Reconciling the General Ledger Accounts

When you connect your accounting platform to Marmalade two new general ledger accounts will be created in your accounting platform:

1. The Marmalade Clearing Account
2. The Make Good Account

Why are there two separate Accounts:
The two separate general ledger accounts are in place to manage two separate processes:

The Marmalade Clearing Account:

• Is used to apply the necessary journals to enable cashed-in invoices to be paid net of fees
• It is also used to apply the necessary journals to reconcile the Credit Card fees in the event that these are paid by yourself rather than on-charged to your customers

The Make Good Account:

• Is used when an invoice needs to be repaid to Marmalade as a result of it no longer being in accordance with our supplier agreement

The Marmalade Clearing Account Journal Entries:

The following actions will result in journal entries being posted to the Marmalade Clearing Account (MCA):

Invoice Cashed-in:

1. Fee amount applied as a payment on the Cashed-in Invoice (Credit - MCA, Debit - Accounts Receivables)
2. Bill created for the fee amount which will be generated by Marmalade at the time the cash-in is paid out and allocated to the expense account selected in the 'Settings Page' in Marmalade (Credit - Expense Account, Debit - Accounts Payable)
3. Bill marked as paid using the Marmalade Clearing Account (Credit - Accounts Payable, Debit - MCA)

Invoice paid by Credit Card and surcharge not passed on to Customer:

1. Fee amount applied as a payment on the invoice paid via Credit Card (Debit - MCA, Credit - Accounts Receivables)
2. Bill created for the fee amount which will be generated by Marmalade at the time the payment for the invoice is paid out and allocated to the expense account selected in the 'Settings Page' in Marmalade (Debit - Expense Account, Credit - Accounts Payable)
3. Bill marked as paid using the Marmalade Clearing Account (Debit - Accounts Payable, Credit - MCA)

The Make Good Account Journal Entries:

The following actions will result in journal entries being posted to the Marmalade Clearing Account (MCA). Depending on the reason why the invoice is needing to be repaid and the repayment method:

Repayment Reason 1: Credit Notes:

If a credit note is applied to a cashed-in invoice the following journal entries are posted in to your accounting platform:

1. Balance added to your Marmalade Account for settlement via cash-in or your next payment for non-cashed-in invoice (No Journals posted)
2. Bill created and allocated to the Make Good Account for the Credit Note Amount (Debit - MGA, Credit - Accounts Payable)
3. Marmalade settles the credit note to the Marmalade Good Account (Debit - Accounts Receivable, Credit - MGA)
4. Marmalade settles the bill by applying a payment to the Make Good Account (Debit - Accounts Payable, Credit - MGA)
5. As a result of the above actions a Credit will be left on the clearing account which will be closed off using one of the settlement options below

Repayment Reason 2: Pay-Directs or Passbacks:

If the funds have been paid to you directly either by the customer (Pay-Direct) or via Marmalade (Passback) then you will physically have the funds to reconcile the payment and the amount of the liability is known at the time we are notified. As a result the below actions are taken by Marmalade:

1. Balance added to your Marmalade account for settlement via cash-in or your next payment for non-cashed-in invoice (No Journals posted)
2. Corrective invoice issued to the Marmalade Balance Settlement contact created when balance added to your Make Good Account in Marmalade (Debit - Accounts Receivable, Credit - MGA)
3. As a result of the above actions a Credit will be left on the clearing account which will be closed off using one of the settlement options below

Repayment Reason 3: Other 

In most other cases if there is a balance owing to Marmalade we do not know at the time of confirmation if the customer will pay and if so how much so we wait until the balance is settled before creating the credit on the Marmalade Clearing Account:

1. Balance added to your Marmalade Account for settlement via cash-in or your next payment for non-cashed-in invoice (No Journals posted)
2. No journals will be added to the Make Good Account until the amount is settled via cash-in or a payment for a non-cashed-in invoice

Settlement Type 1 - Cash-in:

The preferred method to repay an amount payable on your Make Good Account is via cash-in which will result in the following journal being posted to your accounting platform:

1. Cashed-in invoice will be marked as paid, however, in addition to the payment for the fee outlined above an additional payment for the amount payable back to Marmalade will be added and allocated to the Make Good Account (Debit - MGA, Credit - Accounts Receivable)
   - This debit amount will either be equal to the total value of the cashed-in invoice net of fees or the amount added to the Marmalade account for settlement (whichever is lower) this process will continue until the amount payable back to Marmalade is fully settled. Once this takes place the Debits on the MGA from the settlement will equal the credits on the MGA from the issue type.

Settlement Type 2 - Payment for Non-Cashed-in Invoice:

If the amount payable back to Marmalade is not paid back via cash-in it will result in payments for non-cashed-in invoices being used to settle the outstanding balance which will result in the following journal being posted to your accounting platform:

1. Invoice(s) that the payment was for will be marked as paid, however, rather than the payment being reconciled to the bank it will be allocated to the Make Good Account and funds will be retained by Marmalade (Debit - MGA, Credit - Accounts Receivable)
   - This debit amount will either be equal to the total value of the cashed-in invoice net of fees or the amount added to the Marmalade account for settlement (whichever is lower) this process will continue until the amount payable back to Marmalade is fully settled. Once this takes place the Debits on the MGA from the settlement will equal the credits on the MGA from the issue type.

Settlement Type 3 - Repayment via EFT:

If the amount is repaid back to Marmalade via EFT Marmalade will not be able to apply any journal entries automatically. To ensure your accounts reconcile follow the below process:

1. If repayment is for a Credit Note, Pay-Direct or Passback the EFT payment back to Marmalade will need to be manually reconciled to the Make Good Account from your bank feed
2. If repayment is for a different reason you will need to create a Credit Note for the repayment amount and reconcile the payment back to Marmalade as a 'refund'. In this instance the funds won't go through the Make Good Account. Steps on how to do this should be available from your accounting platform provider.

What happens if my Marmalade Clearing Account is not Nil?

• If the Marmalade Clearing Account is not nil the most likely cause is that the payment on a cashed-in invoice has been removed
• Review your cashed-in invoices by going into the Marmalade Dashboard, selecting 'Invoices' and filtering by 'Cashed-in'
• Ensure that each of these invoices in your accounting software are marked as paid and have 2 payments on them (one for the cash-in fee allocated to the Marmalade Clearing Account and one for the amount paid to you by Marmalade)

What happens if my Make Good Account is not Nil?

• Has the amount payable back to Marmalade been settled? As an unsettled payment will be a reason as to why there is a balance on the Make Good Account
• If all invoices payable back to Marmalade have been settled review the above processes to ensure the necessary journals have been applied to the Make Good Account

Does this change impact my customers?
No, there are no changes for your customers.