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
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.
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.
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. :)
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 :)
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.
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!
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!
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
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. ?
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.
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.
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.
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!
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.
See if this video helps you see what's going on here. th-cam.com/video/eyydx886RnM/w-d-xo.html If not that one, this one might help too: th-cam.com/video/qbb9qh649e4/w-d-xo.html
The issue with this video is you would say you did something, but wouldn't show how. Like at 3:30, you say: What I have done is setup a sync. But you don't show how you did this. And I have noticed this in other videos as well, you just say you did something.
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?
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.
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.
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. ;)
@@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.
Yep! And honestly, most payment processors. That's why it's so important for ecommerce businesses... this is the meat of their accounting transactions.
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.
Thanks for watching my video! What accounts do you use clearing accounts with (or should!)?
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
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.
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.
So glad this helped you! :)
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. :)
Glad it was helpful!
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?
Do you have an example for Expensify clearing account?
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 :)
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.
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!
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!
How do I get my afterpay payments from shopify to match xero?
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. :)
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
Probably, but I wouldn't know for sure without looking.
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. ?
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.
@@AcuityEcommerce Thanks so much for your quick response and guidance.
Can I ask why the clearing account has the bank statement like the in the checking account.
Thank you,
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.
@@AcuityEcommerce oh get it. I set up the clearing account as a bank account with the same account number as my checking account, right?
@@AcuityEcommerce hi patty, would you please answer me. What is difference if clearing account is fake bank account or current asset account.?
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.
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!
@@AcuityEcommerce Thank you so much !
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.
See if this video helps you see what's going on here. th-cam.com/video/eyydx886RnM/w-d-xo.html
If not that one, this one might help too: th-cam.com/video/qbb9qh649e4/w-d-xo.html
@@AcuityEcommerce hey do you have a video on how to setup a at clearing account?
Hello, do you have to do this for shopify and amazon if you sell on both? Thx
Not for Amazon because A2X helps with that. But yes for Shopify plus other channels.
Catching Clouds Academy Great, thank you very much for your awesome videos and precious advice!
The issue with this video is you would say you did something, but wouldn't show how. Like at 3:30, you say: What I have done is setup a sync.
But you don't show how you did this. And I have noticed this in other videos as well, you just say you did something.
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?
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.
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.
Thanks for that.
You're welcome
Is this clearing account neccessary in 2021 considering PayPal separates the fees in the bank feed?
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. ;)
@@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.
Whats the best bank or platform to open up a clearing account? A credit union? quickbooks? and answer would be very much appreciated.
Clearing accounts are fictitious "bank" accounts in your accounting system, so whatever system you're using (Xero, QuickBooks, etc.) is the answer.
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.
Yep! And honestly, most payment processors. That's why it's so important for ecommerce businesses... this is the meat of their accounting transactions.
hello , i want to ask if that fake bank account for clearing account it doesn't reflect to the report in BS?
I'd argue that if there's a balance, it should be reflected on the BS (just like an Undeposited Funds account would).
@@AcuityEcommerce thank u 😊
What is the difference between a clearing account vs. undeposited funds account?
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.
still confused
If you're more specific about your question, maybe I can help.