About the Payment Clearing Account Setting
Within Bnbtally, when adding a QuickBooks Online account, you'll be required to set the Payment Clearing Account.
We recommend to have Bnbtally create the Payment Clearing Account in QuickBooks for you. If you select for us to create it for you, we will create it as a type of Current Assett Account. However, you can also set this to the "Undeposited Funds" account if you prefer.
Automatic Payments to Invoices
In Bnbtally, you have the option of setting automatic payments to invoices. If you disable this option, then in QuickBooks you will need to match your invoices to your Airbnb bank transactions manually. This is fine if you like to have this sort of checkpoint. However, we usually recommend that you enable "Apply Payment using Payment Clearing Account" to your invoices...
When this is enabled, Bnbtally uses the Payment Clearing Account to make automatic payments to invoices and ultimately free you from reconciliation.
Here's a diagram of what happens when you use a payment clearing account to automatically apply payments to invoices and set a bank rule to automatically reconcile Airbnb transactions to the same payment clearing account. With this setup, reconciliation is completely automatic.
Create a Bank Rule in QuickBooks
If you enable automatic payments for your invoices, we also recommend to create a bank rule within QuickBooks to automatically transfer all Airbnb bank statement lines to the same Payment Clearing Account. Otherwise, if you didn't do this, you'd need to manually reconcile the bank statement to transfer Airbnb income to the Payment Clearing Account.
Steps to create a bank rule: To create a bank rule in QuickBooks Online, on the left dashboard, click "Banking", select "Rules", and click "New rule". Give the rule a name (e.g.) "Airbnb Payouts", select "Money in" and choose the bank account in which you receive your Airbnb payouts. Then for the condition, set "Description", "Contains" and then type in the text your bank statement uses to indicate an Airbnb payout (e.g.) "Airbnb". For transaction type, select "Transfer" and for account, select your Payment Clearing Account.
Disable Automatic Apply Credits in QuickBooks
One more thing! Within QuickBooks Online settings, under "Advanced Settings", look for the setting "Automatically apply credits" and make sure this is disabled. Although not always, this setting can cause conflicts with payments to invoices for any customers that have other existing payments, over payments or credit memos.
Why should I use a Payment Clearing Account to make automatic payments to invoices?
The reason we offer the option to apply payments automatically to a Payment Clearing Account is to make reconciliation entirely automatic and remove the extra step of matching each invoice to bank statement lines. Most users prefer this. You would no longer have to deal with manually matching or reconciling Airbnb reservations. Reconciliation would be automatic.
What if I DON'T want to automatically apply payments to invoices? What if I prefer to match invoices to Airbnb bank line statements manually in QuickBooks?
That's totally fine, this is completely optional. If you decide not to have payments applied automatically to invoices, you would instead have to match your invoices to your banks statement lines manually on your own within QuickBooks. Once you feel comfortable with your setup, you can always make reconciliation automatic at a later time.
IMPORTANT NOTE: If you decide not to have payments applied automatically to invoices, there are two major disadvantages. First, you'll need to manually reconcile your invoices in QuickBooks. Second, Bnbtally is not able to rollback invoices that have been manually reconciled in QuickBooks. In order to rollback manually reconciled invoices, you would first need to undo the reconciliation within QuickBooks, which is another manual step that would need to take place.
Here's a diagram of what happens when you do not automatically apply payments to invoices. You'll need to manually reconcile Airbnb transactions to invoices.
What is a Payment Clearing Account?
A Payment Clearing Account is a general accounting practice and is defined as "an account you use to move money from one account to another account when you cannot move the money directly. This account normally has a balance of $0.00 because you always take out the same amount that you put in. It may also be called a Clearing Account, Barter Account or Wash Account" (source)
Specifically for Airbnb, the Payment Clearing Account is used to apply payments to Airbnb invoices upon the day the Airbnb reservation payout is posted. Payouts can take 2-6 days (or longer) to arrive in the bank account after posted from Airbnb. Monies owed are held in this clearing account until the payouts are received in the bank. This account also helps to automate the reconciliation process.
There are scenarios where a payment clearing account can be misused. Make sure you're not making these mistakes...
Some have made the mistake of using the Airbnb Payment Clearing Account to directly connect their bank feed. This is not correct. Your bank feed should be connected to a completely separate account.
Applying payments to invoices automatically with Bnbtally but forgetting to transfer bank statement lines from Airbnb transactions to the payment clearing account in QuickBooks. See section above for more about this: If I enable Automatic Payments, is there anything else I need to set up in QuickBooks?
Forgetting to disable "Automatically apply credits" in the advanced settings of QuickBooks. Again, see section above for more about this: If I enable Automatic Payments, is there anything else I need to set up in QuickBooks?
Opposite to item 1, transferring bank statement lines from Airbnb transactions to a Payment Clearing Account yet later deselecting automatic payments to invoices in Bnbtally. In this case you may have decided that you want to manually match invoices with bank statement lines but may have forgotten to remove any bank rules in QuickBooks for automatic transfer to payment clearing account.
Changing the payment clearing account used in Bnbtally but using the previous payment clearing account in QuickBooks.
How to disable Auto-Payment Settings
For each listing...
Select the listing from the Listings Manager page
Under any Invoices and Refund Receipts, de-select the bottom checkbox "Automatically Apply Payment". This is all you need to do in Bnbtally.
Within QuickBooks, it's also a good idea to remove any automatic Bank Rules that transfer money to your Payment Clearing Account. And be sure to communicate to any of your stakeholders to let them know you're no longer using the Payment Clearing Account to reconcile Airbnb income.