manage your Sonovate transactions:
  • In Xero, browse to Accounting → Bank Accounts → Add Bank Account
  • Search for and select Sonovate
  • NB - Skip connecting the account automatically; automatic connection isn’t possible yet
  • Give the account a name, e.g. “Sonovate Control Account”
  • Select an account type and enter bank details. We recommend using the bank details of your Sonovate receipt account

 

 

 

ii. Uploading your transactions:

• Download your liability transactions from the Reports section of the Sonovate platform, for the period that you wish to reconcile. The following transaction types will be included:
  • Withdrawals
    • Supplier payments (to your workers and their companies). These will have a ‘MOPAYXXX’ reference that will match the self-bill invoice that we generated.
    • Margin payments. This is what would have actually been paid into your business account.
  • Sonovate fee payments. These will have a ‘SONOXXX’ reference that will tie to the Sonovate fee invoice.
  • Receipts. This is cash in from clients, as they pay off invoices. These will reduce your liability.

 

 

• Upload the liability transactions as a bank statement to the control account in your accountancy system

 

 

• Download your billing documents from the Reports section of the Sonovate system.
  
  

• Upload the invoices and bills from the Sonovate system for the period in question. The files produced by Sonovate are in a Xero-ready format. If you use another accountancy package, you will need to adjust the format accordingly.
  • Invoices (and any credit notes) for client transactions
  • Bills (and any credit notes) for supplier/worker transactions and Sonovate fee transactions

 

 

• Select the invoice file, and ensure that the “Tax exclusive” option is selected. Completing the import will create your Sales invoices in your system
• Do the same for the Supplier self-bills and the Sonovate fee bills

• Approve the bills

 

iii. Reconciling the account:

• All the transactions will then be available for reconciliation in your Sonovate control account
  • The liability transactions will be represented as “bank statement lines” to be reconciled in the left hand column. There are two types:
    • “Spend” transactions (Withdrawals and Sonovate fees)
    • “Received” transactions (Receipts/cash in from debtors)
  • The imported invoices and bills are here represented as “transactions in Xero” in the right hand column

 

• Go through each of the unreconciled control account bill transactions and match them to the transactions in your accounting system. There will be two types of bill:

Fees invoice paid SONOXXX	Sonovate bills (amount and reference will match)
Withdrawal MOPAYXXX	Supplier self-bills (amount and reference will match)

• For the margin payments, “Transfer” these to the business bank account that received that payment. Then from your business bank account, you will be able to match the actual payment to the transaction transferred from the Sonovate control account.

 

Sonovate control account

 

Business bank account

 

• Payments of invoices will show as cash in on the left hand side. These need to be matched to sales invoices on the right hand side. This will mark the invoices in your accounting system as ‘Paid’.

• Xero may help with auto-suggestions of matching invoices. However, to ensure consistency with the Sonovate platform, you should use the cash allocation report from the Sonovate platform, or the ‘Payment in’ screen, which will show payments from clients, and which invoices they were allocated to.

• Where invoices have been paid with credit notes, you will need to allocate the credit to the invoice in advance of this reconciliation activity.

 

2. Aged Debt Reconciliation

 

• After reconciliation up to a given date, the balance of the control account should match the value of the aged debt report downloaded from the Sonovate system for the same date. This can then be double-checked against an aged debt report run from your accounting system.