on September 9, 2015
by Andy Jones
Stripe is a wonderful tool for accepting credit cards of all brands and - very soon - eCheck (ACH) payments online. They have a thorough API that provides real-time information about charges, fees, refunds, and transfers.
If you're an accountant for a small business, chances are some revenue is coming through an online payment service like Stripe, PayPal, Square, or their many competitors. Figuring out where charges, fees, and refunds should be credited/debited is not always clear. Since Stripe is one of the first services that we integrated with PennyPipe, we've had many chances to work with small businesses. Here are a few tips that we've learned that may help make accounting sense of all the data Stripe provides.
1) Consider a Stripe Holding account. Since Stripe deposits money on a 2 day rolling basis for most people, there is an amount of money that is due to you at some future point. Instead of throwing this in accounts receivable or straight into a deposit account, consider creating a separate Stripe Holding account to get an idea about what money Stripe curently has in flux.
2) Stripe has line items for invoices only. If you're looking for line items for invoices or sales receipt, these only exist in certain cases for each charge. If a customer within Stripe has as recurring subscription, or if the customer has line items created then the associated charge will have line items available. The most common case for Stripe is a payment method and an amount. Charges in this case have only the total amount charged and - maybe - a name, email, and description. Stripe is wonderful for simplifying payments, but this may leave much information to be desired if the accounting and ordering process are disconnected.
3) Think about where sales go. You can credit all charges to a generic sales account, or create a separate Stripe sales account. This may be useful, especially if use multiple payment gateway, like Paypal, Braintree, etc. If you're using invoices, or have a tight integration with the order process, you may be able to use the line item information to associate sales to individual items and their associated sales accounts.
4) When Stripe refunds a charge, they refund everything. That's right - the percent fee as well as the per transaction fee all come back to you. I don't if this works across the board, however Stripe behaves this way for my account and all others that I've worked with.
5) Disputes are a series of transactions with wildly different rules. Disputes are a series of related transactions. First, $15 USD is charged for the dispute itself regardless of whether the dispute is won or lost. When the dispute is lost, the full amount of the charge is withdrawn from your rolling balance and you don't receive any fees back. If your rolling balance is not sufficient to cover the dispute, Stripe may withdrawl the amount of money required from your connected bank account. If you win the dispute, Stripe may reinstate the fees, if they were withdrawn at the dispute creation, or do nothing if no amount was held. Each action depends on the card used for payment and the policies they have in place.
6) Check the currencies. Stripe accepts payment in a number of currencies including, US Dollar, Canadian Dollar, Great Britian Pound, among others. If you commonly accept payments from customers using these currencies, make sure multi-currency is enabled within your accounting software and that the correct exchange rate applies. Stripe can charge customers in their local currency and convert to your home currency, however additional fees may apply.
7) Use the description field. Stripe provides a generic description in which you can write anything. Use this to your advantage. If you're billing for an invoice, place the invoice number there. If you're billing for an order, place the order number or a short description of the order in the description. If you ever need to come back to Stripe to figure out what belongs where, this description will help you keep your sanity.
There is no one "right" way to account for Stripe charges, fees, refunds, etc as each person's business is slightly different. Hopefully these tips will help you setup a Stripe system that is manageable as your business grows. And, if we can help at PennyPipe - please give us a shout!
Did these tips help? Show some love and follow us on Twitter or sign up for a free 14 day PennyPipe trial.