Typically, when dealing with credit card batch deposits in Xero, it's common to use a separate Xero account like Undeposited Funds or a credit card holding bank account to "hold" payments and then "group" them in a Bank Deposit to move then into a Xero checking account.
Using a holding account in Xero for credit card sales
This method involves creating a separate Bank Account in Xero to act as a holding account for funds until they're deposited into your physical bank account by your card processor. This can be called "Credit Card Holding Account", for example.
Then, in MyWorks Sync > Map > Payment Methods, MyWorks Sync should be set to sync payments into this holding account.
Orders will then be synced into this bank account in Xero, and instead of "Matching" transactions in the Banking feed in Xero, they should be "Transferred" from this holding account.
This results in your "holding" account containing a remaining balance of the difference between your gross sales for the day and the net sales sent to your bank account - which would represent the transaction fees for these sales. Or, transaction fees can be included in each order as a negative line item, so there's no different left in this account.
For example, if you had $550 of orders on Monday, these would be synced into Xero automatically by MyWorks Sync - resulting this holding account having a balance of $550.
Then, on Wednesday, your credit card processor deposits the net amount (gross sales minus transaction fees) for Monday's sales into your bank account - which is $507.97, for example.
This amount can then be "transferred" from your holding account in Xero in your Banking feed. This then leaves your holding account with a balance of the difference: $42.03. This represents the transaction fees from this deposit, and can then be transferred to your transaction fees expense account on a daily, weekly, or monthly basis, for example.
Transaction Fee Handling
With this method, transaction fees can be accounted for and kept accurate in two different ways:
- A transaction fee report can be pulled from your card processor to compare the transaction fees recorded on a monthly or weekly basis. This would help ensure that the remaining balance in this account does match the actual transaction fees assessed during this period.
- Transaction fee syncing can be enabled in MyWorks Sync, which will sync transaction fees into Xero in each order as a negative line item. This would result in an ongoing $0 in the holding account - which would help identify any issues if this balance is not $0.
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