The Concept: How Trust Account Balancing Works

Trust accounting comes down to matching two things: who the money is owed to, and how much cash is actually sitting in the bank. Every dollar that comes into a trust account belongs to someone: an owner, the management company, a tax authority, or a guest who paid a deposit for a future stay. Clearing tracks all of that as the LIABILITY side. The actual dollars in the bank are the CASH side. Balancing the trust account means proving those two sides match.

🎥 Full Concept Video: Understanding and Reconciling Trust Account Balances

1. The Liability Side

Also referred to as "stakeholders." In Clearing, these are tracked as the allocations using the accounting field. Here is a sample breakdown of how Liabilities are allocated for a specific reporting period.

2. The Cash Side

This is the cash that is actually sitting in the bank, as of the same reporting date:

Cash in Transit bridges a timing gap between when Clearing recognizes a booking on a statement and when the related funds actually settle in the bank. If a booking is recognized on or before your report date but the guest's payment doesn't post to the trust bank account until after that date, the liability exists in Clearing before the cash does. Cash in Transit captures that gap so your liabilities and cash still reconcile to zero, rather than showing a false discrepancy.

3. Balancing the Two

Total Liabilities − Cash in Bank − Cash in Transit = Net. The goal is always a net of $0.

$50,000 − $48,400 − $1,600 = $0

If the net isn't zero, see Troubleshooting a non-zero net below.

4. Booking Example

A guest books a $1,000 stay and pays in full at booking. The management agreement is a 15% commission, and the local jurisdiction charges a 5% occupancy tax.

💡 Tip: Why cash in transit exists: if this booking is recognized in Clearing on March 31 (so it lands on the March statement), but the guest's payment doesn't actually settle in the bank until April 1, the $1,000 liability exists in Clearing on March 31 with no matching bank balance yet. That $1,000 shows up as Cash in Transit on the March 31 report, bridging the gap until the deposit posts and becomes ordinary Cash in Bank.

Using the Trust Liability Report in Clearing

🎥 Full Trust Liability Report Video: How to Use the Trust Liability Report

Where to find it

Go to Reporting → Liability Reports → Trust Liability.

How the report is broken down

Liabilities are calculated based on how everything is allocated in Clearing as of the date you select. This includes balances owed to:

To Owners
To Management
To Tax
Advance deposits
To Vendors
Payables from Trust
To Security Deposits
Bank transactions excluded/unaccounted (should be $0)

Cash is made up of all your connected bank balances that you have marked as a "Trust Account" in Clearing, whether that's one trust account, multiple trust accounts, or cash payments recorded via journal entries. Click the current Cash balance amount to see the amount by account, Day 0 balance, Activity since Day 0, and the current balance.

Cash in transit accounts for timing differences. If a booking is recognized in Clearing before your selected date but the related bank transaction posts after it, that amount shows here so your liabilities and cash still reconcile correctly.

💡 Tip: Click the info icon next to Cash in Transit for more detail on how it's calculated.

The math: Total Liabilities − Cash in Bank − Cash in Transit = Net. Your goal is always a net of zero.

Set up your report for accurate tracking

Before running this report, read all instructions and configure the following settings. This ensures your liability tracking starts from an accurate opening position.

Step 1: Set your Day 0 date

This should fall on the first of a month.

⚠️ If you haven't generated statements in Clearing yet, only set this date if you're confident in the most recent owner and management payments made before joining Clearing. Otherwise, reconcile two months of data in Clearing first by following the Monthly Full-Cycle Checklist (skip step 6), then use those numbers as your opening balances.

If your first owner statements in Clearing were February 2026, your Trust Liability Report should start on April 1, 2026, and your opening balances for your bank and liabilities would be March 31, 2026.

Step 2: Tag your trust accounts

Tag every bank account that holds advance deposits for reservations after your day zero date. You can tag multiple accounts.

For each tagged account, enter the account balance as of the day before the day zero date you set in Step 1. This ensures your day zero liability matches your day zero cash. For example, if your day zero is April 1, 2026, enter your ending bank balance from March 31, 2026.

Step 3: Record your opening balances

Your opening balance is a record of all liabilities as of the day before your day zero date, including owners, management, tax, advance deposits, and any security deposits held.

To calculate it, using a day zero of April 1, 2026 as the example:

Pull your Advance Deposit Report for the day before day zero. In this example, that is March 31, 2026.
Pull your Allocation Report through that same date to get tax and management amounts. In this example, pull the Allocation Report for March 1 - March 31, 2026.
Pull each owner statement for the period ending that date and use the ending balance. In this example, that is the March 1 - March 31, 2026 statement. If you have a lot of owners, see the import option below.

Import owner opening balances automatically

Instead of pulling each owner statement manually, click Import in the Record Opening Balance window.

Add your import dates: select the start and end date of the statement period right before your Day 0 to import the ending balances from statements already generated in Clearing. For example, if your Day 0 is April 1, 2026, select March 1, 2026 and March 31, 2026.

Find a specific owner quickly

Use the Search a specific owner field in the Record Opening Balance window to jump straight to an owner's row instead of scrolling the full list. This is useful if you manage a large owner portfolio and need to review or update one owner's opening balance.

Note on irregular payment cadences: Pulling the Allocation Report for a single month assumes you make payments on a regular monthly cadence. If your payment schedule doesn't align with the month (for example, you collect tax monthly but pay it quarterly), pulling one month's Allocation Report won't give you a true opening balance for that allocation. Instead, pull the Allocation Report for the full period you've been using that allocation type in Clearing (for example, the entire time you've been tracking "To Tax"), so that all revenue and all expenses are summed into one total. That total is your true opening balance. From there, the Trust Liability Report carries it forward correctly each month, regardless of when you actually make the tax payment.

⚠️ Skipping this step will cause errors. Without an opening balance, a payment you make in the following month (for example, an April payment covering March activity) will net against zero instead of against the correct prior balance, and will throw off your liability numbers by that amount.

Once your opening balances are entered, return to the Trust Liability Report. You can expand each category (owners, management, tax) to see the underlying transactions and opening balance for that allocation.

Troubleshooting a non-zero net

If your report doesn't net to zero, work through these checks. Each one is a common cause.

Make sure every booking is fully reconciled

Pull your Booking Reconciliation Report for the period.
Filter by everything except Full in Bank.
Review each booking that appears and make sure it is fully reconciled. Match the income to the bank deposit, or remove the booking from the statement if it shouldn't be there.

Check canceled bookings that received money

In your Booking Reconciliation Report, filter by canceled bookings.
Look for any canceled booking that has money associated with it.
Make sure that money is reconciled. If funds were received for a canceled booking but the booking was never added to a statement, no liability was created for that cash, which pushes cash above liabilities.

Check bookings excluded from statements

In your Booking Reconciliation Report, filter by bookings excluded from statements.
Look for any excluded booking that has a transaction associated with it.
Add that booking to a statement so the liability is recorded alongside the cash.

Check for a trust account transaction marked reimbursable or deductible

Transactions in your trust account never need these boxes checked.

Go to Transactions and click Add filter.
Filter Account to your trust account.
Filter by Reimbursable, then by Deductible.
Uncheck the box on any trust transaction that has it checked.

Check for an operating or JE transaction that is "To Owner" but not reimbursable or deductible

Go to Transactions and click Add filter.
Filter Account to your credit card, operating account, or journal entry account.
Filter Accounting type to To Owner.
Make sure every result is marked Reimbursable or Deductible.

Check for a transaction matched to a booking that also has an accounting field

Find the transaction that is matched to a booking.
Open the transaction and clear the accounting field. A transaction matched to a booking should not also have an accounting field.

Check for bookings marked as paid that need a journal entry

Find any booking you manually marked as paid.
Click the Record Payout button on the booking and record the journal entry against it.

Check for an incomplete transfer into or out of the trust account

If everything above checks out, your trust account may be over or underfunded, often from a prior transfer that wasn't completed.

Track down the source, such as a transfer that was started but never finished.
Correct it with a transfer in or out of the trust account to bring the net back to zero.

Frequently Asked Questions

What happens if no transfers are made?

If no transfers (for example, ACH payments) are made, the balances remain in trust and are included in the amounts owed as of the selected date.

The "Management" balance shows the amount sitting in trust and owed to the management company. This balance grows until a payment is made out of trust.

🙋 Need more help?

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Clearing is a Financial Technology Company, not a bank.

How to Use the Trust Liability Report in Clearing