Billing Negative Disbursements and Cost Recoveries

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Overview

ℹ️ Feature Availability: This functionality may not yet be available in every environment. Contact Efimis Support if the options described in this article are unavailable.

This guide explains how to bill negative incurred disbursements and negative Cost Recoveries, including invoices with positive, negative or zero totals.

Negative items may arise from:

Supplier credit: A credit passed back to the client.
Supplier refund: A refund received after a cost was incurred.
InfoTrack refund: A refunded search or service cost.
Correction: A valid adjustment that must be passed back to the client.

You can bill a negative item without adding a positive item simply to make the invoice balance.

Supported Transactions

Transaction	Supported
Negative incurred disbursement	Yes
Negative Cost Recovery	Yes
Negative anticipated disbursement	No
Positive and negative items on the same invoice	Yes
Invoice with a positive total	Yes
Invoice with a negative total	Yes
Invoice with a zero total	Yes

Negative anticipated disbursements are not supported. This functionality does not introduce or extend support for them. Existing anticipated-disbursement behaviour remains unchanged.

Common Scenarios

The following are common reasons for billing a negative item:

Scenario	What to do
A supplier gives the firm a credit or refund for a cost recorded against a matter	Add the open, unbilled negative incurred disbursement to the client’s next invoice
A Cost Recovery needs to be reduced or refunded	Add the existing negative Cost Recovery or create one while preparing the draft invoice
The negative item only reduces what the client owes	Finalise the invoice and collect the remaining positive balance normally
The positive and negative items cancel each other out	Finalise the zero-total invoice; Efimis automatically settles and closes it
The negative items are greater than the positive items	Finalise the negative invoice, then apply the credit with positive invoices, refund the client or write it off

For example:

Invoice items	Outcome
£1,000.00 fees and a -£200.00 disbursement	The invoice remains positive and the client pays £800.00, excluding any applicable tax
£200.00 fees and a -£200.00 disbursement	The invoice total is zero and Efimis automatically closes it
£100.00 fees and a -£300.00 disbursement	The invoice total is -£200.00 and the firm owes the client £200.00

Add a Negative Item to an Invoice

Add an Existing Negative Incurred Disbursement

Open the relevant Matter.
Create a new invoice or open an existing draft invoice.
In the invoice Items section, select Add Unbilled.
To choose a specific item, select Select Unbilled → Disbursements.
Select the negative incurred disbursement and add it to the invoice.
Review the amount, tax treatment and resulting invoice total.
Select Finalise or Finalise and Send when the invoice is ready.

A negative incurred disbursement must be billed in full. Efimis will not allow you to part bill it.

Add a Cost Recovery

You can add an existing Cost Recovery or create a new one from the draft invoice.

To add an existing Cost Recovery:

Select Add Unbilled.
Select Select Unbilled → Cost Recoveries.
Select the required item and add it to the invoice.

To create a new Cost Recovery:

Select Add New → Disbursement.
Choose Cost Recovery.
Enter the required details and save the item.

Cost Recoveries cannot be part billed and must be included for their full remaining amount.

Billing Rules

Full amount: A negative incurred disbursement must be billed once and in full. Cost Recoveries also cannot be part billed.
Preventing duplicate billing: After an item has been included on an invoice, it cannot be billed again unless it is released by unfinalising the invoice.
No matching positive item needed: You can bill a negative item on its own. It does not need to be grouped with a positive item.
Tax: The billed item retains its applicable tax code and rate. A Cost Recovery uses the applicable billing tax code.

What Happens When the Invoice Is Finalised?

Invoice total	What happens	What to do next
Positive	The negative item reduces the amount the client owes.	Record an Office Receipt for the remaining positive invoice balance.
Negative	The firm owes the client money.	Use the credit while recording a receipt against other positive invoices for the same client, pay the client using Refund Invoice, or write off the credit where appropriate.
Zero	The positive and negative items cancel each other out.	No further action is required. Efimis automatically settles and closes the invoice.

Positive Invoice Total

Where the invoice remains positive:

Reduced balance: The negative item reduces the amount the client must pay.
Amount payable: The client pays the remaining positive balance.
No separate receipt: The negative item is not treated as money received and does not create its own Office Receipt.
Normal collection rules: Standard receipt and allocation rules continue to apply.

Example

Invoice item	Net	Tax	Gross
Professional fees	£1,000.00	£200.00	£1,200.00
Negative incurred disbursement	-£200.00	-£40.00	-£240.00
Cost Recovery	£50.00	£10.00	£60.00
Invoice total	£850.00	£170.00	£1,020.00

The client pays the remaining invoice total of £1,020.00.

Negative Invoice Total

Where the negative items are greater than the positive items, Efimis creates a negative invoice.

The transaction remains an invoice; it does not become a Credit Note. Its outstanding negative balance represents an amount the firm owes to the client.

For example:

Invoice item	Amount
Professional fees	£100.00
Negative incurred disbursement	-£300.00
Invoice total	-£200.00

The firm now owes the client £200.00. You can:

use the £200.00 credit when recording a receipt against one or more positive invoices belonging to the same client
pay the £200.00 directly to the client using Refund Invoice
write off the outstanding credit where appropriate

The invoice may be settled partially or in full. Positive fees are recognised as collected when settlement is applied using the normal allocation order.

Negative invoices do not appear in Pending Transfers.

Zero-Total Invoices

An invoice whose total including tax is £0.00 can be finalised. The subtotal and tax do not need to equal zero individually.

Automatic settlement: The invoice is settled and marked Closed when issued.
No manual allocation: Efimis records an internal non-cash settlement. The invoice cannot be selected in Cash Allocation or manually receipted.
No bank movement: No Office Receipt, Office Payment or bank transaction is created.
General Ledger: Every non-zero invoice component is posted to its relevant General Ledger account.
Fee collection: Positive fees are collected immediately when the invoice is issued.
Unfinalise: A zero-total invoice can be unfinalised, subject to the normal controls. Efimis reverses its automatic settlement and associated fee collection so the draft can be corrected and finalised again.

Example

Invoice component	Amount
Professional fees	£1,000.00
Tax on fees	£200.00
Non-taxable negative incurred disbursement	-£1,200.00
Total payable	£0.00

Managing a Negative Invoice

Choose How to Settle a Negative Invoice

What you need to do	Method to use
Use the credit to reduce the cash the client must pay against other positive invoices	Select the positive and negative invoices together and use Record Receipt
Pay the outstanding credit directly to the client	Select Refund Invoice to create an Office Payment
Remove a credit that will not be refunded or used against another invoice	Use Write Off

Settle Positive and Negative Invoices Together

Use this process when the same client has both positive and negative invoices and is paying the difference.

For example, the client has:

Invoice	Amount
Positive invoice	£1,000.00
Negative invoice	-£200.00
Cash the client needs to pay	£800.00

To record the payment:

Navigate to Invoices → All Invoices.
Select the positive and negative issued invoices.
Select Actions → Record Receipt.
Enter the £800.00 received from the client.
Review the invoice allocations:
- £1,000.00 is applied to the positive invoice.
- The £200.00 credit from the negative invoice reduces the amount of cash required.
Confirm that the total being allocated matches the £800.00 received.
Post the receipt.

Efimis records an allocation against each selected invoice. The negative invoice does not create a separate receipt; it reduces the amount the client needs to pay.

A negative invoice cannot be selected by itself when recording a receipt because an Office Receipt must have a positive value.

Cash Allocation Rules

Same client: All selected invoices must belong to the same client.
Different matters: The invoices can belong to different matters for that client.
Separate invoice allocations: Efimis records an allocation against each selected invoice. It does not directly allocate one invoice against another.
Amount received: The value of the positive invoices, less the available negative invoice credit, must equal the positive amount of cash received.
Negative invoice credit: The credit reduces the amount the client needs to pay. It does not create a separate Office Receipt.
Allocation order: The normal allocation order continues to apply. For the items covered in this guide, Efimis allocates to Disbursements, then Cost Recoveries, then Fees.
Reversal: Reversing the receipt reverses all the associated invoice allocations together.
Partial payments: If the client is only paying part of the balance, adjust the amount against each invoice. Enter a positive amount against a positive invoice and a negative amount against a negative invoice.
Outstanding balances: The amount entered against an invoice cannot be more than its outstanding balance.
Positive receipt: After taking the negative invoice credit into account, the total Office Receipt must still be greater than zero.
Currency and journal: The selected invoices must meet the existing currency, Office Journal and invoice-matching rules.

Refund a Negative Invoice

Use Refund Invoice when the firm is paying the outstanding credit directly to the client.

For example, if the invoice has an outstanding balance of -£200.00, create an Office Payment for £200.00. Enter the payment as a positive amount; do not enter a minus sign.

To refund the invoice:

Navigate to Invoices → All Invoices.
Locate the issued negative invoice.
Open the invoice actions and select Refund Invoice.
On the Create new payment screen, check the Pay from account and Pay to details.
Select the required payment method.
Enter the Posting date. This cannot be earlier than the invoice date.
Enter a Payment number, or leave it blank for Efimis to assign one automatically.
Enter a Reason.
Review the invoice allocation and enter the amount being refunded as a positive value.
Post the payment.

Efimis automatically applies N-T with zero tax to the invoice refund allocation.

The payment can be for part or all of the outstanding credit, but it cannot be greater than the invoice’s outstanding negative balance.

Efimis creates an Office Payment in the Cashbook and allocates it against the negative invoice. When the invoice is fully refunded, it is marked Closed.

The user must have permission to post an Office Payment.

Unfinalise a Refunded Invoice

A negative invoice can be unfinalised, subject to the normal invoice controls.

If the invoice has been refunded through an Office Payment:

Locate and reverse the associated Office Payment.
Confirm that the refund allocation has been removed and the invoice’s outstanding negative balance has been restored.
Return to the invoice.
Select Unfinalise.
Correct the draft invoice.
Finalise it again when it is ready.

Efimis will not allow the invoice to be unfinalised while an Office Payment refund remains allocated.

A fully refunded negative invoice is marked Closed. Reversing the Office Payment restores its outstanding balance and returns the invoice to a state where it can be unfinalised.

Write Off a Negative Invoice

Use a write-off when the outstanding credit will not be refunded or applied against another invoice.

Navigate to Invoices → All Invoices.
Locate the issued negative invoice.
Open the invoice actions and select Write Off.
Enter a negative write-off amount, up to the invoice’s outstanding negative balance.
Complete the required date and reason information.
Post the write-off.

The write-off creates a debit on the Office Ledger, which is the opposite direction to the write-off of a positive invoice.

If the write-off is reversed, the invoice returns to Issued and its outstanding credit balance is restored.

Existing write-off permissions, accounting-period controls and reversal rules continue to apply.

Effect on Fee Collection

The amount of fees treated as collected can be greater than the cash received because a negative item reduces the amount the client needs to pay.

For example, an invoice contains:

Invoice item	Amount
Professional fees	£1,000.00
Negative incurred disbursement	-£200.00
Amount payable	£800.00

If the client pays £500.00, Efimis takes the £200.00 negative disbursement into account when applying the settlement. As a result:

£700.00 of the fees is treated as collected
£300.00 remains outstanding
the client has paid £500.00 in cash

This allows the negative disbursement to reduce the amount payable without incorrectly reducing the positive fees treated as collected.

Accounting Behaviour

The exact tax postings depend on the item’s tax treatment and the firm’s configuration.

Item	Accounting behaviour
Negative incurred disbursement billed	Debits Disbursement Control, reversing the normal billing credit.
Tax when the negative incurred disbursement is posted	Credits Tax Paid where tax applies.
Tax when the negative incurred disbursement is billed	Debits Tax Collected where tax applies.
Negative Cost Recovery billed	Debits the configured Cost Recovered account and debits Tax Collected where tax applies.
Negative invoice total	Creates an Accounts Receivable credit balance owed to the client.
Zero invoice total	Creates no Accounts Receivable movement while retaining all non-zero component postings.

Efimis retains the tax code and tax rate recorded against the billed negative item. For a Cost Recovery, this includes the applicable billing tax code.

Audit and Reporting

Efimis retains an auditable record of the transaction through:

Issued invoice: The negative item and its tax treatment remain visible.
Ledger records: The invoice and underlying matter transactions remain traceable through the applicable ledger entries.
General Ledger: The relevant control, recovery and tax movements are retained.
Settlement history: Cash Allocations, Office Payments and reversals remain linked to the invoice.
Collection reporting: Fee-collection values reflect the amounts applied when the invoice is settled.
Zero-total invoice reporting: Fees collected mirror the fees billed when the invoice is issued.

Zero-total invoice fee collection is reflected in:

Invoice Collection Report
Fee Analysis Pivot
Referral Fee Analysis
Fee Earner Performance

Existing Controls

The normal controls continue to apply, including:

Invoice finalisation permissions
Cash Allocation and Office Receipt permissions
Office Payment permissions
Write-off and reversal permissions
Invoice unfinalisation controls
Locked accounting periods
Client-paid item restrictions
Tax configuration and validation
Split-billing rules
Currency, journal and regional restrictions
Invoice and settlement audit history

Historic postings and collections are not recalculated when this functionality becomes available.

Key Behaviour Summary

Area	Behaviour
Negative incurred disbursement	Can be billed once and in full.
Negative Cost Recovery	Can be included on an invoice and cannot be part billed.
Negative anticipated disbursement	Not supported.
Positive invoice	Negative items reduce the amount payable.
Negative invoice	Remains an invoice and creates a credit owed to the client.
Zero-total invoice	Automatically settles and closes when issued.
Cash Allocation	Positive and negative invoices can be settled together for the same client.
Client refund	Creates an Office Payment in the Cashbook.
Fee collection	Recognised as settlement is applied; zero-total invoices collect fees when issued.

Troubleshooting

Issue	What to check
The negative incurred disbursement is unavailable.	Confirm that it belongs to the correct matter and remains open and unbilled.
Efimis will not accept a partial amount.	Negative incurred disbursements and Cost Recoveries must be billed in full.
The negative invoice is missing from Pending Transfers.	This is expected. Negative invoices are excluded from Pending Transfers.
Refund Invoice is unavailable.	Confirm that the invoice is issued, has a negative outstanding balance and the user has permission to post an Office Payment.
A negative invoice cannot be included in Cash Allocation by itself.	This is expected because an Office Receipt must have a positive value. Use Refund Invoice instead.
A zero-total invoice cannot be receipted.	This is expected. It is automatically settled and closed when issued.
The negative invoice cannot be unfinalised.	Check whether an Office Payment refund remains allocated. Reverse the associated Office Payment before unfinalising the invoice.

Best Practices

Validate the source: Confirm that the transaction represents a genuine refund, credit or correction.
Check tax: Review the applicable tax code and rate before finalising the invoice.
Review the total: Confirm whether the final invoice will be positive, negative or zero.
Choose the correct settlement method: Decide whether to use Cash Allocation, Refund Invoice or Write Off.
Review postings: Check the resulting ledger and General Ledger entries.
Check reporting: Confirm that invoice balances and fee-collection values appear correctly.