Reconciling 1pm payments in Xero

When 1pm sends a payment to Xero, the invoice in Xero shows it as paid straight away. Your bank feed then brings in the same money as a statement line, and Xero asks you to reconcile it. The payment is already in your books, so the job is to tie the bank line to the payment 1pm created, not to record the money a second time.

This article covers which Xero account each kind of payment lands in, and how to reconcile a bank transfer, a card payout, and a transfer that landed in your clearing account.

Where 1pm posts each payment

You choose the accounts on the Xero page in 1pm, under Account mapping. There are two pickers.

Payment account: where payments post by default. If you take card payments online through 1pm, this should be a clearing or contra account, not your everyday bank account.
Account for payments you record by hand: optional. When you set it, a bank transfer, cash, cheque or any other payment you record yourself posts here instead. Pick the bank account that money actually arrives in.

Card payments taken online through 1pm always post to the payment account, whichever way the second picker is set. Leave the second picker on Same as the payment account and every payment posts to one account.

A deposit paid on an event confirmation follows the same rule. 1pm copies it onto the deposit or balance invoice, and the copy posts to whichever account matches how the confirmation was paid. When 1pm can't tell that a copy is entirely money you recorded by hand, the copy posts to the payment account. That happens on a confirmation that has taken a card payment, in these cases:

A card payment and a hand-recorded payment on the same day. Both copies post to the payment account.
One copy that covers more than one payment. Money paid before the balance invoice exists is copied onto it as a single payment when you raise it. Two bank transfers, or a card payment and a transfer, arrive as one copy.

To keep each bank transfer on its own, raise the balance invoice before the transfers arrive. Each one is then copied as its own payment, dated the day you recorded it for, and posts to the second account.

A confirmation marked paid with no payment recorded also posts its copy to the payment account, because there is no payment to judge it by.

Changing either picker applies to payments sent from then on. A payment already in Xero stays in the account it was posted to.

With both pickers set, 1pm names the account on every payment, on the Xero sync console and on the Xero card at the bottom of each invoice. A payment still to be sent reads "Will post to" followed by the account, so you can check it before you send it. A payment already sent reads "Posted to" followed by the account.

To check a payment in Xero itself, open the invoice there and click the payment link under the total (for example "Payment (30 Jul)"). The account name is at the top of the payment page.

A bank transfer posted to your bank account

This is the simple case, and the reason to set the second picker. The payment is sitting in the same bank account as the statement line, so Xero can pair them.

In Xero, open the bank account and go to Reconcile.
Find the statement line for the transfer. If Xero has already suggested the payment on the right, check the name and amount and click OK.
If there is no suggestion, click Find & Match on that line.
Tick the payment in the list. It shows as "Payment" with your client's name, dated the day you recorded it in 1pm. Type the amount or the client's name in the search boxes if the list is long.
Click Reconcile.

If the dates differ by a day or two because the money cleared after you recorded it, the match still works. Xero matches on the amount you tick, not the date.

Cash you bank in one deposit works the same way. Tick each payment that went into the deposit until the total matches the statement line, then reconcile.

Xero only offers the invoice's remaining balance

You click a statement line, search for the invoice, and Xero offers the amount still owing instead of the amount you received. A $300 deposit on a $570.90 invoice shows $270.90 to allocate.

That is Xero telling you the $300 is already on the invoice. Don't allocate the bank line to the invoice: that would record a second payment. Match it to the existing payment instead, using Find & Match as above.

If the payment isn't in the Find & Match list, it was posted to a different account from the bank account you are reconciling. The next two sections cover that.

Card payments and Stripe payouts

Card money doesn't reach your bank one payment at a time. Stripe pays it out in batches, with its fees already taken out, so no statement line ever equals a single 1pm payment. That is why card payments belong in a clearing account.

Each card payment increases the clearing account's balance. When a Stripe payout arrives in your bank feed:

Go to the statement line for the payout and open the Create tab.
In What, choose your clearing account.
Set the tax rate to one that keeps the line off your tax return. In Australia that is BAS Excluded.
Click Reconcile.

The payout moves the money out of the clearing account and into the bank. What stays behind in the clearing account is the total of Stripe's fees, which you or your accountant move to a fees expense account. Many accountants do this once a quarter.

A bank transfer that landed in the clearing account

This happens when the second picker was blank, or when the transfer was copied from a confirmation in one of the cases listed under "Where 1pm posts each payment". Either way a transfer you recorded by hand posted to the clearing account with your card payments. The payment is not in your bank account in Xero, so Find & Match can't find it.

Code the statement line to the clearing account instead:

Go to the statement line for the transfer and open the Create tab.
In Who, enter the client.
In What, choose the clearing account the payment was posted to.
In Why, enter the invoice number, so the entry explains itself later.
Set the tax rate to one that keeps the line off your tax return. In Australia that is BAS Excluded.
Click Reconcile.

The payment added the amount to the clearing account, and this line takes it back out and into the bank. The invoice stays paid, and no income or tax is counted twice.

Don't choose your sales account in What. The invoice has already recorded the sale and its tax, so coding the bank line to sales counts both a second time.

If your clearing account is set up in Xero as a bank account, you can use the Transfer tab instead and pick it there. The result is the same.

Before you reconcile

Open the Xero sync console in 1pm and check two things.

Nothing is waiting to cross. A payment badged Not in Xero yet or Waiting isn't in Xero, so there is nothing to match its bank line against. Send it first.
Left behind in Xero is empty. A payment you deleted in 1pm after it synced is still in Xero. Reverse it there before you reconcile, or your books show money you didn't receive.

Sending invoices to Xero covers connecting Xero, the account mapping, and the sync console.
Recording payments and taking card payments covers recording a bank transfer and taking cards online.