Using Ledgers

Ledgers use Financial Events to generate account balances in the Highnote Platform. A Financial Event is defined as any event that impacts the balance of a Financial Account, for example, a card swipe or ACH transfer. A Financial Event results in a Ledger Entry, which is a record of the change in account balance.

Ledgers can be used to create periodic statements and account snapshots, as well as display account balances and the status of money movement.

In the following graphic, money movement starts with an external bank account transferring money into a Financial Account. The transfer of those funds results in a Ledger Entry in the Cash Ledger, to reflect the account balance. When transactions are made using a Payment Card, the Authorization Ledger reflects pending authorizations and/or holds on an account. After a transaction clears, the Available Cash Ledger reflects the money available in the Financial Account.

When you create a Card Product, Ledgers are created automatically based on the type of Card Product created. Ledgers have a LedgerName, description, and a normalBalance determined by the Ledger category. For example, a CASH Ledger has a category of ASSETS and has a normal balance of debit. This normal balance is important in interpreting the balance of the Ledger because ledger balances are represented as either debit or credit balances. A full list of Ledgers is available in the LedgerName API Reference.

Account balances reflect the credits and debits of an account. Account balances are represented by a single positive number, the direction of the balance (either debit or credit), and the account’s normal balance. The normal balance is important because it reflects whether the Ledger balance’s expected state is debit or credit.

If the balance of the Ledger and the normal balance agree, the balance is interpreted as positive. If the balance of the Ledger and the normal balance disagree, the balance is interpreted as negative.

The following example using a CASH Ledger outlines how account balances and normal balances are reflected:

• If a CASH Ledger has a $1000 debit balance, then the balance is positive. This means there is $1000 in the account because the normal balance for a CASH Ledger is debit.
• If a CASH Ledger has a $1000 credit balance, then the balance and the normal balance disagree. The credit balance represents a -$1000 balance in the cash account.

Highnote’s Ledger system is based on generally accepted accounting principles, with cash and activity being represented independently. This means that account balances provide a snapshot for a point in time, rather than reflecting pending or available balances. Pending or available balances can be calculated across Ledgers if desired.

You can use the FindOrganization query to list all Ledgers for your Organization or a Financial Account. This query returns each Ledger’s normalBalance, creditBalance, and debitBalance.

In a Ledger, each Financial Event is recorded as a Ledger Entry. A single Ledger Entry represents how an event impacts a single Ledger.

When two or more Ledger Entries offset each other, they form a Journal Entry. Journal Entries always consist of at least two Ledger Entries, one on the left side (debit) and the other on the right side (credit). Journal Entries summarize activity across the Ledger Journal or multiple accounts.

What makes the Ledger system work seamlessly is the requirement that in any given Journal Entry, the sum of debits and credits must always be equal.

You can use the following query to find a Ledger and its associated Ledger and Journal Entries: