How do I record a payment or transfer between linked accounts?

It's very common to make payments between a bank and credit card or to transfer funds between bank accounts.  When both sides are linked accounts Cheqbook won't let you record directly to the other account.  Instead it suggests you to go through "Payments in Transit" instead.  Why?

This was our solution to a special problem caused by downloading transactions from BOTH accounts.  For example, if it's a credit card payment:

  • the bank will report a payment out, and... 
  • the credit card will report a payment received.

In traditional accounting software you would manually key this transaction once, and be done.  However we're getting it downloaded twice.  See the problem?  If users did what they normally would they'd unknowingly duplicate the payment in their books!

To prevent users from making this error Cheqbook doesn't allow transactions to go directly between two linked accounts (linked accounts are those for which we get transactions from a bank or credit card company automatically).

Instead we suggest you record both transactions to the "Payments in Transit" account, which we established just for this purpose.  When those two transactions "meet" they offset one another, leaving this account with a zero balance.  

Once Cheqbook has learned to post credit card payments that hit your bank account, and payments received that are applied to your credit card to this Payments in Transit account, you shouldn't have to bother with it again.

Except: we do recommend you periodically check "Payments in Transit" to make sure it's maintaining a zero balance, and investigate any discrepancies.  We're finding in practice that new companies take a little while to get Cheqbook's blue coding (i.e. Payees) trained correctly for them, then it settles down nicely. 

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3 Comments

  • 0
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    Jack Walters

    First, where is the Payments in Transit account located?

    I have expenses in my Bank Account that are only located there and others that are also in PayPal. How do I create an account and easily copy entries from a linked account to a regular account which will show all sales and expenses?

     

    Thanks,

     

    Jack

  • 0
    Avatar
    Doug Levin

    Jack,

    The payments in transit account is in the group "Cash & Cash Equivalents".

    As for your second question, normally you would link both accounts, as the expense transactions that occur in each account can then be automatically downloaded and categorized.  The payments in transit account would not be used to transfer expenses, only to transfer funds from one account to another.  An expense is recorded when the payment to the vendor is made, not when the transfer from one account you own to another in anticipation of the payment.

    This comes up sometimes with credit card payments.  Inexperienced users think they have to detail the payment to the credit card company into the different expenses they're paying, when in fact that's just a transfer.  Instead they should expense the payments made from the credit card - that's when the expense counts.

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    Andrew Alaniz

    Is there a solution for the scenario where I legitimately need to make an expense payment between accounts?

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