Clearing Account | Why Your Ecommerce Accounting System Needs This

Рет қаралды 17,786

6 жыл бұрын

This video talks about clearing accounts - what they are and why you need them. You may already be familiar with the concept of a clearing account if you’ve used Undeposited Funds in QuickBooks. For ecommerce businesses, the concept is the same. If you have made sales with a shopping cart with the deposit in transit, you don’t want the individual transactions cluttering up your bank account. These transactions should live in their own clearing account for easier identification and reconciliation.
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Пікірлер: 61

@AcuityEcommerce 6 жыл бұрын

Thanks for watching my video! What accounts do you use clearing accounts with (or should!)?

@OctaveZangs 5 жыл бұрын

Thanks for this video! Would you recommend this method over the one Xero suggests (creating a Current Asset account)?: central.xero.com/s/article/Reconcile-payments-received-from-online-sales-AU-UK-US-GL

@AcuityEcommerce 5 жыл бұрын

Yes. The reason why I prefer using a bank account is because you can import transactions directly into the account. You can't do that with a current asset account, so their way is less flexible.

@jeffreymorgan6975 4 жыл бұрын

Thank you! I just found this video, I'm helping a friend with his Trucking company ans the Accountant said to set up a Bank Clearing account and I had no idea what he meant. I appreciate the explanation.

@AcuityEcommerce 4 жыл бұрын

So glad this helped you! :)

@lauraprater2300 2 жыл бұрын

Thank you for this incredibly easy to understand explanation and walk-through of why and how to set up and use a clearing account. Wow! It only took 6 minutes. Amazing. :)

@AcuityEcommerce 2 жыл бұрын

Glad it was helpful!

@erwinsigua1831 Жыл бұрын

Hi, nice video. Just want to ask, for example Shopify. How do you set it up that the invoices will go into that clearing account?

@karenswartz3491 Жыл бұрын

Love the videos so far - I'll be watching more (subscribed!) I've inherited Clearing Accounts that were set up as Current Asset accounts. I need to be able to use them because our e-commerce is like a twisted tree of feeds. Should I export the transactions in these accounts and set up/import them as new bank accounts or is there some way to convert them? The idea of journal entries to clear the "Clearing Accounts" seems crazy!

@AcuityEcommerce Жыл бұрын

You can use a clearing account as a current asset account too... it's just a bit harder to manage sometimes. If it's really twisted, I'd probably export them just so I can unravel everything in a spreadsheet and see what's going on. Understanding that is usually the hardest part. Then going forward, as long as everything is connected properly, you'll understand the feeds better and be better able to manage everything. Thanks for subscribing!

@upanbyudesign5323 3 жыл бұрын

Thanks for that.

@AcuityEcommerce 3 жыл бұрын

You're welcome

@JamieHarrisonGuitar 4 жыл бұрын

Hey! Thanks for the great video! I was just wondering, if you are using a Paypal feed, but sending all wesbite sales transactions to a clearing account (because using stripe as well etc), do you need to reconcile each individual payment in your paypal and stripe bank feed as a transfer as well? Or does this seem like the wrong way to do it? Thanks so much for the great content -I'm learning a lot :)

@AcuityEcommerce 4 жыл бұрын

Trick question. Yes, you need to reconcile what gets received in your bank account against the sales that are made, but you don't have to do it transaction by transaction.

@JoeleneMann 2 ай бұрын

Do you have an example for Expensify clearing account?

@tagliollc3081 6 жыл бұрын

When you say that one of the best uses for a clearing account is for Paypal accounts, I imagine this works equally well for Square transactions too.

@AcuityEcommerce 6 жыл бұрын

Yep! And honestly, most payment processors. That's why it's so important for ecommerce businesses... this is the meat of their accounting transactions.

@leannep1044 3 жыл бұрын

Hi, Thanks for your detailed video. Would this work just as effectively where I use external Practice Management software to record my daily sales outside of xero? Somehow I need to get my daily or weekly sales figures from the PM software entered into Xero (it doesn't integrate). Then this needs to be reconciled with all the different payments that appear in the bank account. eg Merchant settlements, Paypal, cash & cheques deposited, direct EFT by clients etc. ?

@AcuityEcommerce 3 жыл бұрын

Yes! In fact that's exactly the concept that A2X (one of my favorite tools) is built on. They take Amazon, Shopify, eBay, etc. data and summarize it outside of the accounting system & push one or two invoices (depending on whether the transactions span multiple accounting periods) into Xero (or QuickBooks Online). You have all the detail in A2X, but it doesn't clutter up or overwhelm your accounting system and still allows you to reconcile the money that hits your bank.

@leannep1044 3 жыл бұрын

@@AcuityEcommerce Thanks so much for your quick response and guidance.

@WendyYing 5 жыл бұрын

Thank you for this great info. I am trying to do this with square but I can't figure out how to manage the bank feeds to change the transactions from coming into my bus bank account to my fake square bank account.

@AcuityEcommerce 5 жыл бұрын

I'm glad you liked the video. Take a look at Organization Settings / Payment Services and look at how you set up the Square integration. I suspect you'll find the Payment Account is pointing to your business bank account instead of the fake Square bank account. Just Edit & change. :) I hope this helps!

@WendyYing 5 жыл бұрын

@@AcuityEcommerce Thank you so much !

@mrki731 5 жыл бұрын

Hello, do you have to do this for shopify and amazon if you sell on both? Thx

@AcuityEcommerce 5 жыл бұрын

Not for Amazon because A2X helps with that. But yes for Shopify plus other channels.

@mrki731 5 жыл бұрын

Catching Clouds Academy Great, thank you very much for your awesome videos and precious advice!

@hailengoc6545 3 жыл бұрын

Can I ask why the clearing account has the bank statement like the in the checking account. Thank you,

@AcuityEcommerce 3 жыл бұрын

If you set up the clearing account as a bank account, you can import data into Xero. You can also set it up as a current asset, but then you won't be able to import data. We use both methods in different circumstances.

@hailengoc6545 3 жыл бұрын

@@AcuityEcommerce oh get it. I set up the clearing account as a bank account with the same account number as my checking account, right?

@hanschauhan8219 3 жыл бұрын

@@AcuityEcommerce hi patty, would you please answer me. What is difference if clearing account is fake bank account or current asset account.?

@ahctmp Жыл бұрын

We are a small non-profit so I don't want to add to our expenses by signing up for A2X or similar companies. I set up a clearing account where I can store my Amazon sales until Amazon sends the payment to my checking account. How do I then reconcile the Amazon sales in my clearing account?

@AcuityEcommerce Жыл бұрын

Amazon is notoriously difficult to reconcile without a third-party tool like A2X. You can get close by using the summary disbursement statements (you can pull reports in your Amazon account), but they don't split out sales & fees by month, so you end up with month-to-month data that doesn't allow you to review trends accurately. It's so much trouble, I feel like A2X is worth every penny.

@ahctmp Жыл бұрын

Thanks for your reply. I do understand what you write. However, when I watched your video about using the Clearing account, all the transactions were unreconciled before you transferred the Amazon payment to the bank account. After the transfer, the individual transactions showed as being reconciled. I was wondering how the individual transactions became reconciled.

@talmageandchenoa 6 ай бұрын

How do I get my afterpay payments from shopify to match xero?

@AcuityEcommerce 6 ай бұрын

Sales from a payment processor will also have associated fees. You probably still need to post those to get the deposits to match in Xero. :)

@talmageandchenoa 6 ай бұрын

Thanks for replying. Should I manually create these payments to match and add the fees myself? I was wondering if I need to create a clearing account @@AcuityEcommerce

@AcuityEcommerce 6 ай бұрын

Probably, but I wouldn't know for sure without looking.

@Barketdotcom 5 жыл бұрын

I've setup clearing accounts in wave accounting, which are working fine, but I am ending up with double counted sales in my cashflow statement, as the transfers are being accounted for as sales. Is this just a wave specific issue or would this happen in Xero too?

@AcuityEcommerce 5 жыл бұрын

Sorry - I don't use Wave, so I don't know but it sounds Wave-specific.. I haven't noticed that problem in Xero.

@Barketdotcom 5 жыл бұрын

@@AcuityEcommerce Okay thanks - will speak to wave

@upspace 4 жыл бұрын

@@Barketdotcom did you get an answer to this? I am also trying to use Wave and set up a clearing account

@Barketdotcom 4 жыл бұрын

upSpace hi, do you mean the double counting issue on the cash flow statement, or just how to setup the clearing accounts?

@upspace 4 жыл бұрын

@@Barketdotcom just setting up the accounts. - did you just create an account "money in transit"?

@JCLPAA 3 жыл бұрын

Is this clearing account neccessary in 2021 considering PayPal separates the fees in the bank feed?

@AcuityEcommerce 3 жыл бұрын

I'd say it depends on the transaction volume. If you're talking a handful of transaction per month, it's no big deal, but if you've got thousands... umm, yeah. You want the clearing account. ;)

@JCLPAA 3 жыл бұрын

@@AcuityEcommerce Your videos have been extremely helpful as I teach myself how to integrate PayPal and QuickBooks. Setting up and properly using the clearing account has been challenging. I really appreciate u taking time to respond.

@Jen-xm9bp Жыл бұрын

Whats the best bank or platform to open up a clearing account? A credit union? quickbooks? and answer would be very much appreciated.

@AcuityEcommerce Жыл бұрын

Clearing accounts are fictitious "bank" accounts in your accounting system, so whatever system you're using (Xero, QuickBooks, etc.) is the answer.

@mista625 5 жыл бұрын

At 3:35 you show the AR account (Clearing Account) but you don't mention how to go about reconciling all of those individual transactions that got pulled in from the 3rd party that have individual sales order details. Your screenshot shows them as already reconciled but you don't talk about how you did that. What do we do with those transactions? In your video, it shows that you have about 40 of them.

@AcuityEcommerce 5 жыл бұрын

See if this video helps you see what's going on here. kzfaq.info/get/bejne/m9-pl9tpnZy2noE.html If not that one, this one might help too: kzfaq.info/get/bejne/p8iSbNSZm5qdlWg.html

@blackknight22 3 жыл бұрын

@@AcuityEcommerce hey do you have a video on how to setup a at clearing account?

@zayrabuergo6625 2 жыл бұрын

hello , i want to ask if that fake bank account for clearing account it doesn't reflect to the report in BS?

@AcuityEcommerce 2 жыл бұрын

I'd argue that if there's a balance, it should be reflected on the BS (just like an Undeposited Funds account would).

@raizen8270 2 жыл бұрын

@@AcuityEcommerce thank u 😊

@BoxerDogs 3 жыл бұрын

What is the difference between a clearing account vs. undeposited funds account?

@AcuityEcommerce 3 жыл бұрын

No difference except that all undeposited funds accounts are clearing accounts but not all clearing accounts are undeposited funds accounts. ;) But in practice - they are identical.