Getting paid by card and ACH: applying payments and reconciling deposits

01How the money arrives#

Each payment method lands differently, and the reconciliation has to absorb all of them. The structure is the same everywhere: the customer pays the invoice in full, and the processor or the banks pay you less, later, or in a batch with other payments.

Fees differ by provider and by your plan. At Stripe’s standard US pricing, for example, an online card payment costs 2.9% plus 30 cents and an ACH Direct Debit costs 0.8%, capped at $5. Your rates may differ; check your own dashboard, not a blog post. The four common routes:

• Card through a processor such as Stripe: the processor deducts a percentage plus a fixed fee per payment, and pays out a batch on its schedule, less any refunds and chargebacks.
• ACH debit through a processor: cheaper per payment and often capped, but slower to settle, and it can fail days after it looks successful.
• ACH credit or wire initiated by the customer: arrives in full or nearly, usually as one transfer covering several invoices.
• Paper check: deposited by you, sometimes in a batch with others.

02Applying a card payment, worked#

A customer pays a $5,000 invoice by card through Stripe. At the standard rate the fee is $145.30 ($145.00 plus 30 cents), so the payout for that payment is $4,854.70. Use a clearing account that stands in for your processor balance.

The payment: debit Stripe clearing $5,000, credit accounts receivable $5,000. The invoice is paid in full. The fee: debit payment processing fees $145.30, credit Stripe clearing $145.30. The payout: debit cash $4,854.70, credit Stripe clearing $4,854.70. Clearing returns to zero, the invoice is closed, the fee sits in its own account, and the bank feed’s deposit matches the payout exactly.

The same invoice paid by ACH Direct Debit at the standard rate would cost 0.8% of $5,000, which is $40, capped at $5. The entries have the same shape with a $5 fee. That difference is why many B2B companies steer invoices above a few thousand dollars to ACH.

03Payments that don’t match an invoice#

Partial payment. A customer pays $3,000 against a $5,000 invoice. Apply the $3,000; the invoice shows $2,000 still due, aged from its original due date. Find out why: a dispute, a misunderstanding, or a customer paying in installments. Each has a different next step, and none of them is closing the invoice.

One payment, several invoices. A customer wires $12,400 to pay three invoices of $4,000, $5,200 and $3,200. Apply it across all three: debit cash $12,400, credit accounts receivable $12,400. When there is no remittance advice, find the combination of open invoices that sums exactly, oldest first, and confirm it with the customer when it is ambiguous.

Short by a bank fee. A customer wires $4,985 for a $5,000 invoice and an intermediary bank kept $15. That is a bank charge, not a short payment: debit cash $4,985 and bank fees $15, credit accounts receivable $5,000, if your policy is to absorb it. Overpayments and payments with no invoice are unapplied cash: a credit on the customer’s account, and a liability if no invoice is open at month end. Every difference gets a disposition, a fee, a write-off with a reason, a dispute or unapplied cash. None is left to sit on the invoice.

04QuickBooks Online and Xero#

Both systems handle this, if you let them. In QuickBooks Online, receive the payment against the invoice into Undeposited Funds (Payments to deposit), then record the bank deposit by grouping those payments and adding the fee as a negative line to the fee account, so the deposit equals what the bank received. In Xero, record the payment against the invoice into a clearing account for the processor, then reconcile the payout in the bank feed against the payments and a fee line. Processor integrations can do most of this automatically; check what they post before you trust it.

The mistake to avoid in both: matching the bank deposit directly to the invoice and then also recording the payment from the processor’s sync. The invoice is paid twice, and AR goes negative by the same amount. The symptom is customers with credit balances who never overpaid.

05Reconciling the month#

Payments are reconciled when the bank, the processor and the receivables all agree. One case needs care: an ACH debit can fail days after it appears successful (insufficient funds, a closed account, a revoked authorization), so a failed payment is not an error to delete. Reverse it: debit accounts receivable, credit the clearing account, and record any failure fee as an expense. Then the invoice is back in the aging and the reminder sequence picks it up.

At month end, check:

• Every deposit in the bank matches one payout or one customer transfer, to the cent.
• The processor clearing account ties to the processor’s balance at month end, including payouts in transit.
• Fees for the month tie to the processor’s fee report.
• Undeposited Funds or any clearing account holds only payments genuinely awaiting deposit.
• Failed ACH payments are reversed against the invoice, which goes back to open.
• The aging ties to accounts receivable, and unapplied cash is listed by customer.