Interfund Transfers and Pooled Cash

Setting Up Interfund Transfers

 

Summary

 

Some organizations set up their Chart of Accounts as a pooled cash system, with all cash accounts residing in the same fund. Being that the organization's expense and revenue accounts reside in other operating funds, any journal entry that affects the cash account and the expense or revenue account would be out of balance by fund. Springbrook's Interfund Transfers functionality uses an additional set of accounts to keep these funds in balance.

 

There are two ways the system can be set up to balance this entry:

  1. Using a uniform Due To account in each of the operating funds and one Due From account in the pooled cash fund.
  2. Using a uniform Due To account in each of the operating funds and non-uniform Due From accounts in the pooled cash fund. For each operating fund, there would be one and only one Due From account for pooled cash that represents that operating fund’s claim on pooled cash.

 

Both of these options utilize the interfund transfers process. However, the set up and the GL effect of the two approaches are slightly different.

 

The system must be configured to utilize interfund transfers in the Accounts Payable module, General Ledger module, Payroll module, and System Wide Access module.

 

Related Links

 

Click here for information on the AP Setup window.

Click here for information on the PR Setup window.

Click here for information on the SS Setup window.

 

Step by Step

 

1     Set up the AP module.

 

  • Open the AP Setup window (AP> Utilities> Setup).
  • Check the Enable Interfund Transfers toggle on the General tab.
    • Confirm that the Mode field is set to Standard. Any other mode will not work properly with interfund transfers.
  • Enter the desired fund in the Clearing Fund field.
    • This is the interfund transfers cash account. All cash entries will be written to an account comprised of this fund and the bank account specified on the transaction.
  • Click here for information on the AP Setup window.

 

2     Set up the PR module.

 

  • Open the PR Setup window (PR> Utilities> Setup).
  • Select Interfund Transfers from the Mode drop-down menu on the General tab.
  • Enter the desired clearing fund in the Clearing Section 1 field.
    • This is the interfund transfers cash account. All cash entries will be written to an account comprised of this fund and the bank account specified on the transaction.
  • Click here for information on the PR Setup window.

 

3     Set up the SS module.

 

  • Open the SS Setup window (SS> Utilities> System Setup).
  • Open the Transfer Accounts tab.
  • Enter a Due To Account and a Due From Account or click the field labels to select the accounts from a list.
    • These accounts must be specified when Springbrook is initially being set up. If your organization uses a uniform due to and due from account, these are the accounts that will be used to balance funds.
  • If your organization does not use a uniform due to and due from account, you will need to specify the due to and due from accounts for each of the modules that utilize interfund transfers.
  • Click the Create icon to create a new account line item in the data grid.
  • Click the Ellipsis icon in the From Account section to select the due from account for the specified system.
  • Click the Ellipsis icon in the To Account section to select the due to account for the specified system.
    • As with the Due To and Due From accounts above, if one is specified the other must be specified as well in order to save.
  • Select a System from the drop-down menu. You must specify a system in order to save the due to and due from accounts.
    • Select AP if the due to and due from accounts are to be used in the Accounts Payable module processes.
      • The From Account for AP must be from the same fund as the Clearing Fund specified on the AP Setup window (AP> Utilities> Setup> General tab> Clearing Fund field).
      • Multiple due to and due from accounts can be specified for AP, but the From Account and To Account on each line item cannot be from the same fund. Each account specified as a To Account must be from a different fund as well.
    • Select CR if the due to and due from accounts are to be used in the Cash Receipts module processes.
      • Cash Receipts processes refer to all module processes that can be paid down in the Cash Receipts module. This includes all CIS (Customer Information Systems - Accounts Receivable, Building Permits, Business Tax, Cash Receipts, Licenses and Permits and Special Assessments) modules as well as the Utility Billing module.
      • Multiple due to and due from accounts can be specified for CR, but the From Account and To Account on each line item cannot be from the same fund. Each account specified as a To Account must be from a different fund as well.
    • Select GL if the due to and due from accounts are to be used in the General Ledger module.
      • The due to and due from accounts specified for GL will be used to balance manual journal entries for cash-related line items processed through the Journal Entries process. Click here for information on manual journal entries.
      • Multiple due to and due from accounts can be specified for GL, but the From Account and To Account on each line item cannot be from the same fund. Each account specified as a To Account must be from a different fund as well.
    • Select PR if the due to and due from accounts are to be used in the Payroll module processes.
      • Multiple due to and due from accounts can be specified for PR, but each account specified as a To Account must be from a different fund.
  • Click here for information on the SS Setup window.

 

4     Accounts Payable distribution example.

 

  • Below is an example of the AP Computer Checks distribution using a uniform Due To account in each of the operating funds and one Due From account in the pooled cash fund. The fund and account details in this example are:
    • Clearing Fund = 1100
    • Due To Account = -00000-111100
    • Due From Account = -00000-111100

 

Fund Account Debit Credit  
1100

1100-00000-111100

Due To / Due From Account

 XXX    
 

1100-00000-222222

Clearing Fund Cash Account

   XXX  
         
2200

2200-00000-5000000

Fund 2200 Payables Account

 XXX    
 

2200-00000-111100

Due To / Due From Account

   XXX  
         
3300

3300-00000-500000

Fund 3300 Payables Account

 XXX    
 

3300-00000-111100

Due To / Due From Account

   XXX  
         

 

  • Below is an example of the AP Computer Checks distribution using a uniform Due To account in each of the operating funds and non-uniform Due From accounts in the pooled cash fund. The fund and account details in this example are:
    • Clearing Fund = 1100
    • Due To Account = -00000-111100
    • Due From Accounts = 1100-00000-100001, 1100-00000-100002 and 1100-00000-100003

 

Fund Account Debit Credit  
1001

1001-00000-222222

Accounts Payable Account A

 XXX    
 

1001-00000-111100

Cash In Bank - Due To Account

   XXX  
         
1002

1002-00000-222222

Accounts Payable Account B

 XXX    
 

1002-00000-111100

Cash In Bank - Due To Account

   XXX  
         
1003

1003-00000-222222

Accounts Payable Account C

 XXX    
 

1003-00000-111100

Cash In Bank - Due To Account

   XXX  
         
1100

1100-00000-100001

Claim on Cash - Due From Account

 XXX    
 

1100-00000-100002

Claim on Cash - Due From Account

 XXX    
 

1100-00000-100003

Claim on Cash - Due From Account

 XXX    
 

1100-00000-999999

Cash Account set up on Bank

   XXX