Stripe Holding Account

What is a Stripe Holding Account

Apart from reconciling your revenue, Acodei also provides balance reconciliation between Stripe and QuickBooks. We perform balance reconciliation by tracking your Stripe Balance against an account in QuickBooks at all times. We call this a Stripe Holding account. It is possible to have multiple Stripe Balances, and therefore, it is possible to have multiple Stripe Holding accounts.

Simply put, there are two choices when tracking your Stripe Balance in QuickBooks using Acodei: Undeposited Funds and an Asset account, with the subtype "Other Current Assets."

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Bank Holding Accounts

We do not recommend that users use a "Bank" type account, and instead recommend "Other Current Assets". This is strictly to avoid confusion in users choosing "Stripe Bank" as their deposit and holding account, which causes significant issues.

If you want to set your holding account as a Bank type, please let us know, and we can enable this for you.

Undeposited Funds (or Payments to Deposit) is sufficient for balance sheet purposes for most users. See below to learn more about Undeposited Funds. Undeposited Funds allows for payout reconciliation.

We highly recommend using a 'non-UF' asset account for more advanced users who track high payment volumes and more complex balance transactions. See below for more details on asset accounts. Asset accounts allow for balance reconciliation.

What are Undeposited Funds?

Undeposited funds (also known as Payments to Deposit) serve as a temporary repository within accounting systems, designed to monitor money received by a business before depositing it into a bank account. This account is a holding area for payments or receipts awaiting deposit. It is particularly useful for businesses handling multiple payments throughout a period, allowing them to consolidate these funds before making a single deposit.

By utilizing Undeposited Funds, businesses streamline the reconciliation process and maintain accurate financial records. Once the funds are deposited, the balance within the Undeposited Funds account returns to zero.

Choosing the Right Stripe Holding Account

When selecting a Stripe holding account in QuickBooks, it’s essential to understand the trade-offs between using Undeposited Funds and a different asset account. Here’s a structured breakdown of each option to help you make an informed decision:

Undeposited Funds

Pros:

Automatic Reconciliation: Undeposited Funds offer automatic reconciliation through a matching deposit on your banking feed, simplifying the process for average users.

Ease of Use: Ideal for businesses with straightforward accounting needs, as it simplifies the process of matching and depositing payments.

Default Option: Every QuickBooks account comes with Undeposited Funds by default, making setup quick and easy.

Cons:

Multiple Accounts Complexity: When various accounts (other payment providers, check payments, etc.) contribute to Undeposited Funds, reconciling may become challenging.

Timing Discrepancies: Timing differences between transactions can hinder daily balance reconciliation between Stripe and QuickBooks. We create daily balance summaries to counteract this, but some items are included on deposits, which can make timing difficult.

High-Volume Limitations: Accounts with a high volume of transactions may encounter challenges with Undeposited Funds.

Non-UF Asset Account

Pros:

Detailed Tracking: Allows for more detailed tracking of high payment volumes and complex balance transactions.

Accurate Daily Reconciliation: Provides accuracy on a daily basis, essential for advanced users with sophisticated accounting needs.

Custom Naming Conventions: Users can create distinct naming conventions for their holding accounts, enhancing organization.

Cons:

Manual Reconciliation Required: Unlike Undeposited Funds, asset accounts require manual reconciliation, which can be time-consuming.

Initial Setup: Requires making a starting balance entry in the new account that matches your current Stripe Balance.

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Non-UF Account Starting Balance

If you opt for an account different from Undeposited Funds to track your Stripe Balance, it's important to make a starting balance entry in the new account that matches your current Stripe Balance. From there, the account should remain reconciled.

Users may choose either method based on their specific needs and preferences. It's important to note that you are not obligated to choose either method; it ultimately comes down to user preference.

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Switching Accounts

Please be aware that if you switch holding accounts, you'll need to delete all transactions from that account if you decide to switch back to Undeposited Funds.

Undeposited Funds and Stripe Payouts

In the context of Stripe payouts, funds remain within the Stripe balance until a payout occurs. Consequently, QuickBooks reflects these funds as Undeposited Funds. While the account could bear any name, Undeposited Funds or Payments to Deposit are the most common designations within QuickBooks Online.

Ideally, the balance in Undeposited Funds should match the Stripe balance, barring minor discrepancies such as specific fees only visible upon payout. These fees or charges reconcile upon payout into a bank deposit.

We like using Undeposited Funds as our holding account because it helps us make bank deposits and matches transactions on your bank feed. This makes reconciliation quicker and adds more validation than using a Transfer. However, you can pick between Undeposited Funds or another account as your holding account.

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If Undeposited Funds Account Does Not Exist

New QuickBooks accounts come with Undeposited Funds accounts, but occasionally they might have been deleted or marked inactive. You can create an Undeposited Funds account by creating an "Other Current Assets" account with subtype "Undeposited Funds".

Clearing Refunds Account

Our app will prompt you to establish a Clearing Refunds Account as part of our onboarding process. This account serves the singular purpose of efficiently managing negative payouts from Stripe. Specifically designed for this function, it facilitates the clearance of specific transactions from the Undeposited Funds category in cases of negative payouts, also known as withdrawals or clawbacks, initiated by Stripe.

Rather than directly recording negative payouts as expenses from the Undeposited Funds, we direct them to the Clearing Refunds Account. This strategic approach is necessary because transactions within Undeposited Funds persist indefinitely, remaining visible without resolution. Therefore, to maintain clarity and accuracy, we reassign transactions associated with negative payouts to the Clearing Refunds Account, ensuring a balanced Undeposited Funds ledger.

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Account Balance

Your Clearing Refunds Account should remain at zero at all times unless there is another pending negative payout. If it is not at zero, please reach out to us at [email protected].