Reconcile Stripe Payments in Xero Easily

Struggling to reconcile Stripe payments in Xero? Here's the solution. By integrating Stripe with Xero, you can automate payment reconciliation, saving hours of manual work. This process links Stripe transactions to Xero invoices, accounts for fees, and supports multi-currency transactions. Here's what you'll achieve:

• Automatic reconciliation: Match payments to invoices in real time.
• Fee tracking: Stripe fees are recorded as separate transactions.
• Multi-currency support: Handle international payments effortlessly.
• Time savings: Businesses report reducing reconciliation time by up to 92%.

To get started, set up the Xero Stripe bank feed, configure payment settings, and use tools like "Find & Match" for unmatched transactions. Whether you're dealing with surcharges, recurring payments, or manual adjustments, this guide simplifies the process and ensures accurate financial records.

Reconcile your Stripe feed in Xero

How do I reconcile a payment from Stripe in Xero?

Once you've set up the automated feed, you can handle Stripe payment reconciliation directly in Xero. Here's how:

In Xero: Go to Accounting > Bank Accounts > Select Stripe account, then follow these steps:

• In the Reconcile tab, click Find & Match on the payout line.
• Check the box for "Show Spent Items" to display all related transaction details.
• Select both the payment transaction and the associated fee transaction.
• Click OK to confirm the match.

"When the payment is made, Xero will automatically create a spend money transaction for the Stripe fee and mark the invoice as paid" - Stripe Support Documentation

Key Reconciliation Tips:

• Use the "Merchant Fees" account category to match fee transactions separately from payments.
• Cross-check using Stripe charge IDs (e.g., ch_XXXX) for accuracy.

For businesses handling aggregated payouts, like the UK e-commerce company mentioned earlier, match the total payout to grouped transactions using memo fields for clarity.

If transactions are missing, verify the payout settlement period (typically 2-7 days) and ensure the date ranges align.

How do I record a Stripe transaction in Xero?

While most Stripe transactions are handled through automated reconciliation, there are times when you may need to record them manually. Here's how you can do it:

1. Navigate to Accounting > Bank accounts > Stripe account in Xero.
2. Select Import Statement.
3. Upload the Stripe CSV file containing the transaction details.
4. Use the Stripe charge IDs (e.g., ch_XXXX) as your reference.
5. For transactions with surcharges, break down the amounts into payment, surcharge income, and fee expense.

Tips to Avoid Common Issues

• Ensure the currency settings in Stripe and Xero are aligned.
• Always use Stripe charge IDs (ch_XXXX) for consistency and tracking.
• Enable automatic creation of fee transactions in your payment service settings.
• Set up separate clearing accounts to manage Stripe payouts effectively.

Taking these steps helps maintain accuracy, even for transactions with added complexities like surcharges.

How do Stripe payments work in Xero?

Stripe and Xero simplify payment reconciliation by using charge ID matching. Payments are processed through three key steps:

• Payment Import Process: Xero automatically pulls Stripe payouts into your bank feed. It identifies all transactions linked to a specific payout and matches them to the relevant invoices in your Xero account.
• Automated Matching Setup: To enable this, you need to ensure:
  • Bank accounts are correctly mapped in Payment Service Settings.
  • Payout schedules are properly configured.
• Handling Fees: Xero automatically accounts for Stripe processing fees during reconciliation. For example, a $1,000 payment with $29 in fees will be recorded as a $971 net deposit, with the fees logged as a separate transaction.

Note: Automatic reconciliation works only with scheduled payouts. If you manage withdrawals manually, you'll need to reconcile payments manually using Xero's "Find & Match" feature, matching them with the Stripe charge IDs.

How do I reconcile an EFT in Xero?

Reconciliating EFTs in Xero builds on the platform's automated Stripe integration, specifically handling payment batches. While Xero extends Stripe's automation to bank transfers, you might still need to step in manually at times.

If the auto-match doesn’t work:

• Go to the Reconcile tab and use the Find & Match feature.
• Search for transactions by payment amount or date.
• Double-check the transaction details to ensure accuracy.

For Stripe EFT fees, use your Merchant Fees account (set up earlier) to track net deposits and related costs. This keeps your records accurate when processing payments in bulk.

Troubleshooting common reconciliation issues:

• Duplicates: Turn off duplicate sync settings to avoid errors.
• Currencies: Make sure your currency settings align with your Stripe-Xero setup.
• References: Ensure invoice ID formatting matches the Stripe charge IDs.
• Timing: Verify payout settlement periods to match transactions correctly.

For foreign EFTs, rely on Xero's multi-currency support and daily exchange rates. Apply the same multi-currency techniques discussed earlier for accurate reconciliation.

Setting Up and Managing the Stripe and Xero Integration

This process streamlines reconciliation workflows, as shown in earlier examples. To get started, you'll need to meet specific requirements, including having a Xero organization based in the same country. Proper setup ensures you can take advantage of automated reconciliation features.

Connecting Your Stripe Account to Xero

You can link your accounts through Xero's Payment Services screen:

• Go to Settings > Payment Services in Xero.
• Search for Stripe under bank account connections.
• Complete the OAuth authentication process.
• Confirm admin access credentials for both Stripe and Xero.

Alternatively, you can connect directly from an approved invoice by selecting the "Online Payments" option and choosing Stripe as the credit card provider.

Configuring Payment Services Settings in Xero

Make sure to adjust these key settings:

Setting Category	Key Settings	Purpose
Bank Account	Link Stripe-connected account	Route transactions properly
Fee Structure	Set 2% default merchant fees	Track fees automatically
Payment Sync	Enable/disable as needed	Avoid duplicate entries
Tax Handling	Configure for transaction fees	Ensure compliance

"The integration handles double-entry accounting automatically - debiting bank accounts and crediting sales accounts with precise fee allocations." - Fusion Accountants Guide

Xero Chart of Accounts Mapping for Stripe Transactions

To maintain consistency, map your accounts as follows:

Primary Account Categories:

• Route Stripe payouts to Accounts Receivable.
• Assign processing fees to a designated Merchant Fees expense account.
• Create a separate Liability Account for chargebacks.
• Use a Sales Returns account to manage refunds.

For businesses with more complex needs, additional automation tools can provide further customization.

Security Tips:

• Regularly check transaction matching using the Bank Reconciliation Summary report.
• Flag any unmatched transactions that remain unresolved 72 hours after payout.

Ongoing verification supports error prevention and ensures smooth reconciliation processes.

Importing & Reconciling Stripe Transactions in Xero

How to Import Stripe Transactions into Xero

To import Stripe transactions into Xero, your Stripe account must be set to use automatic payout schedules. This setup ensures payments are matched to Xero invoices using Stripe's charge IDs (e.g., ch_XXXX).

Once your accounts are mapped correctly during the setup process (as explained earlier), the transaction import process runs smoothly.

Reconciling Stripe Invoices with Surcharging in Xero

If surcharging is enabled, Xero simplifies reconciliation by breaking down each transaction into separate entries. For example, if you have a $500 invoice with a 3% surcharge, Xero will generate:

• A payment entry for $515
• A fee transaction for $15.45
• A net payout that aligns with your bank deposit

Reconciling Invoices Issued Outside of Xero with Stripe Payments

For invoices created outside of Xero, use the "Find & Match" feature to reconcile payments. Match the net amount after Stripe's standard fees, and record the processing fees as separate expense entries for accurate bookkeeping.

Managing Xero Stripe Subscriptions and Recurring Payments

If you're handling recurring payments or subscriptions, apply the same reconciliation steps with a few extra considerations:

• Enable the "Auto-Reconcile" option in Xero's Stripe settings.
• Link subscription IDs to Xero tracking categories during reconciliation.
• Regularly check that daily batch totals in Stripe's activity log match the amounts in Xero's bank feed.

Mastering Stripe Fees and Reconciliation in Xero

How to Account for Stripe Fees in Xero

Xero makes tracking Stripe fees simple through its automated system, set up during the integration process. Once configured in the Payment Services Settings, Xero automatically records these fees as separate transactions in your bank feed. Each fee is listed with clear descriptions, including the relevant Stripe charge IDs (e.g., ch_XXXX), making them easy to identify.

Reconciling Transactions without Surcharging

If your business absorbs Stripe processing fees instead of passing them on to customers, you’ll need to match net payments to invoices while recording the fees separately.

Here’s how Xero handles different transaction scenarios:

Transaction Type	Net Amount Recording	Fee Allocation	Reconciliation Method
Single Payment	Match to invoice	Direct to Merchant Fees	Auto-reconciliation (requires automatic payout schedules in Stripe)
Batch Payments	Split by invoice	Proportional allocation	Manual matching

Analyzing Xero Stripe Fees for Financial Insights

Xero’s automated fee tracking also helps you spot trends and patterns in your processing costs. Regularly reviewing this data can provide valuable insights.

Focus on these key metrics for better oversight:

• Fee Percentage of Sales: Check if your processing costs are higher than the standard 2.9% + $0.30 per transaction.
• Monthly Fee Trends: Use Xero's Expense by Contact report filtered to 'Stripe Fees' to track changes month over month.
• Currency Impact: Compare fees against sales figures in Profit & Loss reports to assess the effect of currency and exchange rates.

These metrics can help you manage and potentially reduce processing costs over time.

Advanced Reconciliation and Reporting Features

Managing Stripe Reconciliation with Xero Central

Xero Central builds on the platform's bank feed features by offering tools for centralized management. However, when a single Stripe account is used across multiple Xero entities, automatic reconciliation isn't possible. Instead, you'll need to use the Find & Match feature to manually reconcile transactions for each organization.

To ensure transactions are matched correctly across entities, pay close attention to the details in each organization's bank feed. This becomes especially important when handling departmental accounts under one Stripe payment processor.

Handling Sales Tax for Stripe Transactions in Xero

Xero simplifies tax filing for Stripe transactions through its tax code mapping system. Payments with mixed tax rates are processed effectively using these features:

Tax Automation Tool	Purpose
Preconfigured Rates	Automatically applies the correct tax rates
Line-Item Tracking	Links taxes directly to specific invoices
Bulk Tax Adjustments	Eases tax handling for multi-currency payments

These tools go beyond just tracking fees, ensuring taxes are applied correctly and efficiently.

Reconciling Stripe Payouts and Monitoring Cash Flow

Stripe payout reconciliation in Xero requires careful timing and accuracy. The system flags discrepancies caused by currency differences or delayed transfers, helping to maintain accurate financial records.

For subscription-based businesses with high transaction volumes, Xero's Advanced Analytics module offers robust monitoring and reporting tools:

Feature	Functionality
Fee Analysis	Predicts fees and provides regional benchmarks
Monitoring	Sends real-time alerts for unusual activity

These analytics tools also address fee trend analysis, as discussed earlier. Xero further supports accurate tracking by creating holding accounts and generating adjustment entries for failed payments, ensuring nothing slips through the cracks.

Streamlining Your Stripe Reconciliation with Xero

Key Tips for Xero Stripe Reconciliation

To simplify Stripe reconciliation in Xero, focus on setting up Stripe payout settings and mapping Xero accounts correctly. It's a good idea to maintain separate general ledger (GL) accounts for Stripe fees and chargebacks to keep your records clear.

When dealing with international payments, use Xero's currency conversion tools to avoid errors caused by exchange rate differences. This is especially important for businesses handling transactions across multiple currencies.

Reconciliation Element	Suggested Approach
Account Setup	Use separate GL accounts for fees and revenue
Currency Handling	Enable and configure multi-currency settings
Matching Transactions	Use the "Find & Match" tool for manual reviews

Insights on Managing Digital Payments with Xero

The Stripe-Xero integration streamlines your workflow by automating tasks like charge ID matching, which drastically reduces manual effort. As mentioned earlier, this feature achieves a 92% auto-match rate, saving time and improving accuracy. Additionally, the system automatically creates "spend money" transactions for Stripe fees, giving you a clear picture of net revenue after deductions. By applying the strategies outlined in this guide - like leveraging auto-matching tools and setting up well-organized accounts - you can cut down on manual work while keeping your financial records accurate and up-to-date.

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