A payment ledger is one of the basic tools of bookkeeping. It helps to record payments related to a specific purpose. This might be anything from a small project within a company to the full day-to-day cash activities of the entire company.
A ledger allows you to record the item when it is conceived and then update it upon payment, which means you don’t forget about upcoming items or forget to follow through on the payment of previous items.
Payment ledgers can be used to track the money that your company owes or the money that is owed to the company. For example, a landlord might keep a payment ledger to record when the monthly rent is paid. Conversely, the same landlord might also keep track of all their maintenance expenses on a separate payment ledger to make sure that they aren’t paying contractors late.
What Is a Ledger Balance?
A ledger balance is computed by a bank at the end of each business day and includes all withdrawals and deposits to calculate the total amount of money in a bank account. The ledger balance is the opening balance in the bank account the next morning and remains the same all day.
The ledger balance is also often referred to as the current balance and is different than the available balance in an account. If you log into your online banking, you may see your current balance—the balance at the beginning of the day—and the available balance, which is the aggregate amount at any point during the day.
Formula and Calculation of Ledger Balance
Ledger Balance = Opening. Balance + Credits – Debits
In order to calculate your ledger balance, add all the credits (deposits, reversals, etc.) that go through your account during the day to the opening balance. Then subtract all the withdrawals, transfers, and other debits from that figure. This will give you the end of day or ledger balance.
Create an Estimate or Invoice
Create an estimate or invoice from LEDGERS with payment link enabled. Once the estimate or invoice is created, the customer will receive a payment link.
When the customer clicks on the link, he/she will be directed to a payment page. In the payment page, if Google Pay is enabled, the customer will have the option to make payment using Google Pay.
Google Pay Payment Flow – Mobile Phone
Step 1: Customer selects Google Pay option in the estimate or invoice page.
Step 2: Customer selects Google Pay option in the estimate or invoice page.
Customer has the option to verify the payment amount. If OK, customer would click on Pay button.
Step 3: Customer authorises payment on G Pay app
In some mobile phones, the customer will be asked to verify on G Pay app, while in some apps, the customer will be taken directly to the UPI pin screen.
Step 4: Payment completed
Payment is complete and the customer is transferred to the receipt page.
Ledger Balance vs. Available Balance
The ledger balance differs from the customer’s available balance, which is the aggregate funds accessible for withdrawal at any one point. Because the ledger balance remains the same throughout the day, it does not include real-time transaction updates.
The available balance changes frequently throughout the day as transactions hit the bank account. Neither balance includes outstanding checks just written from the account, but the available balance updates for recent automated teller machine (ATM) withdrawals, deposits, and other transactions as the information is received by the bank.
Understanding the difference between ledger balance and available balance is a vital aspect of proper financial planning. After viewing the ledger balance, if a check is written or a transaction is made, an account holder may withdraw more money than is available.
This may lead to bank overdraft charges as well as fees from the other party’s bank or business. Monitoring balances on a regular basis alerts a customer of any unauthorized transactions that occur or potential errors committed by the bank.
Opening balance at the start of the day
Balance without pending transactions
Doesn’t change as frequently
Real-time balance
Changes throughout the day
Money immediately available
FAQs
How Long Does It Take for a Ledger Balance to Clear?
The ledger balance is often updated to reflect the available balance within a day. It generally takes less than 24 hours for the ledger balance to become available.
What Is Ledger Balance and Available Balance?
Ledger balance is the amount of money in your account that might not account for transactions made during the day, such as charges or deposits. The available balance is the ledger balance less transactions made during the day.
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