How to reconcile ServiceM8 Pay processing fees in Xero & QuickBooks Online

This article provides tips on how ServiceM8 can help you reconcile ServiceM8 Pay processing fees in your accounting package, with the ServiceM8 Pay Transactions feature. Please consult your accountant/bookkeeper for advice on how to apply this information to your business.

When you process payments via ServiceM8 Pay, processing fees are deducted from the total payment amount before the remaining money is transferred into your bank account. This can make it hard to reconcile your bank statement with invoices, because the amount that the customer paid will not match the amount that is deposited into your bank account.

ServiceM8 can help ease bank reconciliation by using a Clearing Account for ServiceM8 Pay transactions. The Clearing Account is an account set up in your Xero or QuickBooks, which represents the amount that you are owed. When you process a payment using ServiceM8 Pay, the balance of the Clearing Account will increase. When the money is paid into your Bank Account, the balance of the Clearing Account will decrease. 

Here's how it works:

  • All payments processed through ServiceM8 Pay will be posted to your ServiceM8 Pay Clearing Account.
  • Transaction fees will be automatically created as Bills and paid from this account.
  • When the funds are transferred to you, ServiceM8 will create a transaction in your accounting package to move the correct amount from your ServiceM8 Pay Clearing Account to your Bank Account.
  • You can easily match the invoice/transaction with the deposit, simplifying reconciliation in your Accounting Package

Note: this feature is supported for Xero and QuickBooks Online only. 

Setting up ServiceM8 Pay Transactions

To activate this feature, or update your reconciliation settings, in your online dashboard, go to Account > Settings > Preferences > Invoicing > ServiceM8 Pay Transactions:

Complete the setup process:

ServiceM8 Pay Clearing Account: this is the account in your accounting package where ServiceM8 Pay transactions will be recorded. See the next section for details.

Bank Account: the bank account in which ServiceM8 Pay deposits money when paid to you. 

Expense Account: the account which will record transaction fees.

Tax Rate: The Tax Rate applied to ServiceM8 Pay transaction fees. (Note: in Australia, fees from Banking institutions are normally GST-free, however ServiceM8 Pay fees include GST).

Once you have configured your settings, click Next.

Because ServiceM8 will be creating Bills/Expenses in your Accounting Package, they need to be associated with a Supplier (ServiceM8 can create this contact for you). Ensure the supplier contact for ServiceM8 Pay is set to 'ServiceM8 Payments Pty Ltd':

Click Next once you have configured your supplier settings.

The setup process is now complete, and ServiceM8 will use your configured settings to make reconciliation of ServiceM8 Pay transactions simple.

Creating a Clearing Account

The process to create a clearing account depends on your accounting package.

Xero

ServiceM8 can automatically create a Clearing Account during the setup process. If you would like to set up your own clearing account instead, you will need to create a Current Asset account with the "Enable Payments to this Account" option turned on.

QuickBooks Online

You will need to create a Bank account in QuickBooks Online to use as your Clearing Account. Do not use an existing Bank Account which you receive bank statements for -- you need to have a separate account for ServiceM8 Pay transactions. To create an account:

  1. Go to the Transactions menu
  2. Choose Chart of Accounts.
  3. Click New 
  4. Select Bank for the Account Type, and select any Detail Type.
  5. Choose a name, for example "ServiceM8 Pay Clearing Account".
  6. Click Save and Close.

Disclaimer

ServiceM8 cannot provide accounting advice specifically for your business. However, this article describes the features implemented by ServiceM8 which can help make the reconciliation process easier in your accounting package. Please consult with your accountant and/or bookkeeper before activating this feature. 

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