If you sell online in Australia, chances are your payouts come from several places — Shopify, PayPal, Stripe or Afterpay. Each has its own timing, fees and reports. That mix can make Xero a mess if it’s not set up right. I’ve built a process that keeps everything clean, reconciled and stress-free.
Why Payment Gateways Cause Confusion
Stripe deducts fees automatically before payout.
PayPal takes a fee on each transaction and may hold funds.
Afterpay pays later with fees already removed.
Trying to match those deposits directly to individual sales almost never balances. That’s why I always create separate clearing accounts and summarise payouts instead of posting every order.
My Step-by-Step Reconciliation Process
Set up separate clearing accounts – one per gateway (e.g. Stripe Clearing, PayPal Holding, Afterpay Clearing).
Record sales and fees properly – use payout summaries, not individual orders. Apply correct GST codes:
Domestic = GST on Income
Overseas = GST Free
Fees = Input Taxed (no GST)
Match each payout – the bank deposit should equal the clearing-account journal. Any difference = missing fee or refund.
Check clearing balances monthly – they should be ≈ $0 once all payouts land.
Review GST coding before BAS – don’t claim GST on financial fees unless the invoice specifically shows it.
How I Automate Payouts and Reduce Errors
Automation saves hours. I use trusted integrations that push each payout summary into Xero automatically — sales, refunds and fees all mapped to the right accounts. I still verify mappings after setup to confirm every line hits the correct income, fee and GST code.
My Monthly Reconciliation Routine
☑ Compare total income in Xero to Shopify/PayPal/Stripe reports
☑ Check merchant fees coded correctly (no GST over-claims)
☑ Ensure clearing accounts are zero or holding pending payouts
☑ Reconcile bank accounts and clear unmatched transactions
☑ Save reconciliation reports for BAS workpapers
Quick Troubleshooting
☐ Missing payout → check integration sync or delayed settlement
☐ Negative clearing account → refund hasn’t settled yet
☐ Duplicate entries → disable double posting sources
☐ Missing fees → review gateway payout report
Final Thoughts
Separate gateways, summarise payouts and check GST monthly — that’s the formula for clean, ATO-ready books.
If your payouts still don’t make sense, I offer a one-on-one review session to help you fix the setup once and for all.