Temporary holds, pending payments & reversals


can you help with the following in paypal tagging, temporary holds, pending paymets and reversals, how do I tag these

thank you in advance


Firstly, all funds debited/credited into your business account from PayPal should be tagged as a transfer to/from the PayPal holding account, see our knoweldgebase guide for further help on ‘Handling Payments from Merchant Accounts’:


To answer your questions:

a. Temporary Holds: You need to create a ‘PayPal Reserve Holding Reserves’ bank account and tag the rolling/holding reserves as a transfer to/from the new holding account. When PayPal release the funds and after tagging as a transfer from the new holding account, the balance will be £0 on the new account if all the funds held have been released, the holding account will also keep track of the reserve funds held by PayPal.

b. Pending Payments: I believe pending payments are shown instantly, although you cannot withdraw the funds for a set period, if this is the case, you can treat pending payments as a normal transaction, if the funds are then removed by PayPal, the withdrawal should be tagged as a ‘Refund to a customer’.

c. Reversals: A chargeback or reversal will show on the account as a withdrawal and therefore should also be tagged as a ‘Refund to a customer’.

Hi, I am doing accounts since April 2014 and in middle of June 2014 paypal stopped Temporary Holding my funds.

Between April and June is about 60 days (less than 90 days that paypal is holding money) so Im not sure if creating holding account in my case has sense

I therefore tagged them as ‘Not on the list’ and then ‘Adjustments’ both for credits and debits. I also have a big credit from paypal in June when they released at once Rolling Reserve for around 1500 transactions. Also tagged this lump sum as adjustments.

Am I tagging it properly?

Yes that makes sense, if they’re simple in-out adjustments there’s no need to do anything more than this.

Sorry to be a pain but I noticed there are also the funds on hold by paypal when somebody is opening a case on ebay (and depending on outcome it will either come back to me or be refunded to customer) - should I create the holding account for that or treat is as adjustments also?

I wouldn’t bother with the holdings account, not unless you really want to track the amounts on hold.

I would create a new nominal called “PayPal Adjustments” in the assets and liabilities area and tag all these sorts of transactions in and out of there. But you could just use an existing code if you like, it’s not really that important as the net effect will be zero.