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QuickBooks Reconciliation 

Introduction 

Reconciliation is the process of confirming that the balance in the Accounting books matches the balance in the Statement (gateway statement, bank statement etc).

Reconciliation helps your accounting team confirm that all the amounts appearing in the statement are brought to record into the books of accounts and a clear explanation emerges for the unreconciled items.

Note
  • Only Chargebee sites with Stripe gateway configured are supported.

Problem Statement 

Imagine that you have a number of invoices processed on a daily basis. The payments are initiated from Chargebee and processed by your gateway. The gateway transfers the final amount (as a lump sum) at the end of the day or after a few days depending on the gateway, with no correlation to the original Invoices for which payments are processed. The problem statement is as follows:

How do we reconcile the invoices/transactions with the bank statement when one lump sum amount is deposited in the Bank Account (when you do not know which individual invoices make up the lump sum amount)?

Bank Transaction Invoices/Transactions
Sum of $490 credited to the
Bank Account on 4th Jan
Customer 1 - Invoice 001 - $99
(Paid on 2nd Jan)
Customer 2 - Invoice 002 - $99
(Paid on 2nd Jan)
Customer 3 - Invoice 003 - $99
(Paid on 2nd Jan)
Customer 4 - Invoice 004 - $99
(Paid on 2nd Jan)
Customer 5 - Invoice 005 - $99
(Paid on 2nd Jan)
Note

Stripe cannot be connected to QuickBooks to download the statement (as you can do with your bank accounts)

The Reconciliation process can be simplified by following the steps mentioned below [this is a recommendation from Chargebee and may vary based on different accounting practices]:

  • Create a Bank Account for the Gateway (in addition to your physical Bank Account)
  • Download Gateway statement from Chargebee
  • Upload Gateway statement into this Bank Account
  • Use Chargebee's Chrome plugin to perform Reconciliation

In the same example above, an account is created in QuickBooks and the gateway statement is uploaded.

Invoices/Transactions Gateway Statement Bank Transactions
Customer 1 - Invoice 001 - $99 (Paid on 2nd Jan) Transaction processed, for $99
Customer 2 - Invoice 002 - $99 (Paid on 2nd Jan) Transaction processed, for $99
Customer 3 - Invoice 003 - $99 (Paid on 2nd Jan) Transaction processed, for $99
Customer 4 - Invoice 004 - $99 (Paid on 2nd Jan) Transaction processed, for $99
Customer 5 - Invoice 005 - $99 (Paid on 2nd Jan) Transaction processed, for $99
Processing Fee
$5.00
Transfer $490 to
Bank account on 4th Jan
Sum of $490 credited to the
account on 4th Jan
Note

The gateway processing fees will be aggregated and shown in the gateway statement export if the multiple fee line items were applied in your gateway statement.

Set up Clearing Account 

  • You can create a clearing account of type "Bank" in QuickBooks and select the account in Chargebee while setting up the integration
  • Payment and refunds can be mapped to one Bank account only. You cannot map payments to one Bank account and refunds to another.
  • You can create more than one clearing account if you have multiple currencies or gateways configured in your Chargebee site such that payments and refunds can be mapped to multiple clearing accounts. Eg: A clearing account for Stripe, another account for GoCardless etc or based on currencies.
  • If you have selected a Bank account and want to change the Bank account to a clearing account, you can select the Manage Mapping option and edit the account selected.

Steps to Reconcile Payments 

Step 1: Download Gateway Statement from Chargebee

If you have not enabled Reconciliation during initial configuration, you can begin the setup and select a clearing account.

  • Connect your Chargebee and QuickBooks accounts
  • Navigate to the QuickBooks Integration sync settings from Settings > 3rd Party Integrations > QuickBooks
  • Click on Get Gateway Statement
  • Select the gateway account for which you want to download the statement
  • You can optionally select Include pending transactions for charges, payments and refunds that are in in-progress status to be included in the reconciliation statement
  • Similarly, select Include unsettled payouts to include settlements and bank transfers that are in in-progress status to be included in the reconciliation statement
  • Select the date range for which the statement should be downloaded and click Download.
Note
  • Gateway statement can be downloaded for transactions made after Mar 15, 2017 only.

  • When you provide a date range, you can select dates within 2 months range only while exporting the gateway statement.

Step 2: Upload Gateway Statement in QuickBooks

If you have an existing gateway account in QuickBooks to manage the gateway statement, you can use that, else create a new Bank chart of account and import the Gateway statement.

Step 3: Start Reconciliation process

  • Download and install the Chargebee's browser extension - for Chrome
  • After the gateway transactions have been imported into QuickBooks, run the Chargebee's Payment Reconciliation plugin.
  • The plugin will start searching for transactions and find matches automatically.
Note
  • If a match is not found, the extension will skip the entry and proceed to the next transaction.
  • The extension will not match Gateway Fees and Settlement/transfers to Bank, these should be reconciled automatically (as explained in the following steps).

Step 4: Review the reconciled payments

  • Click on Reconciliation option in the menu from Settings
  • Select the clearing/gateway account, enter the date and bank balance to begin the review process
  • The transactions which have matched will be auto-selected
  • Click on Finish Now option.

Step 5: Map the Gateway processing fees

  • Navigate to the Gateway account.

  • Select an expense (or any Account) and map the gateway processing fees.

Step 6: Transfer settlement amount to a Bank Account

  • After the Payments and refunds are reconciled between, the settlement entries should be reconciled.

  • You need to transfer the lump sum amount from the Gateway account to an actual Bank Account.

  • Now run the Reconciliation process for the Bank Account as well.

Reconciliation is now complete, all entries are processed.

Reconciling Multi-currency Invoices 

  1. If you have multiple bank accounts linked to Stripe and in QuickBooks, you can generate separate statements per currency and upload them in currency-specific clearing accounts in QuickBooks. Contact support@chargebee.com  to generate multi-currency statements.
  2. If you have multiple currencies in Chargebee and a single bank account in Stripe, Stripe will apply the exchange rate while processing payments. Chargebee will sync the exchange rate used in Stripe to QuickBooks. You should manually reconcile such transactions.

FAQ 

1. Will the gateway statement be converted into QuickBooks format?

When you download the statement from Chargebee, Chargebee will convert it to a format accepted by QuickBooks, so you need not convert the files again.

2. How are multi-currency invoices managed?

For Multi currency users, the exchange rate will be derived from the Gateway involved.

3. Why should I enable Include pending transactions and Include unsettled payouts?

Payment transactions and payment gateway payouts between your bank and gateway accounts do not happen in real-time. Let's say you are using the Stripe payment gateway for payment processing and you have a few transactions initiated via Stripe for the last week of May. You might actually see these amounts credited in your bank account only in the first week of June, until when they are marked "in progress" in your gateway statement. Similarly, Stripe payouts towards your bank account that includes settlements might take a while to be processed and does not happen in real time with every transaction.

Some businesses may find this sort of time lag difficult because, it could come in the way of the reconciliation process. To address this time lag and to help you with successful reconciliation during any given period of time, you can enable Include pending transactions and Include unsettled payouts. This will help reconcile all amounts successfully, even those that are in pending status.


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