Payment Deposit and Settlement Accounts - what should I choose?

When setting up your payment gateway in Benji Pays, you are asked to choose some accounts from your accounting system.  What are these?  What should you choose?

The answer depends a bit on your accounting system, and how many currencies you collect payments in.  See below for more information.

Settlements

While reading the below, it's important to remember that when payments are made in Benji Pays or directly in your merchant account, they are lumped into settlement deposits into your bank account.

So if you have 10 payments today, you won't see 10 deposits into your bank account - that would be very expensive as your bank may charge for each deposit. 

You will see 1 deposit for the total of the 10 payments made.  Your bank statement will show 1 deposit.  Because of this, you do not want to record the payments directly into your bank account, instead accountants and bookkeepers generally use a clearing or suspense account.  This is simply a holding account that aids their bank reconciliation process.

Settlement Deposit Account

This will be the same for all accounting systems.

This is the actual Bank Account that you provided your payment processor to have them deposit your funds into.  If you take payments in multiple currencies, you may have one for each currency you transact in, or one for all for all currencies.

When selecting this account in Benji Pays, choose the same account you setup with your processor.  

Changing this account in Benji Pays or choosing one other than the one you provided your payment processor will not change where your funds are deposited, it will only change where Benji Pays records the deposit in your accounting system.

Payment Deposit Account

This is the account recorded on the payment transaction in your accounting system..

QuickBooks Online and QuickBooks Desktop

Do not select a bank account here.  Doing so will make your bank reconciliations very difficult.

For most companies, we recommend you select "Undeposted Funds".  

Undeposited Funds is a special account in QuickBooks used to record payments that have not been deposited into your bank account yet.  It provides a benefit that when creating a bank deposit in QuickBooks, we can link it to specific transactions in Undeposited Funds - this will not work the same with any other account.

In more complex setups, you may need to use one or more clearing or suspense accounts.  Your accountant or bookkeeper can help you set this up and determine the best way to set things up for your business.

When would I use a clearing / suspense account instead of Undeposited Funds?

The most common scenario would be one like this:

You have one Gateway with multiple currencies configured e.g.  US Dollars. Canadian Dollars and British Pounds.

Your  Gateway collects all of these transactions in their original currency, but then converts all or some of them back to US Dollars and deposits US Dollars into your chequing account.

QuickBooks will not allow you to link transactions from a different currency when creating a deposit.  For example, if you settlement includes funds from Canadian Dollar transactions and is being deposited in US Dollars to your US Bank Account, you will only be able to link it to USD Payments in QuickBooks and not the Canadian Dollar ones.  This is a limitation of QuickBooks.

Our recommendation is to use a clearing account instead.  Benji Pays will create the deposit and it will indicate each invoice included for easy reconciling, exchange rates will be provided automatically.  

Create One settlement account for each currency your gateway will settle in, so if your CAD transactions settle in CAD to a CAD bank account, and everything else settles to USD, then create to clearing accounts, one for CAD and one for USD.

This only applies if you are using a gateway such as Stripe, where you can select multiple currencies in Benji Pays. It does not apply to single currency gateways where we would recommend using the "Undeposited Funds" account.

Xero Account

If you use Xero, and are manually reconciling your transactions, we recommend you select the same bank account as your settlement account above.

If you are using our automated settlement reconciliations (coming later in 2025), we recommend that you create a clearing / suspense account.  We will then create the necessary transactions to link everything together, making your reconciliation process easy and quick.

1. This account should not be of Type "BANK" in Xero.  We recommend "Current Asset" however it's best to check with your accountant.

2. This account should have the "Enable Payments to this account" option enabled as shown below