Welcome to the Fit Small Business Xero training course. In the previous lesson,
we showed you how to get paid faster by accepting online payments from your
customers. In this lesson, we're going to cover how to reconcile online payments
and fees from a credit card processor in Xero. To follow along with me,
login to your Xero account now or click the link below this video for a free
30-day trial of Xero. You can also click this link to access our full Xero course
and other helpful resources. Let's get started. As we discussed in the how to
reconcile bank accounts lesson, reconciling is the process of making
sure that your bank account matches your accounting software. This also applies to
online payments from customers that have been credited to your bank account along
with any fees the merchant has charged you. You can click here to access the
bank reconciliation lesson. We'll be using PayPal as an example, but the
reconciliation process should be similar for other payment processing services.
To reconcile online payments and fees from the Xero dashboard you want to go ahead
and scroll down - in this example we're going to scroll down to a PayPal account.
And you want to click the button that says reconcile 2 items. So the number
of items may vary but you want to click this button here to get to the
reconciliation screen. On the left side of the screen is a list of the
transactions that have automatically downloaded from your bank. So in this
example these transactions here on this side of the screen have downloaded
directly from PayPal. In the How to Set Up a Bank Account lesson, we showed you
how to set up bank feeds. Be sure to watch this video tutorial to learn how
to set up a bank feed account. You can click here to access this lesson.
Please note a PayPal bank account must be set up to track payments received.
However most merchants will deposit directly to your existing business checking account.
On the right side of the screen you're going to see transactions that have
already been recorded in Xero. As you learned in the last lesson, when a
customer makes a payment, Xero will reduce the accounts receivable
balance and mark the invoice as paid behind the scenes. Xero will also record the fee
charged by PayPal or your payment service if you choose to have Xero
automatically record the fee. Basically you would determine this when you set up
the PayPal account in Xero. Otherwise if Xero does not automatically record the
fee, then you will need to create a spend money transaction to record any merchant
fees that have been deducted from your bank account. You can click here to
access the lesson on spend money transactions. Xero will attempt to match
transactions that have downloaded from your bank or merchant to transactions
that have been recorded in Xero. So essentially, Xero would attempt to
match these transactions on the left with transactions that are already in
your Xero account on the right. For transactions that it has attempted to
match, you will see a button with the word OK. similar to these two
transactions listed here. So let's take a look at these transactions. On the left
hand side of the screen, we'll see a customer payment that was made on July
23rd for $1. So on the left hand side of the screen this is the credit from your
banks for the payment itself. On the right side of the screen this entry was
recorded once your customer went into their invoice and clicked pay now
and they entered their credit card information. So you want to notate that
the reference number information here at the bottom, starting with 0 7 K 4 7 7,
matches the reference number that's located here on the right side of the
transaction here. So based on the date of the transaction, the amount, and of course
the reference number, these are more than likely accurate matches. And so to accept
the match all you have to do is click the OK button to accept it.
The second transaction here is a fee that was charged by PayPal for the
transaction that we just reconciled. So on the left-hand side here this is
the feed that was deducted directly from your bank account for 33 cents. On the
right side we have a spend money transaction that was recorded
automatically by Xero. As I mentioned previously you can set PayPal up or your
payment service up to where Xero will automatically record the fee for you.
If you don't set up the account to automatically record the fee you will
need to set up a spend money transaction as mentioned previously. So once again
based on the date, the amount information, we can go ahead and accept this item to
reconcile it. So we'll click OK here. Once you have successfully reconciled your
transactions, you should see a notification similar to this one
confirming that you have reconciled your transactions. Which means that the
balance with your bank account matches what you have in your Xero account.
If you are having a difficult time reconciling, refer to the reconciling
tips that we shared with you in the How to Reconcile a Bank Account video tutorial for help.
You can click the link below to access this lesson.
We return back to our Xero dashboard and scroll down. So now instead
of seeing items to reconcile you'll see this green check mark with the
reconciled indication here letting you know that everything has been reconciled.
So that wraps up the lesson on how to reconcile credit card payments and fees
from a merchant in Xero. To access our full Xero course or any of the other lessons
in this series, click this link. You can also find a link below this video for a
free 30-day trial of Xero. If you have feedback about this course
or if you have any questions, please leave a comment below.
Also, don't forget to subscribe.