Interest on client money

What the register holds

Finance, Client account, Interest is the register of interest a bank credits to the firm's client accounts. Each record shows the Account, the Period the interest covers, the day it was Credited and the Amount, and each keeps the firm's policy as it stood when it was recorded. Filter the list by account.

On a pooled client account the record does not post a journal: the interest reaches the books when it is attributed, and until then it is explained on its line in the bank reconciliation (see Reconciling the bank). On a designated client account, one held for a single matter, the interest belongs to that matter whatever the firm's policy says, and recording it posts the credit to the matter's client ledger at once. Working out each matter's share of a pooled account's interest is not yet part of the system.

Record interest

1. Choose Record interest.
2. Choose the Client account the bank credited, and give the Amount, Period from, Period to and Credited on.
3. Add a Note if it helps, for example "Credit interest on the client call account".
4. Save.

The account must be one of the firm's client accounts, the amount more than nought, and the credited day not a day to come: interest is recorded once the bank has credited it. To fix a mistake, choose Correct from the record's row menu; the form then reads Correct interest.

The firm's policy

Under Settings, Accounting, Ledger settings, Interest on client money says who interest paid on a pooled client account goes to: Held for the clients (the default), Shared across matters pro rata or To the office account. The firm's lawyer should confirm which treatment applies under the Legal Profession (Professional Conduct and Etiquette) Rules, 2020 (L.I. 2423) before changing it from the default.

The report

The client account reports include a report of interest on client money: the interest the banks credited in a period, and where the firm's policy sent it. See Reports and the firm's figures.