In A2X for Shopify, the PayPal payouts are generated as per the data fetched from Shopify. The expected deposit amount that A2X allocates to the clearing account per PayPal payout is the gross amount - so the PayPal fees are not deducted. Why? Simply because the PayPal fees don't pass through your Shopify account, which is what A2X is connected to.
This guide will explain how to confirm that the A2X PayPal payouts balance back to your monthly PayPal detailed statement, as well as how to allocate your PayPal fees on a monthly basis.
1/ In A2X - filter your payouts list by payment gateway
For reasons of clarity, we have listed below the A2X PayPal payouts covering the two months (Nov, Dec) that we will cover in this article:
Please Note: The account in our example is set up to generate PayPal payouts on a daily basis. However, you can also set A2X to generate either weekly or even better, monthly payout entries for your other payment processors such as PayPal, AfterPay, Sezzle, Stripe etc.
2/ In PayPal - run a monthly report of your account activity for given period
Go to Reports > Activity Download, select the date range and click on Create Report.
We requested both the November and December reports as shown below and excluded/greyed out the unnecessary text detail for simplicity purposes.
November PayPal Activity Statement
December PayPal Activity Statement
3/ Compare and balance the A2X payout amounts to the Paypal statement data
This is the flow of events:
Throughout the month, A2X is posting the PayPal payout total or 'expected deposit amount' to the Gateway Clearing account.
Throughout the month, PayPal deposits are received into your bank account, net of fees. These deposits are allocated to the Gateway Clearing account to offset the balance entered by A2X.
At the end of each month, the difference in your Gateway Clearing account will generally be the PayPal fees. The fees need to be accounted for by completing a journal entry deducting the monthly fee total from the Gateway Clearing account, allocating to your PayPal fees expense account.
Please Note: On the odd occasion, the difference in the Gateway Clearing account may also be caused by a carry over balance for a transaction that hasn't cleared yet.
If we put the above flow of events into numbers:
A2X has allocated an amount of $3,283.81 to the Gateway Clearing account for the month of November 2019.
We have allocated all PayPal deposits throughout the month to the Gateway Clearing account - the total of the PayPal deposits for November 2019 is $3,215.78.
This leaves a balance of $68.03 in the Gateway Clearing account - which is the total of the PayPal fees for the month of November 2019.
4/ Account for the PayPal fees using a manual journal entry
In QuickBooks Online, the monthly entry for PayPal fees would look similar to this:
In Xero, the monthly entry for PayPal fees would look similar to this:
The end result is that the Gateway Clearing account is reconciled back to $0.00.
As mentioned above, on the odd occasion, a balance may carry over into the next month due to timing.
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