Precise financial reporting is essential for building trust among vacation rental Property Management Company (PMC) stakeholders, which include homeowners, property managers, tax authorities, and guests. A critical aspect for achieving this is standardizing the booking’s recognized date for reporting purposes. The recognized date determines when a booking’s financials are recognized by the business; this relates to when they will appear on the management statement, owner statements, and other financial reports. The recognized date ensures that booking deposits and other financial activities are accurately aligned with the reporting period of interest.
However, challenges with recognizing financials for Short-Term Rentals arise in a variety of ways. For example, the Online Travel Agencies (OTAs) are not standardized in how they pay out on bookings. Airbnb, tends to payout for reservations on the check-in date of the guest, whereas other booking channels, like a direct booking site that is processing payments with a payment processor (ex. Stripe), will often payout within a few days of the money being collected. These differences make if very challenging for Short-Term Rental property managers, or bookkeepers working with vacation rental PMCs, to close their books accurately and efficiently each month.
Additional challenges arise with bookings that span across multiple months. For instance, a booking that starts in June and ends in July creates a dilemma: should the financials appear in June’s reporting or July’s? Should we split the booking to have a subset of days in each month? If so, how should we split the booking line items like cleaning fee or accommodation fare? Will the new split bookings both be recognized on check-in? It gets complicated, quickly!
While this article won’t focus on splitting bookings over a month’s end, it is possible to do so within Clearing. Stay tuned for an article related to splitting bookings over months end.
It is important to know that mismanagement of the recognized date can lead to discrepancies in owner payouts, inaccurate financial records, and an increased need manual corrections.
While Clearing provides an intuitive solution to these complexities by allowing users to utilize the default recognized date they prefer. Short-Term Rental PMCs can choose whether they’d like to recognize booking financials based on the arrival date, the departure date, or any other chosen date selected individually for each booking. Adjustments can be done on an individual or bulk booking basis, and property managers can lock recognized dates to safeguard data integrity, once processed. This ensures that financial reports remain accurate, consistent, and aligned with the business's operational needs.
While property managers have the freedom to choose how they want to recognize their revenue, several choose departure date as the default recognized date. This approach helps ensure that all mid-stay changes are accurately reflected in the financial reporting and statement generation. The recognized date functionality was built to ensure timely and accurate reporting, fostering trust and transparency with property owners, and improving operational efficiency altogether.
Simple Steps to Manage the Default Recognized Date in Clearing
Step 1: Set the Default Booking Recognized Date Rule
Log in to your Clearing account and navigate to the "Rules" section on the left side menu. Here, click “On Bookings" then find and select the "Recognized Date" rule option.
Here, choose between the “Arrival” date or the “Departure” date to set the default recognized date.
Once selected, click "Apply to existing bookings" button to save the settings.
Often the “Departure” recognition date option is chosen because it ensures that all mid-stay changes are captured before generating financial reports.
Step 2: Adjust the Recognized Date for Specific Bookings
While the default rule applies to all future bookings, you may encounter scenarios where individual bookings require exceptions. For example, if a booking hasn’t been paid, and the property manager doesn’t want to pay owners without receiving funds. In this situation, the property manager might move that booking into next months reporting so that they don’t put their trust account out of balance.
To do this, go to the “Bookings” section in Clearing’s left menu. Click the “Open” button to see the booking details for that specific booking.
Here, locate the recognized date field, and choose the desired date.
The system will automatically save these changes. If the booking has been locked, it will need to be unlocked to make changes to the recognized date.
Step 3: Lock the Recognized Date for Accuracy
If you want to safeguard critical financial data, like when a booking was recognized, you can always lock the booking. This prevents accidental or unintended changes that could disrupt financial reports.
To do this, “Open” the booking details for the booking you wish to lock.
Find the button to lock the booking and toggle it on. This will prevent future changes to the recognized date.
To lock multiple bookings at once, go to the booking list view, bulk-select the bookings, and click the lock option to secure the recognized dates across all selected bookings.
Take control of your financial reporting with Clearing!
By managing recognized dates effectively, you can enhance accuracy, standardize your reporting processes, streamline operational insights with a standard revenue recognition date, and ensure trust and transparency with property owners.
Whether you need precise manual recognized date changes or system-wide updates, Clearing’s tools ensure your financials are always on point.
Ready to optimize your reporting process?
Contact us today for a personalized demo and learn how to manage the default recognized date in Clearing. Contact us for more information!
Explore our comprehensive knowledge base today to dive deep into Clearing's features and embark on a journey to revolutionize your financial management experience.
Clearing is a Financial Technology Company, not a bank.