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Xero Reconciliation 

What is Reconciliation? 

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
  • This feature is available along with Chargebee-Xero integration only
  • The Chargebee-Xero integration is available from the PRO Plan onwards. Find out more on the pricing page .
  • Only Stripe is supported for now.

Problem: What is the trouble with Xero Reconciliation 

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 can be linked to Xero as a payment processor. But Stripe cannot be connected to Xero to download the statement from Stripe (as you can do with your bank accounts)

Solution: Create Intermediate Gateway Bank Account 

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 an individual account for every gateway in your Xero Chart of Accounts exclusively for transactions processed by a gateway and

  • Use Chargebee to download a Gateway statement from your Gateway for each of the accounts and push them to Xero.

Mapping payments between the Gateway statement, Invoices/transactions and your Bank statement becomes easy

Note

Currently, Chargebee only supports downloading and pushing account statements from Stripe Gateway.

In the same example above, an account is created in Xero 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 may be aggregated in-case the fees was applied multiple times.

Setup Xero Reconciliation using Chargebee 

Step 1: Download Gateway Statement

  • Connect your Chargebee and Xero accounts

  • Navigate to the Xero Integration sync settings from SettingsThird Party IntegrationsXero

  • Click Get Gateway Statement

  • Select the date range for which the statement should be downloaded

  • You will be notified when the statement is available for download > once you receive the notification, download the statement.

Note

Get Gateway Statement option is enabled only on request, kindly drop in an email to Support and we will enable this option offline.

Step 2: Upload Gateway Statement in Xero

If you have an existing gateway account in Xero with Type as Bank to manage gateway statement, you can use that, else create a new gateway Account with Type as Bank to import the Gateway statement.

Note

All Paid Invoices shall be integrated from Chargebee to Xero into the Gateway account in Xero with Type as Bank.

Step 3a Manual: Reconcile the Invoices/Transactions with Gateway Statement

Chargebee ensures the payment transactions sent to Xero contain the gateway transaction ID.
The gateway transaction ID will be available in the gateway statement as well.

Note

Xero uses Customer Name, Date, and Amount for finding matching entries for reconciliation. But when the transactions are processed via the gateway, it will not be possible to use these search criteria to search for the transactions. Hence the gateway transaction ID should be used for searching.

  • You can search with Gateway transaction ID to reconcile transactions

  • Repeat this process for Payments and Refunds

Step 3b Automatic: Run Google Chrome Extension to reconcile automatically

  • Install and run the Google Chrome Extension to automate the Reconciliation process

  • Xero displays 20 records per page

  • You can run the extension for each page in Xero and complete the reconciliation.

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 Settlements to Bank Accounts, these should be matched automatically (as explained in the following steps).

Step 4: Map the Gateway Processing Fees

Map the Gateway Processing fees to a specific expense account in Xero

Note

You can also create a Reconciliation rule so Xero can match the conditions next time and automatically display as a match. Read more about Xero Reconciliation   rules.

Step 5: Transfer settlement amount to a Bank Account

After the Payments and refunds are reconciled between the Gateway Statement and Gateway Bank account, the lump sum amount pending to be transferred in the Gateway Statement shall be transferred from the Gateway Bank Account to your actual Bank Account.

Step 6: Reconcile Bank statement entries

  • Once your bank statement is uploaded, Xero will display the Bank statement and the transactions that have to be reconciled

  • The gateway statement transfers should be reconciled to complete the Reconciliation process

FAQ 

How will the gateway statement be converted into QuickBooks understandable format?

When you download the statement from Chargebee, Chargebee will understand the type of gateway and convert it to a format accepted by Xero.

How are multi-currency invoices managed?

For Multi currency users, the exchange rate will be derived from the Gateway (by calculating the exchange rate from the original and converted amount)

How will offline payments be reconciled?

  • Offline transactions will be sent from Chargebee.
  • Offline transactions will be downloaded into Xero via the Bank Statement feed.
  • You should manually match the Offline transactions.
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