How to Reconcile Stripe Transactions

Hi there,

Let’s talk about Stripe and Xero.

Xero has partnered with Stripe to enhance payment and accounting processes for US businesses. This integration allows Xero users to:

• Accept online payments via Stripe

• Ensure smooth payment collection

• Automate reconciliation

By linking the two platforms, businesses benefit from:

• Improved cash flow visibility

• Reduced manual data entry

• Enhanced financial management efficiency

The collaboration aims to provide a seamless experience for users, simplifying the handling of financial transactions and accounting.

Xero makes it very easy to connect Stripe as a payment processor. Here’s how it works:

Step 1: Set Up Stripe Feeds in Xero

First things first, connect your Stripe account to Xero:

1. Log in to Xero: Navigate to the "Accounting" menu, select "Bank accounts."

2. Add Bank Account: Click "Add Bank Account" and search for Stripe.

3. Connect Stripe: Follow the prompts to connect your Stripe account to Xero.

This video will walk through the process with you:

Step 2: Match Transactions

Once connected, Stripe will automatically feed your transactions into Xero. Here’s how to match them:

1. Go to Reconcile Tab: In Xero, navigate to the "Reconcile" tab under the "Accounting" menu.

2. Find Stripe Transactions: Locate the Stripe transactions imported into Xero.

3. Match with Invoices: Match these transactions with the corresponding invoices. Xero will suggest matches based on amounts and dates.

More on matching transactions:

Step 3: Handle Fees Separately

Stripe fees can complicate reconciliation if not handled correctly. Here’s the process:

1. Create a Stripe Fees Account: In Xero, set up an expense account specifically for Stripe fees.

2. Record Fees: Deduct the fees from the total payment received. For example, if you received $970 from a $1,000 transaction (with $30 in fees), record $970 as a transfer to your bank account and $30 in the Stripe Fees account.

3. Split Transactions: During reconciliation, split the transaction to reflect the payment and fee correctly.

Step 4: Ensure Accurate Revenue Booking

To ensure your revenue is not understated, follow these tips:

1. Invoice Everything: Make sure all your sales are invoiced in Xero. Uninvoiced sales can lead to understated revenue.

2. Reconcile Regularly: Frequent reconciliation helps in catching any missed transactions early.

3. Check for Discrepancies: Regularly compare your Stripe balance to your Xero balance to identify any discrepancies.

Troubleshooting Common Issues

• Duplicate Transactions: If you find duplicate transactions, ensure that they are not double-counted. Delete or unmatch the duplicates.

• Unmatched Payments: Occasionally, payments might not match automatically. In such cases, manually search for and match the correct invoices.

Hope you enjoyed this one!

Cheers,

Tam