Reconciling your net settlement
Reconciling your net settlement against the sales invoices in your accounting system
When reconciling bank payments with received amounts, there may be a small difference due to the fees charged.
Net settlements will not impact VAT returns. You should always record the sale as paid in full (gross), and any processing fees charged should be recorded as an expense.
Each accounting software handles these fees differently. The general principle remains the same: the sale is recorded as 100% received, with the fees treated as an expense. Some software solutions allow this to be done within the same window when marking invoices as paid, while others may require an additional journal entry.
Below are the leading accounting software providers and their respective solutions:
Xero
https://central.xero.com/s/article/Reconcile-a-bank-statement-line-using-Find-Match#:~:text=If%20a%20statement%20line%20includes,bank%20fee%20adjustment%20during%20reconciliation.&text=Web%20iOS%20Android-,For%20the%20relevant%20bank%20statement%20line%2C%20click%20Find%20%26%20Match.,Adjustments%2C%20then%20select%20Bank%20fee
QBO
https://quickbooks.intuit.com/learn-support/en-au/help-article/bank-feeds/account-bank-fees-matching-transactions-bank-feed/L67lX12yz_AU_en_AU
FreeAgent
https://support.freeagent.com/hc/en-gb/articles/115001217630-How-to-split-a-transaction-for-commission-or-fees-deducted
Sage Cloud
https://gb-kb.sage.com/portal/app/portlets/results/viewsolution.jsp?solutionid=222001000100752&hypermediatext=null#:~:text=Match%20existing%20transactions%20%3E&text=Select%20Match%20in%20the%20middle%20of%20the%20transaction.,the%20matching%20payments%20or%20receipts.
Freshbooks
https://support.freshbooks.com/hc/en-us/articles/7588492035469-How-do-I-reconcile-complex-transactions-in-bank-reconciliation/#balances
Freeagent
https://support.freeagent.com/hc/en-gb/articles/115001217630-How-to-split-a-transaction-for-commission-or-fees-deducted
Please use the above information as reference only, we are not advising you on your financial record keeping. If you are ever in doubt on how you reconcile transactions, then you must speak to your accountant or bookkeeper for advice.
