Dealing with credit cards


Float pulls in both bank accounts and credit card account from Xero. Both of which can be accessed from the bank account panel by selecting the ‘Manage bank accounts’ option.

 

Within Float there are 2 ways in which credit cards accounts can be handled:

  • Firstly, credit cards accounts can be excluded from the cash flow in which case budgeting will be carried out on the credit card payments being made.
  • Secondly the credit card accounts can be included in the cash flow which gives an overview of the overall cash position (taking into account outstanding credit card debt).

In the first option the credit card account is excluded from the cash flow, this prevents the credit card balance from having an impact on the cash flow. In this situation the only credit card related figures impacting the cash flow are the payments being made, which creates a real time cash flow figure. However as any purchases made on the credit card are contained in the credit card account, when this is excluded from the cash flow the related purchases are not shown in the cash flow because this money isn't actually leaving the business. So here budgeting would be carried out on the credit card payment and when the payment is made this would show in Float as money out.

The second option is to include the credit card account in the cash flow. With this account included the credit card balance will have an impact on the cash flow and related purchases will be shown in the cash flow table as these are debits from the credit card account which contribute to the negative balance. In this situation the payments to the credit card are treated as transfers between accounts (out of one account and into another which creates a zero sum transfer) so the credit card related figure which impacts the cash flow is the credit card balance shown in the credit card account. In this situation budgeting would be carried out on credit card purchases instead of the credit card payments.

Note: For QuickBooks there can be a variation on this depending on how credit card payments are recorded. If the payments are recorded as a transfer you can follow the above, however if the payment is recorded in another way you may need to exclude the credit card account from the cash flow.


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