How to account for Stripe fees in banking / accounting

Hot_Glass

Hi, I'm based in Australia, but this may apply to other countries.

Keen to hear how others handle the discrepancy between and invoiced amount, and the amount paid into your bank, when Stripe take their 0.30c and 1.75% (domestic) cut for processing Wave invoice payments via credit card.

Say an invoice is for $100 + gst (10%) = $110 total invoice.
I imagine the 0.30c and 1.75% will be applied to the WHOLE amount, as that is the amount they are handling.

Payment comes through for AUD$107.77 (fee of $2.23)
How do you manage the fees ?

My initial thought is to just add a receipt for this as a finance charge, putting Stripe in as the vendor ?

Is there GST payable on the fee ?
Hard to say for sure because both Stripe and Wave are based US / Canada respectively, but have offices here in Australia ?

Thanks for anyone chiming in with their experiences, or a Wave admin.

Hot_Glass

Thought more about this, and of course the invoice has to balance up too, so . . .

What about editing invoice after the adjusted bank deposit has been made, and putting an expense line in for the commission ?
If possible to put an expense line in an invoice, then that would adjust both the invoice to the correct commission paid amount, and put the expense into accounts for tax ?

ZoeC

Hey @Hot_Glass, thanks for reaching out and great question! If you are sending an invoice and receiving a payment through Stripe, the amount on the invoice is not going to match the amount you receive in your bank account, so here's what to do:

1. Head to Accounting > Chart of Accounts > Expenses > Payment processing Fees > Add a new account. You can call this account Stripe Fees.
2. If you have your bank account connected, this connection will import the invoice payment deposit transaction minus the fees. So head to this transaction and split it.
3. Categorize the first half of the split as Payment received for an invoice in Wave > select the correct invoice and enter the full amount of the invoice.
4. Categorize the second half of the split as Stripe Fees and enter the amount of the fees that were deducted from your payment.

By following these steps you are recording the invoice as Paid and accounting for your transaction fees. Please let me know if you have any questions!

Hot_Glass

Thanks Zoe, I'll check that out when first Stripe payment comes through next week.

I will check if this accounts for GST difference too, I will still have to pay full GST on the invoice, and check if Strip fees have GST, how this method accounts for these, this will be the deciding factor on how to handle it for me, I guess.

AnthonyBrowne_ABC

Hi guys, I just realised that I may have not have been reconciling my accounts accurately over the past year.

When I import my bank statements, I usually delete the bank statement entry for an invoice that has been paid via Stripe and therefore already accounted for in Wave transactions. Is this the correct approach?

Because of the service charge for Stripe transactions, the amount that makes it into my business bank account is not the same amount as on the original invoice. Is there a way that I can record the Stripe fees as an operating expense in Wave so that my account is more accurately reconciled?

Kind regards

Anthony

sheilahash

Hey @ZoeC

I have the same issue. I have a Canadian account and all of my clients are in Canada EXCEPT for 1 U.S. client. He pays view American Express and I bill him in USD. Since Wave does not allow me to take credit card payments on his USD invoice, I've had to resort to billing through Stripe. The problem comes when I am trying to apply the Stripe Payment that shows up in my bank transactions.

1. what arrives is the conversion [minus] the transaction fees
2. it won't allow me to apply the payment to his invoice, in fact, when I'm trying to categorize the transaction, his invoice doesn't appear at all!

Help?!

Barsin

Hey there @AnthonyBrowne_ABC

I merged your question into this thread as I do believe Zoe's answer above may help you! Have a look and let me know if you have any other questions.

Hi @sheilahash

Thanks for reaching out to Wave support.

Unfortunately at this time Wave cannot attribute a payment to an invoice with a different currency. What we typically ask of our users to do is simply go to the the invoice and record a payment to their account. This will populate a new transaction in the currency of the invoice. The invoice will also be marked as paid. You can then delete the bank imported transaction that you were trying to associate with an invoice, as there will be redundant income transactions on your transactions page.

Our team is fully aware of this matter and we're looking into making sure that this type of transaction will be reconciled moving forward!

sheilahash

@Barsin how am I supposed to reconcile the bank account if I delete the transaction from Wave??

JulianP

Hey there @sheilahash .

When it comes to handling invoice payments outside of Wave in a foreign currency, you will have 3 options in this case:

1. CAD/USD Business Profile

Right now, Payments by Wave can only handle payment transactions directly in your business currency. So, within 1 business profile, if it's set to CAD/CAN you'd be restricted to processing CAD only. However, Canadian businesses are able to make a secondary business profile in Wave, with an address in Canada, but processing in USD.

When this happens, Wave opens an integration with Stripe for that specific business profile. They would then do payment processing for you, but, the integration functions in such a way that the automatic accounting on our end should still be seamless. I should mention, Stripe only allows Credit Card payments at this time, so this CAN/USD business profile wouldn't be able to handle ACH/Bank.

In terms of attaching a US bank account, you could definitely do so in this case. If it was a non-Canadian or US based USD account, there are some restrictions (the bank has to be able to offer a US or international routing number) but a USD account with a Canadian bank should connect fine. For the most accurate bookkeeping, and to satisfy both you and your customers, I suggest this method personally.

2. Default Currency Invoicing

Instead of changing the invoice currency to USD, you can issue your invoices to US customers in CAD, your default currency. By doing so, when your customer makes a payment, their bank would handle the currency conversion on their end and you won't have any foreign currency conversion issues in your Wave account. Please note, with this method, a currency charge may appear in your customers bank, but this fee is outside of Wave.

3. Manually Recording Invoice Payments

Finally, you can simply delete the Stripe payment transactions and mark your invoices as paid manually, generating an invoice payment transaction as Barsin suggested. However, you won't be able to reconcile your account moving forward with this method as you may know.

Moving Forward

Moving forward, with your current Stripe payment transactions, you can action Barsin's suggestion and delete them, then simply mark your invoice(s) as paid manually to generate a new invoice payment transaction.

Alternatively, you can delete both the Stripe transaction and the invoice itself and recreate them in a new CAN/USD business profile mentioned in option 1. With this method, you will be able to reconcile the account without any issues and the invoice/transaction will be recorded in the correct currency (USD). Then for all future invoices in USD, you can issue them through this business.

I suggest reviewing your options and making the best decision for both you and your business. I hope this helps!

sheilahash

Hi @JulianP

Option 1 intrigues me, I feel like this may be the correct way to move forward, but I'm still a little confused by it. Let me know if I've got this correct:

• I create a second business within my main Wave account by navigating to Profiles-->Businesses-->Create a Business
• Set the new business COUNTRY to CAD but the BUSINESS CURRENCY default to USD
• Navigate to this "New business" each time i want to create / send / charge a USD invoice

Questions:

• Do I still name the Company name the same?
• Do the transactions run into my primary business transactions page?
• I'm concerned this will create more work for myself / my accountant
• Are there any video walk-throughs or tutorials on how all this works? (I also don't want to mess up my account)

JulianP

Hey there @sheilahash !

You hit the nail on the head with the three points you listed. Regarding your questions, I answered them for you below:

"Do I still name the Company name the same?"

That's correct. However, to help you differentiate the two businesses, you can name the new one something along the lines of "Your business name (CAD/USD)".

"Do the transactions run into my primary business transactions page? I'm concerned this will create more work for myself / my accountant."

I'm afraid not. They will be stored within your new CAD/USD business profile. However, for tax and filing purposes, you can generate a reports for this business on the Reports page.

"Are there any video walk-throughs or tutorials on how all this works? (I also don't want to mess up my account)"

I'm afraid that we don't have a video tutorial on how to create a CAD/USD business profile but it sounds like you have a good grip on the workflow. Essentially the process is the same as Wave Payments but you would be processing through Stripe with USD as your default currency. I hope this helps!