Re: What's the best way to model "in-flight" transactions?

[replicon]

Thanks for the insights, everyone!



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Re: What's the best way to model "in-flight" transactions?

[Alton Brantley]

The way I handle this is to create a subaccount of my bank accounts labeled 
“Bank1:ACH” for automated clearing house.
Then the transactions look like this (where Db means debit, Cr means credit, 
and assuming credit card is paid $1000.00)
Bank1 is an account of type bank (an asset),
ACH is a subaccount of Bank1 of type cash (also an asset)
CreditCard1 is an account of type credit card (a liability)

When the credit card bill is paid:
CreditCard1 Db 1000.00
Bank1:ACH  Cr 1000.00
  This transaction reduces the liability (by increasing the credit available) 
and reduces the cash available in the ACH account(creating a negative balace). 
If I look at the Accounts tab, I can see at a glance what my bank account is 
according to the bank, and the pending deductions from that amount.

When the payment clears the bank:

Bank1:ACH Db 1000.00
Bank1 Cr 1000.00 
  This transaction reduces the money in the “float” of the ACH (by increasing 
the negative balance there), and reduces the cash in the Bank1 account, showing 
that the bank paid through the ACH.

It seems complicated (at first), so play with it in a dummy set of books. 
You’ll get the feel of it pretty quick. 
This is the only way I have found of being able to reconcile easily both the 
credit card statement and the bank statement without editing dates that make 
one or the other not map correctly.



> Date: Thu, 28 Sep 2017 05:39:09 -0700 (MST)
> From: replicon >
> To: gnucash-user@gnucash.org 
> Subject: What's the best way to model "in-flight" transactions?
> Message-ID: <1506602349864-0.p...@n4.nabble.com 
> >
> Content-Type: text/plain; charset=us-ascii
> 
> Hey all,
> 
> I've been using/loving GNUCash for almost a year now, and one thing I'm sure
> I'm doing wrong is how I'm showing credit card payments.
> 
> For paying credit card bills, I just use my bank's bill pay. The bank is
> different from the credit card provider, so there's some "in-flight" time
> for that money. The day the withdrawal shows up on my checking account is
> not the same as the day the payment shows up when I login to my credit card
> provider and check transactions there.
> 
> Right now, in GNUCash, I just do a transaction from checking account to
> credit card, and by convention, always adjust the time to reflect checking
> account, but I wonder if there's a more correct way to do it.
> 
> The best I can think of is to have a separate account for "in-flight"
> transactions between establishments, and turn the credit card payment into
> two transactions that go through this account. Is that the best way to do
> it? If so, what account type would that be? Would it be an asset, because in
> a way, it's like I'm loaning money to some imaginary entity for a while,
> which it will repay to my other account a day or two later? :)
> 
> Thanks!
> 
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Re: What's the best way to model "in-flight" transactions?

[Mark Phillips]

One way to think about the float is to, well, not think about it. When you
pay you credit card company with bill pay, those funds are "gone" in the
sense you really should not use them for another transaction. So, enter the
transaction as you have been doing. Your gnucash bank balance will be
correct, as you have earmarked those credit card funds for the credit card
payment. When you reconcile your bank account, those funds will either be
gone or not, it doesn't matter, as your gnucash balance will still reflect
the correct amount of disposable cash in your bank account.

Mark

On Sep 28, 2017 7:17 AM, "David Carlson" 
wrote:

> I think the answer is "What works best for you."
>
> When most of our bank account transactions were checks (cheques in many
> countries) we entered each check by date and number in the checkbook
> register.  When the bank statement came we compared it to our register,
> checking off each one that appeared on the statement.  Then we made a list
> of the checks (and deposits) that did not match the bank statement, added
> them up and compared sum of those and the statement balance to our
> checkbook register balance.  Since we did it all by hand, there were months
> when we would tear our hair out trying to find out why they did not agree.
>
> I personally use a pair of special accounts that I call Checking A-R and
> Checking A-P to hold items that are in float, but I only use them when I
> want to account for float, say, over the transition from month to month, or
> when there is an unusual issue with a missing check or whatever as each
> transaction gets entered twice.
>
> I only consider doing this for bank accounts, credit card accounts, and
> sometimes for medical bills if I am trying to track what I owe there.
>
> David C
>
> On Thu, Sep 28, 2017 at 7:39 AM, replicon  wrote:
>
> > Hey all,
> >
> > I've been using/loving GNUCash for almost a year now, and one thing I'm
> > sure
> > I'm doing wrong is how I'm showing credit card payments.
> >
> > For paying credit card bills, I just use my bank's bill pay. The bank is
> > different from the credit card provider, so there's some "in-flight" time
> > for that money. The day the withdrawal shows up on my checking account is
> > not the same as the day the payment shows up when I login to my credit
> card
> > provider and check transactions there.
> >
> > Right now, in GNUCash, I just do a transaction from checking account to
> > credit card, and by convention, always adjust the time to reflect
> checking
> > account, but I wonder if there's a more correct way to do it.
> >
> > The best I can think of is to have a separate account for "in-flight"
> > transactions between establishments, and turn the credit card payment
> into
> > two transactions that go through this account. Is that the best way to do
> > it? If so, what account type would that be? Would it be an asset, because
> > in
> > a way, it's like I'm loaning money to some imaginary entity for a while,
> > which it will repay to my other account a day or two later? :)
> >
> > Thanks!
> >
> >
> >
> > --
> > Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-
> f1415819.html
> > ___
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Re: What's the best way to model "in-flight" transactions?

[David Carlson]

I think the answer is "What works best for you."

When most of our bank account transactions were checks (cheques in many
countries) we entered each check by date and number in the checkbook
register.  When the bank statement came we compared it to our register,
checking off each one that appeared on the statement.  Then we made a list
of the checks (and deposits) that did not match the bank statement, added
them up and compared sum of those and the statement balance to our
checkbook register balance.  Since we did it all by hand, there were months
when we would tear our hair out trying to find out why they did not agree.

I personally use a pair of special accounts that I call Checking A-R and
Checking A-P to hold items that are in float, but I only use them when I
want to account for float, say, over the transition from month to month, or
when there is an unusual issue with a missing check or whatever as each
transaction gets entered twice.

I only consider doing this for bank accounts, credit card accounts, and
sometimes for medical bills if I am trying to track what I owe there.

David C

On Thu, Sep 28, 2017 at 7:39 AM, replicon  wrote:

> Hey all,
>
> I've been using/loving GNUCash for almost a year now, and one thing I'm
> sure
> I'm doing wrong is how I'm showing credit card payments.
>
> For paying credit card bills, I just use my bank's bill pay. The bank is
> different from the credit card provider, so there's some "in-flight" time
> for that money. The day the withdrawal shows up on my checking account is
> not the same as the day the payment shows up when I login to my credit card
> provider and check transactions there.
>
> Right now, in GNUCash, I just do a transaction from checking account to
> credit card, and by convention, always adjust the time to reflect checking
> account, but I wonder if there's a more correct way to do it.
>
> The best I can think of is to have a separate account for "in-flight"
> transactions between establishments, and turn the credit card payment into
> two transactions that go through this account. Is that the best way to do
> it? If so, what account type would that be? Would it be an asset, because
> in
> a way, it's like I'm loaning money to some imaginary entity for a while,
> which it will repay to my other account a day or two later? :)
>
> Thanks!
>
>
>
> --
> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
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Re: What's the best way to model "in-flight" transactions?

[Buddha Buck]

Remember that your books are supposed to reflect your view of the
transactions you are making, not those of other entities.

Instead of a credit card payment or an account-to-account transfer,
consider the more traditional case of paying a vendor with a check.

On January 1st, you buy a CD from a folk musician at a concert, and you
write them a check for $15.00. You put that into GnuCash as "Tanglefoot CD,
Db. Exp:Music $15, Cr. Ass:Bank $15 (check #1423)".

On January 15th, you check your balance online, and see that the check
cleared on the 10th. You go into GnuCash, pull up your register for
Ass:Bank, find the transaction for buying the CD, and tick the cleared
column so it shows a "c".

On January 28th, you get your bank statements, and reconcile it against
Ass:Bank, and change the "c" in the cleared column to an "r", for
reconciled.

As far as you were concerned, the transaction happened on the 1st; the fact
that the bank didn't register it until the 10th is "recorded" only in so
much as in the time frame between when the transaction was put into GnuCash
(on the 1st) and when it was noticed (on the 15th), the transaction was not
marked "cleared".

There is one slight complication: *transactions* are not marked as
"cleared" or "reconciled". The part of the transaction associated with a
particular account (what GnuCash calls a *split*) is "cleared" or
"reconciled". So it is possible, and in many cases common, for only parts
of a transaction to be reconciled. For instance, in the above example, it
makes no sense to reconcile the $15 cebit to Exp:Music. Reconciliation is a
comparison against someone else's record of the transaction, and there
isn't another record to reconcile against.

So to get back to your situation; Let's deal with a complicated credit card
payment setup I'll likely have to deal with tomorrow.

On Friday, Sep29, I get paid by my client, and I deposit the check into my
bank. That evening, I go online and I schedule an "immediate" payment to my
CC for $500. Because it is Friday night, the CC company doesn't process the
payment until Monday. It takes a day for the request to get processed by my
bank, and two more days for the payment to wend its way through the
clearinghouse systems to the CC company. At which point, the CC company
lists the transaction on my statement as happening on Friday, Sep29, but
before then, it didn't appear.

So how should this be modeled in GnuCash?

Sep29 Payment of Invoice #2345 by XYZCo, Db: Ass:Bank $1000, Cr:
Inc:Services $1000
Sep29 Pay Visa, Db: Lia:Visa $500, Cr: Ass:Bank $500

Then on Oct03, I notice that the bank has processed it, and mark the
Cr::Ass:Bank $500 as "cleared".
On Oct05, I notice that Visa has processed it, and mark the Db: Lia:Visa
$500 as "cleared".

I believe that GnuCash has modes for showing the "cleared" balances on
accounts, which is what you should really be looking at when comparing
statement (or online) balances with GnuCash balances.




On Thu, Sep 28, 2017 at 9:00 AM replicon  wrote:

> Hey all,
>
> I've been using/loving GNUCash for almost a year now, and one thing I'm
> sure
> I'm doing wrong is how I'm showing credit card payments.
>
> For paying credit card bills, I just use my bank's bill pay. The bank is
> different from the credit card provider, so there's some "in-flight" time
> for that money. The day the withdrawal shows up on my checking account is
> not the same as the day the payment shows up when I login to my credit card
> provider and check transactions there.
>
> Right now, in GNUCash, I just do a transaction from checking account to
> credit card, and by convention, always adjust the time to reflect checking
> account, but I wonder if there's a more correct way to do it.
>
> The best I can think of is to have a separate account for "in-flight"
> transactions between establishments, and turn the credit card payment into
> two transactions that go through this account. Is that the best way to do
> it? If so, what account type would that be? Would it be an asset, because
> in
> a way, it's like I'm loaning money to some imaginary entity for a while,
> which it will repay to my other account a day or two later? :)
>
> Thanks!
>
>
>
> --
> Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html
> ___
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What's the best way to model "in-flight" transactions?

[replicon]

Hey all,

I've been using/loving GNUCash for almost a year now, and one thing I'm sure
I'm doing wrong is how I'm showing credit card payments.

For paying credit card bills, I just use my bank's bill pay. The bank is
different from the credit card provider, so there's some "in-flight" time
for that money. The day the withdrawal shows up on my checking account is
not the same as the day the payment shows up when I login to my credit card
provider and check transactions there.

Right now, in GNUCash, I just do a transaction from checking account to
credit card, and by convention, always adjust the time to reflect checking
account, but I wonder if there's a more correct way to do it.

The best I can think of is to have a separate account for "in-flight"
transactions between establishments, and turn the credit card payment into
two transactions that go through this account. Is that the best way to do
it? If so, what account type would that be? Would it be an asset, because in
a way, it's like I'm loaning money to some imaginary entity for a while,
which it will repay to my other account a day or two later? :)

Thanks!



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