Clearing is financial software tailored for short-term rental property managers to streamline bookkeeping and trust accounting. This guide reviews your monthly requirements in detail and explains how Clearing simplifies the process.
Disclaimer:
This guide serves as a starting point. Every company faces unique challenges, and monthly processes can vary. Please download and adapt this guide to fit into your standard operating procedures. This guide assumes that you have already setup your rules and management commission formulas but they can be revised and re-applied at any time. Of course, you can create new rules when needed. Please refer to the recording of your implementation call to review how it was done initially.
We break down those requirements in 6 main categories. Each category will be detailed below. We highly recommend following each step in this order:
Ongoing tracking of booking financials and transactions.
Reconciliation of bookings and their bank deposits from Airbnb and other channels.
Reconcile Trust Account and other connected accounts.
Generate & send owner statements.
Generate management report.
Pay relevant stakeholders: owners, management company, taxes, vendors.
1. Ongoing categorization of booking financials and transactions
A. Bookings
It is best practice to make sure that your financial data is correctly saved and your rules correctly applied. So we recommend opening Clearing at least once a week and simply open a few bookings and ensure that each fee is properly categorized and allocated either to the owner, to management or to tax. If applicable, you can also make sure that your rules have been correctly executed and if needed, you can edit them. You can also review your management commission to ensure that it was correctly calculated. If you need to adjust your formulas, simply go to Rules → Commission. Here’s a fully detailed guide on creating and managing your commission formulas.
NOTE:
If you don’t find the expected numbers inside the booking financials, simply click refresh to redownload the latest information about the booking. The booking financials come from your PMS so if you need to compare the financials from Clearing, simply open the reservation in your PMS. You can always edit any number in Clearing.
For more information on how to refresh bookings, please refer to this article.
NOTE:
If you are missing one or multiple bookings, you can simply click on “Missing a booking?” in the Bookings section. Then enter the booking ID of the booking you are missing and click “Find booking”. Make sure to enter the booking ID from your PMS, not the channel reservation code. The ID of the booking can be found in your PMS. If you are missing multiple bookings for a specific asset, go to “Assets & owners” and open the asset. Then click on “Find missing bookings”.
-> Once you have reviewed a booking, we highly recommend to lock it to avoid any modification.
Tip: We specifically recommend you review your Cancelled bookings for accuracy. Some property systems will pass unnecessary booking financials on cancelled bookings, even if it was cancelled with a full refund or no payment collected at all. You can filter for the Cancelled status on the bookings page. Failing to review cancelled bookings may result in over paying your owners with money you do not actually have.
B. Transactions
Categorize your bank and card transactions. Simply go to Transactions and ensure that:
You find the most recent transactions
Each transaction is categorized
Your rules have been correctly applied to categorize your transactions (if applicable)
To create rules for transactions, go to Rules and on top click on the “On transactions” tab. Then “By Merchant” will allow you to categorize your most frequent merchants. Not all merchants have to/can be categorized, so don’t worry if you only categorize the main ones. Custom rules will allow you to categorize transactions at a more granular level.
Here's a some guidance on how to treat each field on a transaction:
Category: every transaction should be categorized
Asset: only necessary if the transaction is for a specific asset. You can split a transaction if you need to allocate the amount to different assets.
Homeowner: only necessary if the transaction is for a specific owner. You can split a transaction if you need to allocate the amount to different owners. This field is automatically populated if you attached an asset to the transaction and the asset has an owner associated. Note that if you are looking to deduct an expense from the owner payout, you need to have an owner attached on the transaction.
Accounting:
Trust account: should always be populated for transactions to and from the trust account, outside of sub-transactions matched to bookings (the financials inside the booking are already accounted).
Credit card or operating account: should only be populated for expenses reimbursable by the owner (use "To owner"). Leave the accounting field empty for transactions for the management company, they are already on the management side and don't need to be accounted.
Reimbursable: only for expenses that you need to be reimbursed for by an owner. This option only works when an owner is attached to the transaction. Note that this is mostly relevant for expenses out of the operating account or credit card. Expenses out of the trust account are already using the owner's funds and shouldn't be reimbursed.
Deductible: only for income that you need to add to your owner payout and deduct from the management statement. This is relevant for discounts and for co-hosts who receive their commission directly from Airbnb.
-> Once your are done with a transaction, you should lock it to avoid any modification.
NOTE:
If you are missing transactions from an external account linked in Clearing, click on “Missing transactions?” and follow the instructions.
We highly recommend watching the recording of your implementation calls as they will usually capture everything above and answer most of your questions.
2. Reconciliation of bank deposits from Airbnb and other channels
This step is essential to ensure that the expected amounts of each reservation have been fully collected in your bank account. This process ensures you don’t pay owners with funds you haven’t received, avoiding financial discrepancies. It is an important step to ensure that:
You are not paying owners with funds you haven’t received
Channels are correctly paying you
In short, your goal is that each booking shows the green dot “Full in bank”. This means that you have received the entire amount of each reservation in your bank account. If it is “Collected more”, “Partial in bank”, you can open the reservation and scroll to the reconciliation section to understand the gap. To manually mark a booking as collected, scroll to the bottom of the booking and click 'Mark as collected'.
Another way to verify that this step is properly done would be to go to your transactions and look for your bank deposits from Airbnb, VRBO, payment processors, etc. They should all be matched to booking data and say “open sub-transactions” to open the list of individual charges of each bank deposit. You can filter the list of transactions by merchant and filter for Airbnb only, for example, to focus on Airbnb deposits. Airbnb deposits are reconciled using the Clearing Chrome Extension.
The process of reconciling your channel deposits is fully detailed in this guide.
We highly recommend to Fully Lock bookings when you are done reconciling them. This will ensure that the booking financials can no longer be edited (unless you remove the lock).
You can also use the booking reconciliation report in the Reporting section to display all your bookings for a certain date range and compare the actual and expected payout. You can lock bookings from this reporting.
3. Reconcile Trust Account and other accounts as needed
For this step you will need to have your downloaded bank statement for each account from your bank. On your transactions page in Clearing you will then click "Menu" and then the option for "Reconcile an Account." Select the account you are going to reconcile. Now enter the starting balance in the account and the ending balance from the bank statement.
Since we are connected via Plaid, all of your transactions should already be there. Cases where they may not be there are:
A: You incorrectly created a Journal Entry to this bank account. To correct this, find the journal entry and change the account, possibly change it to Journal Entry if it is not supposed to be in any bank account.
B: The Plaid connection missed a transaction. If this happens, use Find Missing Transactions to locate them. If that does not work, then you may need to manually enter the transaction or import them via our import tool.
C: The date on the Plaid transaction in Clearing is a day before (or after) the starting (or ending) date of the statement you are reconciling. For example you are reconciling an account from 1/1 to 1/31. Your bank might say that a transaction happened on 1/31 but in Clearing it's 2/1. You will want to update the transaction in Clearing to make sure it's on 1/31. This happen when timezone aren't setup properly or Plaid track the timezone differently than your bank. It should not happen and when it does, it should only affect transactions happening on the first or last day of a month.
The total amount from all transactions displayed should equal the net change in your bank account.
4. Generate and send owner statements
Once you have reconciled your bank deposits, you are ready to generate owner statements. Owner statements are essential to summarize the activity of a property and add any reimbursable expenses. Clearing’s owner statements are flexible and can be customized. A full guide to generate owner statements is available here.
NOTE:
The owner statement will include all bookings that have a recognized date between the start and end date you select. The recognize date is either the arrival or departure date, depending on your settings. We recommend departure date. When opening a booking, you can always update the recognize date to any custom date that you want.
NOTE:
If you need to split a booking going across multiple months, for example a booking that starts at the end of a month and ends in the following month, you can open the booking and click on “Split”. Then follow the instructions for Split by Month.
On the owner statements, if you add the summary by booking, you will find the green dot next to each booking to confirm that you have reconciled that booking correctly.
Once you are ready, you can save the statement to generate a PDF version and you can send it to your owner. We highly recommend to Fully Lock bookings when you are done generating the owner statements. This will ensure that the booking financials can no longer be edited (unless you remove the lock).
5. Generate management report
To understand how much money you earned in a given month, you need to go to Reporting and then open the Management reporting. This report tracks:
Your total management commission
Reimbursable expenses
Deductible income
Any booking financials marked “to management”
Any transactions marked “to management” (only relevant for transactions out/to the trust account)
You can apply filters on categories and can generate the report by owner and by asset.
In short, the total of all the above categories should be the amount to move from the trust account to the operating account. If you collect and keep cleaning fees but you are paying cleaners out of the trust account, then you should exclude that category from the report. You can repeat this for any categories paid directly out of the trust account, but marked as to management.
6. Pay your stakeholders: owners, management company, taxes and vendors
Now that you have generated the statements and reports you need after reconciling your bookings, you are ready to pay your owners and other relevant stakeholder.
If you are in the US, Clearing allows you to pay from any US bank account to any US bank account, also called “recipients”.
Paying owner
Paying owners can be done after you generate their owner statements. Click “Pay” through the relevant owner statement and this will open a new payment window. Make sure that you have entered your owners bank account information.
Paying the management company
Using the Payment section and clicking on “Make a payment”, you can move funds between your accounts (assuming you have linked them or added your operating account as a recipient).
Paying taxes
This is relevant if you pay taxes on behalf of your owners. We recommend using a service like Avalara to pay taxes by city and state. Otherwise, you can always use the Tax reporting to track your taxes owed.
Paying vendors
You can pay any US bank account from Clearing so if you have contractors that you need to pay, you can do so using Clearing.
If you haven’t done so at a previous step, we highly recommend to Fully Lock bookings when you pay the owner. This will ensure that the booking financials can no longer be edited (unless you remove the lock).
In summary
By following this monthly checklist, you’ll maintain accurate records, streamline payouts, and build trust with property owners. Log in to Clearing today and make property management easy! If you have any questions or suggestions, please reach out to our support.