If you've set debits and credits to your bank account to show as consolidated for each day, then Bill.com processes a daily lump sum withdrawal from your bank, for all of your payments in a single day. To help you reconcile the individual payments with the lump sum, we sync the lump sum journal entry, and the payment journal entry to a clearing account for you to then compare. Here are some details on how it works, and how to reconcile.
- Clearing account overview
- Reconcile your bank account
- Bill payments
- Customer payments
- Reconcile your clearing account
- Things to know
Clearing account overview
Bill.com Payments and Your Bank Account
When paying bills through Bill.com, funds are transferred from your bank account into a Bill.com bank account. Payments are then sent to your vendors from the Bill.com bank account (this is part of what makes our payments process so secure; your bank account is never exposed on checks, or in payment information). On the Process Date, we withdraw the total amount needed for payments in a lump sum. When reviewing account details or bank statements, debits will show up as batch withdrawal(s), not separate withdrawals for each bill payment.
We make two scheduled payment pickups each day:
- All payments scheduled before 3:00 pm Pacific Time / 6:00 pm Eastern Time on the bank business day before the Process Date will be picked up during the first pick-up run, and will be withdrawn from your bank account as a lump sum.
- Any payments scheduled after 3:00 pm Pacific Time / 6:00 pm Eastern Time on the same day, with the same Process Date, will be picked up during the second pick-up run, and will be withdrawn from your bank account in a second lump sum.
- Example: Monday at 12:00 pm Pacific Time / 3:00 pm Eastern Time, schedule 3 payments with Tuesday as the Process Date (total: $300). Four hours later, at 4:00 pm Pacific Time / 7:00 pm Eastern Time, schedule 3 more payments with Tuesday as the Process Date (total: $400). On Tuesday, two lump-sum withdrawals are made from your bank account - one for $300 and one for $400. All bills are still paid on time, the same as if we had just made one lump-sum withdrawal.
Why the Clearing Account Helps
After bills are paid, bill payments sync to your accounting software, and are linked to corresponding bills. By syncing them to the Clearing Account, rather than the bank account register, easily reconcile without having to match the lump sum withdrawal to multiple transactions.
Reconcile your bank account
To simplify reconciliation, we make use of two clearing accounts. Your Bill.com account is pre-populated with the following accounts:
- Accounts Payable: Bill.com Money Out Clearing
- Accounts Receivable: Bill.com Money In Clearing
These accounts are set as the default accounts for syncing bills and invoice payments in sync preferences.
Scheduled bill payments, including those scheduled for future dates, will sync to the Bill.com Money Out Clearing account in your accounting system. When the sync runs on or after the process date, we will create a Funds Transfer journal entry, which posts a debit to the Clearing account, and a credit to the Checking account.
In the end, the Clearing account should balance to $0.00 for the day.
Payments made to you are posted in the Bill.com Money In Clearing account, along with the dates customers are scheduled to pay. The Funds Transfer journal entry is posted with the dates the funds arrive in your bank account. Therefore, these dates may differ by about 3-5 days. Because of this delay, there may be an overlap of transactions preventing your register from balancing out to $0.00 at the end of each day.
Reconcile your clearing account
To reconcile your Clearing Account(s), enter $0.00 as both the beginning and ending balances, then clear all transaction for the period. Use the following reports as guidelines:
- Payables Reports: Funds Transfer Detail for Bill.com Payments
- Receivables Reports: Funds Transfer Detail for ePayments Received
Locate these reports by selecting Reports in the navigation menu in your Bill.com account
Note: Receivables payments scheduled for the end of the month may not show as deposited until the beginning of the following month. When reconciling your Bill.com Money In Clearing account, you may want to extend the period ending date by a few days.
Things to know
- If you sync with Xero, reconciling the bank account will not automatically mark the matching line item(s) in the Bill.com Money Out Clearing account as Reconciled. If needing each line item in the Clearing Accounts to be marked as Reconciled, it will need to be done manually.