What is Clearing Account?
A clearing account is a temporary general ledger account used to hold transactions before they are transferred to their final destination. It allows complex transactions to be processed in stages and reconciled before posting.
How It Works
- Open a dedicated clearing account in the chart of accounts.
- Post incoming or outgoing transactions to the clearing account when their final classification is not yet known.
- Reconcile the account regularly so its balance does not persist beyond intended use.
- Move each item to its permanent account once the supporting details are confirmed.
- Close the clearing account to zero at period end where possible.
Saudi Context
Saudi entities commonly use clearing accounts for WPS payroll, supplier sub-ledgers, and bank-to-book reconciliations. ZATCA expects reconciled balances and clear support for any non-zero clearing balances during VAT and zakat audits.
Example
A company books a SAR 250,000 customer collection to a ‘bank clearing account’ on the day the deposit appears, then moves it to the specific customer ledger after the bank statement is matched.