Accounting ▸ Disbursements

This page explains the Accounting ▸ Disbursements view inside the Matter detail page, and — importantly — the accounting behind the two kinds of recoverable client cost. The Matter detail page is a two-level tab strip; see Matter detail for the parent overview.

A disbursement is a cost you incur on a client’s behalf and intend to recover when you bill the matter. Athenty distinguishes two kinds, and they’re accounted for very differently.

Hard costs vs. soft costs

	Hard cost	Soft cost
What it is	Real cash leaves the firm — a vendor invoice paid, a registration or search fee, a courier	An in-house charge where no cash leaves the firm — photocopies, printing/scanning, internal mileage at a set rate
Comes through	Accounts Payable (a vendor bill)	Entered directly on the matter as an estimated, billable item
On the ledger before billing	A recoverable asset in 1210 Client Disbursements Recoverable	No journal entry at all — it’s only a billable WIP estimate
Shows on Unbilled Recoverable	Yes — and the total ties to your 1210 balance	Yes — but flagged “estimated, no GL”

The intuition: you can only capitalize a cost you actually paid. A hard cost is money you advanced, so it sits as an asset until the client repays it; a soft cost is just an internal rate you haven’t spent cash on, so there’s nothing to capitalize until you bill it.

How each posts

Hard cost — when the vendor bill is paid

A matter-allocated line on a vendor bill posts:

DR 1210  Client Disbursements Recoverable   (the cost, pre-tax)
DR 1290  HST/GST Receivable (ITC)           (the input tax you paid the vendor)
   CR 2000  Accounts Payable                (bill total = cost + tax)

The cost lands in the 1210 asset (you’re owed it by the client); the tax the firm paid the vendor lands in 1290 as an Input Tax Credit (see Tax & ITCs below).

Soft cost — when entered

Nothing posts. It sits only as an estimated billable item and appears on Unbilled Recoverable until billed or written off.

Billing — when it’s invoiced to the client

On the client invoice (via generate from WIP or a manual line):

• Hard cost: the 1210 asset is cleared at cost into Accounts Receivable. Any markup above cost is revenue (4200); billing below cost writes the shortfall down (5950).

  DR 1200  Accounts Receivable
  DR 5950  Disbursement Write-downs          (only if billed below cost)
     CR 1210  Client Disbursements Recoverable   (clears the asset, at cost)
     CR 4200  Disbursement Recovery & Markup     (markup above cost, if any)
     CR 2200  HST/GST Payable                    (output tax on the recovery)

• Soft cost: there’s no asset to clear, so the whole amount is recovery revenue.

  DR 1200  Accounts Receivable
     CR 4200  Disbursement Recovery & Markup     (full amount)
     CR 2200  HST/GST Payable                    (output tax on the recovery)

Example — a $50 charge: as a soft printing charge, nothing posts when entered; when billed, DR 1200 $50 / CR 4200 $50 (+ tax). The same $50 as a hard courier cost instead clears the $50 sitting in 1210 rather than creating fresh revenue.

Tax & Input Tax Credits (ITCs)

Tax flows in two directions, and the firm nets them against each other.

1. Input tax (what you pay a vendor on a hard cost). This is an Input Tax Credit — recoverable from the CRA — so it debits 1290 HST/GST Receivable regardless of the line’s tax rate. You recover the pre-tax cost from the client (1210 holds the cost net of tax).
2. Output tax (what you charge the client on the recovery). When you bill the cost back, you charge GST/HST on the recovery and credit 2200 HST/GST Payable (the tax-rate’s own GL).

Net to the CRA = output tax collected − ITCs claimed. You charged the client tax on the recovery, you reclaimed the tax you paid the vendor, and you remit the difference. Soft costs carry no input tax (no vendor was paid), so they only generate output tax on the recovery.

Agency disbursements. Some costs are paid as the client’s agent (e.g. certain government fees that carry no GST, or where the firm doesn’t claim the ITC). Those should pass through tax-included with no ITC and no output tax. Athenty supports this: every hard/soft cost lets you manually enter or override the tax amount (set it to zero for a true agency pass-through). The default model above is the non-agency treatment, which fits most recoverable disbursements.

All disbursement tax rates are configured under Settings ▸ Accounting ▸ Tax Rates (rates flagged applies to disbursements); the matter’s default rate pre-fills and remains overridable per line.

Where to see it

• Unbilled Recoverable (under A/R Reports) — every hard/soft cost not yet billed.
• The matter’s Billings sub-tab turns these into invoice lines.
• Settings ▸ Accounting ▸ Reports ▸ GL Drill-Down — trace the 1210 / 1290 / 4200 / 2200 / 5950 postings.