About the Payment Clearing Account in Bnbtally
Within Bnbtally, when adding a Xero account, you'll be required to set the Payment Clearing Account.
We recommend to have Bnbtally create the "Airbnb Payment Clearing Account" in Xero for you. If you select for us to create it for you, we will create it as a Current Asset Account. In your Bnbtally invoice settings under your listing rules, you will have the option of setting automatic payments to invoices using the payment clearing account. If you were to disable this option in your invoices, then in Xero you would need to match your invoices to your Airbnb bank transactions manually, which is not usually recommended.
Create a Bank Rule in Xero
If you're using the payment clearing account, we also recommend to create a bank rule within Xero to automatically transfer all Airbnb bank statement lines to the same Airbnb Payment Clearing Account. Otherwise, if you didn't do this, you'd need to manually reconcile the bank statement lines, which takes time and is prone to errors.
Where to Create a Bank Rule in Xero
To create a bank rule in Xero, go to the following...
Go to the "Accounting" menu and select "Bank Accounts".
Towards the top of the page, click the button labeled "Bank Rules".
Select "Create rule" and click "Receive Money Rule"
Bank Rule Settings
Conditions: The conditions you set in your bank rule will depend on how your banking institution records your Airbnb bank line items, it will also depend on which payment processor Airbnb uses for your country/jurisdiction - these factors may vary. For most bank statements, the Airbnb line item "Reference" or "Description" contains the word "AIRBNB". Note, you can confirm by checking your bank statements and checking what an Airbnb line item looks like in Xero.
Set the Contact: Set the contact to "Airbnb Payout Clearing" (or whichever contact you prefer to clear Airbnb payouts).
Fixed Value Line Items: We don't recommend setting any fixed value line items.
Ratio Line Items: Allocate 100% of the amount to your payment clearing account. Assuming that you've used Bnbtally's recommended payment clearing account, select account code "Airbnb Payment Clearing Account". Feel free to set a description but that's optional. We don't recommend setting any tracking categories or tax rates greater than 0%.
Set the reference: Select "from the Reference" Note, this depends on your banking institution statements and preference. For example, you may want to set it from description. Double check by looking at your banks statement.
Target a bank account: In the drop down selector, choose the bank account where you are receiving your Airbnb payouts.
Give the rule a title: "Airbnb Payouts" will work, but this is to your preference.
That's it! Now your reconciliation is completely automatic!
Disclaimer: Just like any other recommendations we provide, please check with your accountant to make sure the correct bank rules and Xero settings apply to your specific business. The above Bank Rule settings are what we find to be the most common.
Automatic Payments to Invoices using Payment Clearing Account
On the bottom of each invoice in your listing rules of Bnbtally, there is the following option:
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.
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.
However, in Bnbtally you shouldn't use a Payment Clearing Account if you're not receiving the money directly from Airbnb. If you're receiving money from someone else other than Airbnb, you'll need to collect from them directly and reconcile your invoices with your deposits from them.
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 Xero?
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 Xero. If this is what you wish, just deselect "Apply Payment using Payment Clearing Account" under your invoice settings within each of your listing rules. You can always re-enable this setting at a later time.
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 "Apply Payment using Payment Clearing Account". This is all you need to do in Bnbtally.
Within Xero, 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.
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 Xero. Second, Bnbtally is not able to rollback invoices that have been manually reconciled in Xero. In order to rollback manually reconciled invoices, you would first need to undo the reconciliation within Xero, which is another manual step.
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 zero (or close to zero) 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. The account usually has a small balance because payouts can take 3-5 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...
Applying payments to invoices automatically with Bnbtally but forgetting to transfer bank statement lines from Airbnb transactions to the payment clearing account in Xero. We recommend to follow the instructions above to create a bank rule.
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.
Listings in Bnbtally are disabled but there is money being received from Airbnb for these listings.
How come my payment clearing account doesn't perfectly balance to zero?
General Delay of Payments from Airbnb: It's quite normal that the payment clearing account doesn't perfectly balance to zero. This is due to the fact that there's a 3-5 day delay (or more) between when Airbnb posts a payout and when the money is received by your bank account. However, the balance should not go too far beyond what you might receive within that 3-5 day delay window. Note that Airbnb posts a payout usually 24 hours after the check-in date and Bnbtally will create any invoices and payments to those invoices deposited to the payment clearing account on the date the payout is posted.
Check Xero Matching Start Date: Check the date you started importing invoices from Bnbtally (with applied payments to the payment clearing account) to make sure it matches exactly the date you started reconciling bank statement lines to your payment clearing account. Any payouts received by Airbnb that do not have a respective invoice from Bnbtally or visa versa may be a cause for discrepancy with your payment clearing account balance. You might want to check to see if there are any lingering bank statement lines from the beginning of your import that were or were not transferred to the payment clearing account when they should or should not have been. It may be best to work with your Xero accountant for this.
Check Any Xero Bank Rule: There might be something wrong with any bank rule that you may have set in Xero or there may be another conflict with another bank rule. It may be best to work with your Xero accountant for this.
Check Any Disabled Listings in Bnbtally: If there are disabled listings in Bnbtally in which you are receiving payouts from in Airbnb, this will cause a masmatch in you Payment Clearing Account especially if you're using a Bank Rule in QuickBooks.
Related Guide: Airbnb Accounting & Bookkeeping: A Comprehensive Guide