Why have an ABA Clearing Account?

Lorelle Taylor
Lorelle Taylor Member Posts: 16

I am starting a new company. Previous companies had ABA Clearing Accounts, but is there some reason that online payments can't just come directly out of the Bank account instead, saving having to do a transfer after each payment?

I notice in the previous company that in the Banking Preferences that Open Enter Payroll is set up as ABA Clearing & Open Pay Payroll Liab. is set up as Cash at Bank account. Not sure what these do.

Comments

  • Big Hat
    Big Hat Accredited Partner Posts: 93 Accredited Partner Accredited Partner
    edited February 2017
    You may find it easier for reconciling uploaded files

    John Peppas

  • Natalie_7017696
    Natalie_7017696 Member Posts: 29
    edited July 2018
    I have a clearing account so that when I upload a payment to the bank with say 25 different accounts I don't want 25 different entries showing in my reconciliation.  I only want one (which is what you bank statement will show).
  • DebonAir
    DebonAir Member Posts: 392
    edited May 2017
    Natalie is correct.  The clearing account will make reconciling your bank a very simple and easy procedure.  If you don't use a clearing account you may find you can take hours and hours to reconcile if something is missing or incorrectly entered. More so if you reconcile only once a month.
  • DebonAir
    DebonAir Member Posts: 392
    edited May 2017
    I think that question was answered. I also reconcile daily and still use the clearing account.
    Do what ever suits you best.

  • Lorelle Taylor
    Lorelle Taylor Member Posts: 16
    edited September 2016
    Thanks for that. So what do you have in the Banking Preferences for the Default Accounts to Use?
  • DebonAir
    DebonAir Member Posts: 392
    edited May 2017
    I have the clearing account set for all of my bills to be paid with an ABA file. All super and wages are also paid from the clearing account, as they are also showing as a single transaction on my bank account. It certainly does make life easier, especially after returning from holidays and backtracking a huge pile of work.