About the Payment Clearing Account Setting
Within Bnbtally, when adding a QuickBooks Online account, you'll be required to set the Payment Clearing Account.
You can select a current asset account within your QuickBooks Online organization or we can create one for you. If you select from your own existing accounts, the "Undeposited Funds" account is a popular choice. However, the best option is 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 Bank Account.
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 "Automatically Apply Payment" 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.
If I enable Automatic Payments, is there anything else I need to set up in QuickBooks?
Yes. First, if you enable automatic payments for your invoices, we also recommend to create a bank rule within QuickBooks to automatically assign all Airbnb bank statement lines to the same Payment Clearing Account. Otherwise, if you didn't do this, you would have to manually reconcile the bank statement line when you receive the Airbnb payout.
Second, 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.
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)
There are scenarios where a payment clearing account can be misused. Make sure you're not making these mistakes...
- 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.