Payments Documentation
- - Single-Phase, where they are executed immediately or
- - Two-Phase, where they are first put in a Pending state and then either Accepted or Rejected / Perfect primitive for atomic transfers across different systems.
Let`s enhance our Income Tracking recipe to use Two-Phase transfer by managing the inflight balance / Distinguish between inflight reserved amounts and accepted/commited amounts to control inflight liquidity.
For simplicity, we will exclude the Payment Provider Fees and Tax from this example.
Two-Phase Transfer is used to place the payment in a Pending state, ensuring that the transaction is only finalized once the payment provider confirms success.
Account Code | Account Name | Account Type | Description |
---|---|---|---|
4000 | Services Revenue | Income | Revenue from selling IT services. |
4100 | Subscriptions Revenue | Income | Revenue from recurring software or service subscriptions. |
1100 | Accounts Receivable – Client X | Asset | Amounts owed by Client X for provided services or subscriptions. |
1000 | Cashe/Bank | Asset | Cash in hand or bank balances. |
2100 | Deferred Revenue | Liability | Revenue received but not yet earned (prepayment). |
Example Transaction Flow: Recording Services Revenue (Two-Phase)
Step 1: Issuing an Invoice for Services Rendered
Your IT consultancy completes a service for Client X and issues an invoice for $2,000.
Account | Debit | Credit |
---|---|---|
Accounts Receivable – Client X (1100) | $2,000 | |
Services Revenue (4000) | $2,000 |
Step 2: Receiving Payment for the Invoice (over Stripe payment provider)
2A - Client X initiates a payment of $2,000 via the Stripe payment provider. The payment is not yet finalized but is authorized and held by Stripe.
Account | Debit Pending | Debit | Credit Pending | Credit |
---|---|---|---|---|
Cash/Bank (1000) | $2,000 | |||
Accounts Receivable – Client X (1100) | $2,000 |
2B - Once the payment is finalized and Stripe transfers the funds to your Cash/Bank account, the pending entry is cleared, and the funds become available.
Account | Debit Pending | Debit | Credit Pending | Credit |
---|---|---|---|---|
Cash/Bank (1000) | $2,000 | |||
Accounts Receivable – Client X (1100) | $2,000 |
Summary of Payments and Two-Phase Transfers:
- This approach leverages two-phase transfers to manage inflight balances, providing clear visibility into payments as they move from pending to final status, while keeping your accounting books accurate and synchronized with the payment provider's flow.