PayNow is a powerful feature that allows you to send invoices to your clients with an embedded payment form. By leveraging Stripe Connect, our clients can seamlessly manage their transactions using their own Stripe accounts. However, reconciling these payments in Xero can sometimes pose questions and challenges. In this article, we'll guide you through the common issues and steps to ensure a smooth reconciliation process.
Understanding Payout Figures
Q: Why is the payout figure less than the invoice amount?
A: The payout figure that appears in your bank account will be less than the total invoice amount due to the deductions made for the Stripe fee and the Formitize application fee. When Stripe processes a payment, it automatically deducts its transaction fee, along with the Formitize application fee before transferring the remaining amount to your bank account. This means the amount you receive will always be slightly less than the original invoice amount.
You can see a breakdown of these fees in the payment details for each payment in the Stripe Dashboard.
Reconciling in Xero
Q: How do I reconcile this in Xero?
A: There are various options for how your reconcile these transactions in Xero:
Using the Stripe Feed in Xero:
You can set up a Stripe feed in Xero. This feed automatically imports your Stripe transactions, including fees.
With the Stripe feed set up, you can reconcile transactions directly from the feed.
After reconciling in the Stripe feed, you can transfer the net amounts to your main account, simplifying the process and reducing manual entry.
See these support articles from Xero and Stripe for more information:
https://support.stripe.com/questions/payouts-and-reconciliation-with-xero-and-stripe
Manual Reconciliation:
Create a Spend Money transaction for the fee deducted from the payout.
Reconcile the payment amount by selecting both the invoice and the spend money transaction to balance with the payment total.
Additional Tips
Regular Monitoring: Regularly monitor and reconcile your Stripe transactions.
Fee Tracking: Use a separate account code in Xero to record the fees deducted by Stripe and Formitize.
Professional Help: If you're unsure about any step or encounter issues, consider consulting with a professional accountant or bookkeeper.
By following these steps, you can ensure that your PayNow Stripe payments are accurately reconciled in Xero, keeping your financial records precise and up-to-date.