Hello
What’s the best way to create a ‘clearing account’ in ERPNext to temporarily hold transactions until they are finalised and transferred / allocated to a main bank account, as is commonly used for recording payments made via payment processors like Stripe etc?
Hi there,
ERPNext gives you a lot of flexibility in this regard, and I’m not sure there’s a universally best way. If it were me, for a case like a payment processor, a lot would depend on how the disbursements were organized.
I’ve not used Stripe, but I’m assuming it aggregates payments to make lump-sum transfers on a periodic basis. In that case, I’d probably just create an account called “Stripe”, point payment methods at that, then make a journal entry whenever Stripe made a payment to your account.
It should be already defined in your local accounting scheme. Not exact a deferred revenue but receivables in transit. The sales invoice is closed but payment is on an account assigned for the payment broker which you are likely to incur comission costs over payment so it is another transaction when you receive the payment.
Thank you, I really appreciate your replies and assistance.
Yes, I’m looking to set up clearing accounts to hold payments which then are aggregated and then disbursed. In our current accounting software, this is a fairly straightforward process, whereby we set up an account as type ‘clearing’, into which we can ‘deposit’ individual payments and then when the disbursement is made we record the transfer from the clearing account to the bank account. We have a number of these clearing accounts set up for our EFTPOS, as well as for Amazon and eBay sales, Stripe and PayPal website payments, etc. (In the case where where the payment processor fee / commission has already been taken out prior to disbursement, we record the expense in the clearing account for that so that it balances to $0).
With ERPNext, which I slowly slowly am attempting to learn, I guess I wasn’t quite sure whether there was a specific way to set up a clearing account or not. I understand though from your suggestion peterg that we could add additional accounts, name them accordingly, and then just use that as a clearing account for our own internal purpose.
On that note, can I also ask … what is the difference between adding a ‘bank account’ (bank account list) and/or adding an ‘account’ as type ‘bank’ (account list) in ERPNext? I am a bit confused with this because I have added a bank account which appears in the ‘bank account list’ but which is not showing up under the ‘bank accounts’ header in the Chart of Accounts. Is that correct / how it is supposed to be or is there something amiss? (Also, to be able to reconcile an account, it needs to be added as a company bank account, is that right?)
Thanks again.
Despite similar names, Account and Bank Account are very different doctypes representing very different things.
The Account doctype represents a heading in your chart of accounts. It’s used to categorize transactions in your General Ledger in pretty much the same way that any modern accounting system will do. You can set a type for each account (such as “Bank”, “Receivable”, “Tax”, etc.). Most of these types are pretty self-explanatory, and they affect how different headings behave in some contexts. Accounts marked “Payable” or “Receivable”, for example, will always expect a Party to be designated with the transaction. I’m not sure off-hand what the “Bank” type does, but I would suspect it plays a role in different reporting workflows.
The Bank Account doctype, meanwhile, represents a literal bank account at a financial institution like Citibank or HSBC. This can be linked to an Account heading if it’s a company account, but Bank Accounts can also be created for employees, suppliers, etc. The Bank Account doctype gets used in a few different ways, including defining sources/destinations for Payment Entries and managing statement imports.
I don’t think ERPNext has any specific concept of a “Clearing Account”, but it sounds like you can do everything you’re describing just by designating an account for the balances to reside in. I’m definitely not an accountant, but this is how I’ve always been told to do it by people who are.
ERPNext also has workflows for managing bank clearances. WIth Payment Entries, for example, you can mark a transaction with a posting date and then later go back and subsequently indicate when it has been registered by your bank. I don’t think this is the right approach for things like Stripe/Amazon/etc, where you actually have a balance for some period that gets paid out plus or minus fees.
Many thanks for this explanation and information peterg, very much appreciated.
So if I’m understanding correctly:
To have company Bank Accounts listed in the Chart of Accounts, we should add them as a Bank Accounts (Bank Account doctype) and then also add a similarly named Account (Account doctype) and link them (ie link the Bank Account to the Account heading).
Also, if we want to be able to import a statement and/or reconcile an account (either a ‘real’ bank account or a ‘clearing’ account), we would need to have that account set up as a company Bank Account in ERPNext.
Basically, yes. The only thing I’d say is that the Account doctype is the only one that’s necessary for managing your books. The Bank Account doctype is used primarily in ERPNext’s import and reconciliation workflows. If you’re not using those, you might not need to create a Bank Account document at all.
OK, thanks again peterg.