If we weren’t dealing with Legal Firms and more specifically Legal Trust Accounts there would be no need for “Anticipated Payments.” Legal Firms often receive money in advance into their General Trust Account which can be used for either direct payment of costs relating to the matter (eg.Barristers Fees) or for payment of the Legal Firms Invoices relating to that matter (providing they have a signed Cost Agreement in place and that they have given the client 7 days notice of their intention to withdraw fund from the clients trust account to pay their invoice ie. a Trust to Office Transfer).
The Regulations governing Legal Trust Accounts require that the Law Firm must have actually “Paid” any 3rd Party Disbursements before they are allowed to do a Trust to Office Transfer (TTOT). The reason for this is that some firms were writing cheques for the disbursements then putting them in a drawer for a couple of months but they were withdrawing the clients funds to pay their own invoice via a TTOT.
Therefore “Anticipated Payments” name for “Account Payable” that are specifically relating to Client Disbursements.
Accounting Treatment
Although LEAP Cloud allows you to monitor these accurately within the Matter in LEAP, the accrual does not flow through to wither Xero or MYOB with the Office Account Integration. Therefore if the Law Firm is reporting on an accrual or hybrid basis you would need to manually enter this adjustment at the end of the month to account for it in both your BAS and Management Accounts.