Suspense
There are a number of scenarios that can cause suspense entries to be created within the software. We'll review them below and provide more information about each scenario. For the purposes of these descriptions, the word "suspense" refers to any owner's money held by the operator and not paid to them, or whenever an owner goes into deficit, because their expenses have exceeded the amount of revenue that they have earned.
Types of Suspense
The following items are the types of suspense that the software creates during normal processing. Depending on how owners and their interests are set up, some of these may not be applicable in all situations.
A global check amount is defined on the Edit> Preferences screen on the Check Printing screen. All owners are subject to that minimum, unless an amount is specified for them on the Owner Information screen, on the Codes tab. When an owner's total earnings for a run are below the minimum amount, their money is held, until such time as they earn enough money to exceed the set minimum amount.
When an owner's total earnings for a run fall below zero, they are placed into suspense as a deficit. Deficit owners owe the operator money, and can either pay off that balance, or the operator can cover that deficit for them, and apply it against any future revenue earnings.
Disbursement Frequency Suspense
On the Owner Information screen, an owner can be marked to get processed Monthly, Quarterly, Semi-Annually or Annually. A monthly owner gets processed every time a closing is done. The other frequencies get processed according to the Check Date used when closing a run. Quarterly owners will be processed when a closing is done with a date in March, June, September and December. Semi-Annual owners will be processed when a closing is done with a date in June and December. Annual owners are processed when a closing is done with a date in December. Any other time that a closing is done, any money for those owners will be placed into suspense, waiting to be released when a check date used during a closing matches their payment schedule.
Quarterly Wells - Some confusion often arises when dealing with quarterly wells. If you want either an owner or well to pay out quarterly, it is only necessary to mark EITHER the owner OR the well as being processed quarterly. Marking both the well and the owner as being quarterly can cause some unforeseen consequences. When you close a revenue run, you will be prompted whether you want to include Quarterly wells in the processing. Answering "Yes" to this question doesn't guarantee that the owners in that quarterly well will be processed, as they are still going to have their frequency checked to see whether they should be processed. An example of this would be answering "Yes" to that question for a quarterly well when closing with a date in January. The well will be processed, but any non-monthly owners will have their money placed into suspense, because the date doesn't match the date of their frequency. To repeat what was mentioned above: For quarterly processing, EITHER the well OR the owner needs to be marked as quarterly, but not both.
An owner can be set as being on hold on the Owner Information screen. When that happens, any money they earn during a closing for all their interests will be placed into suspense, until such time as they are taken off hold.
If just certain interests for an owner should be held, but not the entire owner, they can be set as being on hold on the Division of Interests screen. Any money earned for just the specified well will be held until such time as the interest is taken off hold.
Suspense Balances, Reporting and 1099s
At any point, various reports can be run that show all outstanding suspense. These are located under Reports> Suspense Reports. A report showing all types of suspense can be run, as well as reports for each of the types listed above.
The software tracks suspense balances both when they are put into suspense, and when they are released from suspense. Since these two pieces of data are stored with all suspense entries, it is possible to run reports and see what was in suspense at any point in the past, even if it is no longer there. This also allows us to accurately create 1099s for owners, even when there was suspense activity involved during the course of a year. The software will NOT include any money that was in suspense at the end of the year on 1099s. The money in suspense was not paid to the owner, so it should not be included on the totals reported on the 1099. Once the money is released from suspense, it will be reported on the 1099 for whatever year it was released into.
All suspense entries contain the full detailed information of the entries that make them up, so when suspense gets released (even after extended periods of being held), reports are able to show detailed information about the past data.
Owner suspense is reported as the type of suspense that applied to them as of a specific run. To understand this better, a simple example is needed. Owner A is in deficit for the first run of the year for $100. A suspense report for Cumulative Deficits as of the first run would show their total on it, and they would be reported as a deficit on their statement. During the second run of the year, they earned $110. While it covers their deficit, it leaves them below the minimum check amount (assume a minimum check amount of $20 applies in this situation). For the second run, they would be reported as a minimum on their statement, and their total would show on the Cumulative Minimums report. If a suspense report for the first run is re-printed, the owner would still show as a deficit, because at that time their total balance was negative. Be aware that an owner's suspense type can change during any given closing, but they are always reported as the type of suspense that applies to them at that point in time.
If an owner or interest is on hold, that setting takes precedence over any other type of suspense. For example, an owner who is on hold will always be reported as being on hold, even if their total earnings would normally put them into deficit or below minimum. When an owner is on hold, they are being held regardless of how much or how little money they are earning. The same applies to an interest that is on hold. Regardless of whether that interest is making or losing money, it's being held, and will be reported as such.
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