A2X for PayPal will streamline your PayPal accounting process, replacing your current method, whether you're using a PayPal bank feed, importing a *.csv summarized statement, or both. Follow the instructions below to set up A2X for PayPal.

This guide is divided into two sections:

Step 1: Disconnect your current bank feed
Disconnect your bank feed on the day before the first statement is synced by A2X.

The A2X for PayPal solution replaces your current bank feed by importing a daily statement per currency into QBO. This is done via a journal entry that reflects the daily movement in the applicable PayPal bank account. The journal entry summarizes all transactions posted each day.

Before disconnecting the bank feed, ensure the PayPal balance in QBO matches the ending statement balance. This ensures the A2X connection begins with the correct balance.

Step 2: Create PayPal bank accounts in QBO (if needed)
For each currency used in PayPal, create a separate bank account in QBO.

The PayPal Movement section of the Accounts and Taxes screen will list all PayPal accounts that need to be mapped to QBO.

It is recommended to create a separate PayPal account for each PayPal Fx Currency. It is not advisable to map all PayPal movement currencies to the same PayPal account in QBO, as it won't be easy to reconcile and match each PayPal currency balance.
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Please note: you must have all currencies set up in QBO that are in use by PayPal.
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Please refer below to an example of how the PayPal Movement category within Accounts and Taxes could be mapped to QBO.
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Step 3: Post PayPal statements

Post the first and subsequent PayPal statements from A2X to QBO.

To post the statements from A2X for PayPal to QBO, go to 'Statements' in the menu bar and select the box(es) on the left-hand side that you wish to post. You can post one statement at a time, use bulk actions, or turn on auto-post in Settings.
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A2X will create a journal entry in QBO for each PayPal currency, for each day where transactions were posted.

All transactions are grouped together for a summarized posting. The journal entry will contain one row where the PayPal bank account is increased or decreased for the day.

Step 4: Reconcile PayPal Balances

Compare the PayPal balance in QBO to the actual PayPal statement.

Run a balance sheet report and take note of the ending PayPal bank balance in the applicable currency. You can compare this balance to the actual balance in the PayPal portal, or statement to ensure the ending balance is correct.
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Step 1: Disconnect your bank feed
Disconnect your bank feed on the day before the first statement is synced by A2X.

A2X for PayPal replaces the bank feed by importing a daily statement per currency into Xero. These statements are posted as zero-sum invoices, summarizing daily movements in the applicable PayPal bank account.

Before disconnecting the bank feed, ensure the PayPal balance in Xero matches the ending statement balance.

Step 2: Create general ledger accounts in Xero (if needed)
For each PayPal currency, create a separate current asset account in Xero.

The PayPal Movement section of the Accounts and Taxes screen will list all PayPal accounts that need to be mapped to Xero.

The reason you need to create new current asset accounts in Xero (vs using the existing bank account) is that invoices posted to Xero cannot be posted to bank accounts directly. Therefore we recommend creating new general ledger accounts to represent the various PayPal currency balances.

It is recommended to create a separate PayPal current asset account for each PayPal Fx currency. It is not advisable to map all PayPal movement currencies to the same current account in Xero, as it won't be easy to reconcile and match each PayPal currency balance.
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Please note: you must have all currencies set up as Xero ledger accounts that are in use by PayPal.
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Please refer below to an example of how the PayPal Movement category within Accounts and Taxes could be mapped to Xero.
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Step 3: Transfer Balances to New Asset Accounts
Move balances from legacy Xero PayPal bank accounts to the newly created current asset accounts.

You will need to transfer the reconciled ending PayPal bank account, by Fx currency, to the newly created current asset ledger account(s).

Please refer to the following example.

Your legacy process involved importing a bank feed. As at 30 November 2024, you have a reconciled balance of $510.20 in the USD PayPal Bank Balance.

You have set up a new current asset account called PayPal Bank (USD) A2X. To transfer the balance from the legacy Xero bank account to the new Current Asset account, you must post a 'Spend Money' entry (please note if the PayPal balance is negative, you would use a Receive Money entry).
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After this Spend Money transaction is posted, the balance in the legacy PayPal bank account will be zero and the balance in the current asset PayPal account will be $510.20 USD.

Step 4: Post PayPal Statements
Post the first and subsequent PayPal statements from A2X to Xero.

To post the statements from A2X for PayPal to Xero, go to Statements in the menu bar and select the box(es) on the left-hand side that you wish to post. You can post one statement at a time, use bulk actions, or turn on auto-post in Settings.

A2X will create an invoice in Xero for each PayPal currency, for each day where transactions were posted.

All transactions are grouped together for a summarized posting. The invoice will contain one row where the PayPal bank account is increased or decreased for the day to balance the invoice to zero.

Step 5: Reconcile PayPal Balances
Compare the PayPal balance in Xero to the PayPal statement.

Run a balance sheet report and take note of the ending PayPal bank balance in the applicable currency. You can compare this balance to the actual balance in the PayPal portal, or statement to ensure the ending balance is correct.
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Please note due to the fact that you are using a current asset general ledger account in Xero it will not be possible to use the traditional reconciliation reports within Xero. Please use the accounts reconciliation report to view the opening balance, and daily summarized movement for each PayPal current asset account.