Integrating Stripe payments with Xero accounting can be a real headache for many online businesses.
Luckily, with the right setup you can seamlessly reconcile Stripe transactions in Xero - no more manual imports or messy workarounds.
In this post, you'll learn step-by-step how to:
- Enable the Xero Stripe integration
- Automate transaction imports into Xero
- Reconcile Stripe payouts, fees, refunds and more
- Utilize Xero reports for clear Stripe oversight
With these tips, you'll simplify payment processing and save hours reconciling online transactions.
Introduction
Integrating Stripe with Xero can streamline the process of reconciling online transactions and fees. This simplifies accounting for ecommerce businesses by automatically importing Stripe sales data into Xero for reporting and reconciliation.
In this article, we will cover the key benefits of connecting Stripe and Xero, including:
- Automatically importing Stripe transactions into Xero in real-time
- Matching bank feeds to reconcile Stripe payouts
- Accounting for Stripe processing fees and charges
- Simplified reporting on online sales and revenue
By properly configuring the Stripe-Xero integration, businesses can save significant time on manual reconciliation and gain greater visibility into the profitability of online sales channels.
How do I reconcile a payment from Stripe in Xero?
Reconciling Stripe payments in Xero can seem complicated, but following these steps will simplify the process:
Match the Stripe Payout to a Bank Transaction
- In Xero, go to the Bank Reconciliation tab
- Click Find & Match next to the deposit transaction from Stripe
- Check Show Spent Money
- Select the Stripe payout transaction to match it
This will link the Stripe payout to the bank transaction in Xero.
Reconcile any Stripe Fees
- Stripe charges transaction fees that need to be reconciled
- Go to Bank Reconciliation and click Add
- Select the account the fees hit, enter the amount, and categorize it
- Match the fee transaction to reconcile it
Reconciling these fees is important for accurate financial reporting.
Review Reporting
- Run Xero's Bank Reconciliation report
- Confirm all transactions, including fees, show as reconciled
- Review the Profit & Loss report to check the impact of fees
Following these 3 steps will ensure you accurately record Stripe payouts and fees in Xero. Let me know if you have any other questions!
How do I record a Stripe transaction in Xero?
Recording Stripe transactions in Xero is straightforward with the right setup. Here are the key steps:
Connect Stripe to Xero
- In Xero, go to Settings > Bank Accounts and select Connect Stripe
- Follow the prompts to connect your Stripe account to Xero
Once connected, Xero will automatically import new charges and payouts from Stripe as bank transactions. This eliminates manual data entry.
Categorize Stripe Transactions
To simplify reconciliation, set up rules to auto-categorize Stripe transactions:
- Go to Settings > Bank Rules
- Create rules to categorize charges by:
- Source type (charges, refunds, payouts)
- Metadata tags (products, services, etc.)
- Fixed amounts (subscription fees, etc.)
Auto-categorization will save time reconciling transactions each month.
Reconcile Transactions
When reconciling, match Stripe payouts to deposits and charges to invoices. Having clean Stripe metadata makes this easier.
For best practices on reconciling Stripe transactions in Xero, see this Xero guide.
Integrating Stripe with Xero provides automated transaction feeds, categorization rules, and reconciliation tools to simplify accounting. Following these best practices will help streamline the process.
How do Stripe payments work in Xero?
When a Stripe payout is imported into your bank account in Xero, Xero automatically reconciles the transactions associated with that payout by matching them to the relevant Xero invoices using the Stripe charge IDs. This auto reconciliation works smoothly as long as:
- You have set up an automatic payout schedule in Stripe, not a manual one. Manual payouts can cause reconciliation issues in Xero.
- The charge IDs from Stripe match to invoice numbers in Xero.
If there are any fees deducted from the payout by Stripe, Xero will account for these seamlessly during reconciliation. You can check the reconciliation status of each deposit under the Stripe bank account in Xero to ensure accuracy.
To summarize, Stripe payouts and their related charges are automatically reconciled with Xero invoices out-of-the-box. This saves you time on manual reconciliation and provides transparency into which charges make up a payout deposit. Just be sure to use automated payouts in Stripe and match charge IDs properly.
How do you pass the Stripe fee on to customers in Xero?
To display the surcharge for Stripe transaction fees in Xero invoices, you need to add a field code to an advanced invoice template.
Here are the steps:
- Go to Settings > General Settings
- Click on Invoice Settings
- Under Template, choose "Advanced Template"
- Click Customize
- Add a new field with the name
InvoiceFeeReimbursed
This will display the Stripe processing fees paid by the customer when they click Pay Now on an invoice. The fees will be included in the payment total.
By passing on Stripe fees to customers, you can reconcile invoices and payments properly in Xero while avoiding an expense hit from the fees. Just be sure to communicate the surcharges to customers clearly to avoid confusion.
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Setting Up Stripe and Xero Integration
Integrating Stripe with Xero can streamline online transaction management by automatically importing Stripe sales into your Xero accounting software. Here's a step-by-step guide to getting set up:
Enabling the Xero Stripe Integration
- Log into your Xero account and navigate to the App Marketplace.
- Search for "Stripe" and select the official Stripe integration app.
- Click "Add to Xero" and follow the prompts to connect your Stripe account.
- The integration will now be enabled and ready to configure further.
Configuring Xero Chart of Accounts Mapping
- In Xero, go to Settings > Accounting > Chart of Accounts.
- Review your existing accounts and determine where Stripe transactions should be mapped. Common accounts include:
- Sales Income
- Online Sales Income
- Service Fee Expense
- Online Payment Fees
- Go to Settings > Bank Accounts and select your connected Stripe account.
- Under Account Mappings, assign each Stripe transaction type to its corresponding Xero account.
Automating Stripe Transaction Imports into Xero
- Under Bank Feed Settings in Xero, choose to automatically import Stripe transactions daily.
- Set the time of day transactions should import. Staggering feeds prevents overlap.
- Enable options like "Import new transactions" and "Update existing transactions" as needed.
- Saved changes will apply to future Stripe transaction imports.
Understanding Xero Stripe Fees Structure
Stripe charges transaction fees and monthly account fees. In Xero, these appear as individual fee line items for each deposit:
- Transaction Fee: Percentage of sale amount as a fee expense
- Monthly Fee: Fixed monthly charge as a fee expense
Review imported Stripe fees in Xero frequently when reconciling transactions.
Managing Stripe Transactions in Xero
Integrating Stripe transaction data into Xero can streamline accounting and reconciliation workflows for businesses. This guide covers key steps for importing Stripe payouts, fees, charges, and refunds into Xero.
Reconciling Stripe Payouts
When Stripe pays out funds to your bank account, you need to reconcile these transactions in Xero. Here are the steps:
- Navigate to Banking > Reconcile in Xero
- Select your business bank account
- Match the Stripe payout transaction to the bank statement
- Select the appropriate Income account mapping for the payout (e.g. Online Sales)
- Repeat for all payouts
This will ensure the transactions match between Stripe and Xero.
Accounting for Stripe Fees
Stripe charges transaction fees that should be recorded properly in Xero:
- Go to Reports > Stripe Fee Summary
- Export the fees data to view total amounts
- Create a journal entry allocating fees to appropriate expense accounts
- Common accounts: Payment Processing Fees, Bank Service Charges
Doing this monthly will categorize Stripe fees correctly.
Handling Charges and Refunds
For Stripe charges and refunds:
- Navigate to Banking > Reconcile
- Match charges and refunds from the Stripe statement to the bank statement
- Use appropriate Income and Expense accounts
This will ensure all Stripe transaction types are reconciled accurately.
Importing Historical Stripe Data
To backfill Xero with historical Stripe data:
- Generate Stripe statements for desired periods
- In Xero, go to Bank Accounts > Import
- Select appropriate date range
- Choose Stripe statement file
- Map transaction details to Xero accounts
This will populate past Stripe transactions so your Xero accounting records are complete.
Integrating Stripe and Xero takes some initial configuration but saves significant time reconciling transactions. This guide should help manage common Stripe transaction types within Xero.
Reconciling Stripe Transactions in Xero
Reconciling Stripe transactions accurately in Xero is key for reliable financial reporting. This guide provides best practices for matching Stripe payouts to invoices, handling fees properly, and troubleshooting issues.
Reconcile Stripe Invoices with Surcharging
When invoices include surcharging fees, start by mapping your Stripe transaction fees and payouts to the right Xero income accounts.
- In Xero, ensure you have a Stripe Fees account mapped to your Stripe charges. This captures the total transaction fees deducted by Stripe before payout.
- Also create a Stripe Payouts account. This will record the actual deposits made to your bank account from Stripe.
To reconcile:
- Import Stripe payouts into the Stripe Payouts account in Xero using the bank feed. This records deposits made.
- Import Stripe fees into the Stripe Fees account using the Stripe Xero integration. This captures Stripe's cut.
- Match invoices to payouts by payment reference and confirm no discrepancies.
Following this process produces an accurate picture of transactions by properly accounting for all fees.
Reconcile Stripe Invoices without Surcharging
For invoices with no surcharging, reconciliation is simpler:
- Import Stripe payouts into an Income account like Online Sales using the Xero bank feed. This records the full transaction amount.
- Check that imported payout amounts match issued invoice amounts in Xero to confirm accuracy.
With no extra Stripe fees to account for, matching payouts to invoices verifies transactions are recording correctly.
Reconcile Invoices Issued Outside of Xero
If invoices were not issued in Xero:
- Manually enter the invoice details like date, customer, line items into Xero after the payout imports.
- Match the Xero invoice to the imported Stripe payout by payment reference and amount.
While more labor intensive than issuing invoices directly in Xero, this method lets you fully reconcile external invoices with their related Stripe payout.
Stripe Xero Invoice Integration
Using the Xero + Stripe integration can automate part of the reconciliation process. Here's how it works:
- When an invoice is issued to a customer through Stripe Billing and Xero, a draft payment is automatically created in Xero based on the Stripe invoice details.
- Once Stripe's tracking shows the payment succeeded, that draft payment automatically gets finalized in Xero. This matches the payment to the invoice in one click.
Setting up this integration eliminates manual work reconciling matched invoices and payments.
Troubleshooting Stripe Reconciliation Issues
Common issues and troubleshooting tips:
- If amounts don't match between Xero and Stripe, check that fees and surcharging are properly accounted for.
- For missing imported Stripe transactions, confirm your Xero bank feed connection is working properly. Re-authenticate if needed.
- If a payment doesn't automatically reconcile with its Xero invoice, recheck the integration setup in both Xero and Stripe to make sure syncing is active.
Following these Stripe reconciliation best practices will keep your books clean and accurate! Let me know if you have any other questions.
Advanced Reconciliation Techniques
Reconciling more complex Stripe transactions in Xero can require some additional techniques, but with the right approach it can be managed smoothly.
Handling Multi-Currency Transactions
When Stripe transactions occur in multiple currencies, special care must be taken when reconciling in Xero to avoid discrepancies. Here are some tips:
- Enable multi-currency in your Xero organization if you haven't already. This allows you to manage transactions in foreign currencies.
- Pay attention to the exchange rates being used in Stripe and Xero. Sometimes a small difference can lead to reconciliation issues.
- For higher volumes, consider using the Xero API to automate the reconciliation including handling exchange rate differences programmatically.
- Review any transactions with unexplained differences manually. Check if the exchange rate changed between the time of transaction and settlement.
- Consider adjusting your reconciliation tolerance levels to account for typical exchange rate fluctuations between Stripe and Xero.
Dealing with Partial Refunds
When customers request partial refunds, special attention is required when reconciling:
- The original transaction and refund should be matched in Xero during reconciliation.
- If you use Xero's bank feeds, partial refunds may come through as separate unreconciled transactions. Group them with the original payment manually.
- Make sure to apply the refund against the correct customer invoice in Xero to keep your accounting records accurate.
- For high payment volumes, consider using Brightpearl or Chargebee to automate the linking of partial refunds with original invoices.
Accounting for Disputes and Chargebacks
To correctly account for disputed transactions and chargebacks:
- Disputed charges should be reconciled when they reach "lost" status in Stripe.
- Create a "Chargeback Expense" account in Xero to track lost disputed charges for accounting purposes.
- Ensure funds from lost disputes are properly accounted for as expenses in the correct accounting period.
- Monitor dispute and chargeback levels to identify potential issues with products, services, or processes.
- Consider utilizing Stripe Radar for automated fraud detection and prevention to reduce disputes before they happen.
Properly reconciling complex multi-currency, partial refund, and disputed Stripe transactions in Xero takes some additional care and effort. But with the right workflows and tools in place, managing the intricacies is very feasible. Reach out for personalized advice if you have any questions!
Utilizing Xero Reports for Stripe Transactions
Leveraging Xero's reporting features to analyze Stripe transaction data can provide valuable financial insights for businesses.
Generating Stripe Sales Reports
Xero seamlessly integrates Stripe transaction data, allowing you to generate detailed sales reports. Follow these steps:
- Navigate to Reports > Standard Reports > Sales Reports
- Select the date range to analyze
- Under 'Report Type' choose 'Stripe Sales'
- Customize columns to include key metrics like total sales, average order value, top selling items, etc.
- Export to CSV or PDF to share findings
With a few clicks, you can analyze Stripe sales by time period, best selling products, average order sizes, and more.
Xero Sales Tax Filing and Reports
Xero automates sales tax calculations on Stripe invoices. You can leverage this to:
- File and pay sales tax in Xero based on Stripe transactions
- Generate sales tax reports filtered by state, period, tax type etc.
- Claim sales tax refunds for tax paid on business expenses
- Stay compliant with tax law changes related to economic nexus
Under Reports > Standard Reports, select the 'Tax Reports' section to build custom reports.
Analyzing Stripe Fee Impact on Revenue
To understand how Stripe fees affect your revenue:
- Navigate to Reports > Standard Reports > Profit and Loss
- Select date range
- Customize columns to add:
- Stripe Fees
- Total Revenue
- Total Expenses
- Save custom report
Compare Stripe fees to revenue over time. This indicates what % of revenue goes towards fees. If the % increases substantially, renegotiate your Stripe plan.
Monitoring Stripe expenses is crucial for making informed business decisions and maintaining healthy margins.
Conclusion
Reconciling Stripe payments with Xero can streamline online transaction management for businesses. Here are some key takeaways:
- Automate the import of Stripe sales into Xero to eliminate manual data entry and reduce human error. This saves time and ensures accuracy.
- Review imported Stripe transactions in Xero to match them with the appropriate accounts. This proper accounting setup is crucial for accurate financial reporting.
- Account for Stripe processing fees by mapping them to an Expense account in Xero. This avoids understating revenues and expenses.
- Use Xero's bank feed rules to automatically categorize different Stripe transaction types, reducing manual reconciliation efforts.
- Reconcile any payments collected directly in Xero with corresponding payouts from Stripe to ensure transactions are properly recorded from end-to-end.
- Leverage Xero's sales tax tools for automated sales tax calculations, filing, and reporting based on Stripe payment data. This simplifies tax compliance.
By integrating Stripe and Xero, businesses can save hours of manual work, reduce errors, keep clean books, and gain insights into online sales and revenues. The automation and streamlining of reconciliation and accounting processes is a major benefit for scaling ecommerce businesses.
