This guide will help you to reconcile payments from the likes of PayPal, GoCardless, Stripe along with any credit card PDQ service provider and more broadly any payment provider that collects income on your behalf and pays you the net amount, minus their fee. It’s a very common scenario in accounting and it’s very useful to know how to account for these types of transactions.

You’ll set up a merchant account for the provider, record your invoice payments in full, record the payout to your bank as a transfer, and record the provider’s fees as a cost.

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How payment providers pay you

The key thing here is that the amounts you receive don’t exactly match your invoices, and more often than not they’re lumped together and paid on a deferred basis. For example, you may receive a lump sum payment into your bank account on Wednesday that relates to all sales income collected on Monday, less the processing fee. With other processors, like PayPal, you choose as and when you want to transfer funds to your current account. Irrespective of how and when you’re paid, the accounting method is the same:

• Record each customer payment in full (the gross amount) into a merchant account for the provider.
• Record the money the provider pays into your bank (the net payout) as a transfer from the merchant account to your current account.
• Record the provider’s fees as a purchase from a supplier named after the provider.

When everything is entered, the merchant account balance is back to zero (or equals money the provider is still holding for you).

Give each payment provider its own merchant account

Each payment provider needs its own bank account in QuickFile. There’s a special type of bank account for this called a merchant account. It gives you a ledger for all the gross payments received and processing fees, without mucking up your current account or invoices. It’s really nothing more than a way to abstract all the activity of the payment processor to a dedicated account.

1. Go to Banking > All bank accounts.

2. Click Create and choose Merchant or Payment Service Account.

   

3. In Provider Name, choose your provider, for example GoCardless, PayPal (Merchant Account), Stripe or SumUp. If yours isn’t listed, choose Other.

4. Leave Account Currency as GBP British Pound unless the provider holds your money in another currency.

5. Enter an Account Name, for example GoCardless Merchant Account. You can leave Account Number and Sort Code blank.

   

6. Click Save Details. QuickFile confirms The bank account has been created! and the account appears under Merchant and Online Payment Service Accounts on the Bank Management page.

Worked example: record payments, the payout and fees

1. Record the invoice payments in full

1. Open the sales invoice and click Log Payment.

2. Tick Pay in full so the Amount is the full invoice total, and check the Payment Date.

3. In Paid to, choose the merchant account, then click Save.

   

4. Repeat for each invoice the provider collected.

The invoices now show as paid in full, and the payments appear on the merchant account, already tagged.

2. Record the payout to your bank as a transfer

1. Go to Banking > All bank accounts, click View next to the merchant account, then click New Transaction.

2. Enter the Reference (for example GoCardless payout), set Type to Money Out, enter the Amount paid to your bank (£358) and click Save.

   

3. Click Tag Me on the new line and choose Bank transfer between accounts.

   

4. In Transfer to account, choose the bank account the money was paid into, then click Continue.

   

The merchant account balance now equals the provider’s fee (£2).

3. Record the provider’s fee

1. Click New Transaction, enter a Reference such as GoCardless fee, set Type to Money Out, enter the fee and click Save.

2. Click Tag Me on the new line and choose Payment to a supplier.

3. Click Create a new invoice for this payment.

4. In Allocate to Supplier, start typing the provider’s name and choose it. The first time, type the name and click Create New Supplier instead.

5. Check the Supplier Name and add a Description, or leave it blank to use the bank entry’s reference.

6. Set the VAT to match the provider’s fee statement. Click + Expand next to VAT Options if you need VAT Exempt or Out of Scope for UK VAT.

7. Choose a Category, for example Bank Charges, and click Save.

   

QuickFile creates the supplier (if it’s new) and a purchase invoice for the fee, and shows Transaction Tagged - A backing purchase invoice has been created. The merchant account is back to zero, everything is tagged, your invoices show the full amounts and the fees are recorded as a cost against your profits.

Record sales and fees as lump sums

Logging every payment individually can be time-consuming, and you may not raise an invoice in QuickFile for every sale. Instead you can enter the total sales on the merchant account for a day, week or month, and QuickFile creates one sales invoice for that total against a generic client.

1. On the merchant account, click New Transaction. Enter a Reference such as GoCardless sales w/e 18/10/2026, set Type to Money In, enter the total gross sales for the period from your provider’s report and click Save.

2. Click Tag Me on the new line and choose Payment from a customer.

3. Click Create a new invoice for this receipt.

   

4. In Allocate to Client, choose your generic client. The first time, type a name such as GoCardless Generic Sales and click Create New Client.

5. Enter a Description (for example Sales for week ending 18/10/2026), check the Category and VAT rate, and click Save.

   

QuickFile creates a paid sales invoice for the period and shows Transaction Tagged - A backing sales invoice has been created. The amount you entered is the invoice total including VAT: in testing, £60 at 20% became £50 plus £10 VAT.

Do the same for the fees: enter all the period’s fees as one Money Out line and tag it to the provider as a supplier, as in step 3 above. Then record the payouts as transfers, as in step 2.

Foreign exchange (FX) accounts

Although these accounting processes are more commonly applied to electronic and terminal-based payment processors, they are equally applicable to foreign exchange accounts. These services are generally used to simplify the collection of income in differing jurisdictions and currencies.

Create a merchant account for the FX provider in GBP, and pay invoices in any currency gross to the FX merchant account. Transfers from the FX account to your current account can then be made minus the processing fees.

Troubleshooting

My invoice shows as part paid after the provider took its fee

The net amount was logged against the invoice. The invoice should show the full amount paid into the merchant account: record the full invoice amount as the payment (paid to the merchant account), then record the fee separately as shown in step 3.

One payout from the provider covers several customers’ invoices

Don’t tag the payout to the invoices. Log each invoice as paid in full to the merchant account, then tag the payout as one transfer from the merchant account to your current account.

The merchant account balance isn’t zero

Compare the merchant account with your provider’s statement. The difference is usually a fee, refund or payout that hasn’t been entered yet, or money the provider is still holding for you.

A customer was refunded through the provider

Enter the refund as Money Out on the merchant account and tag it as Refund to a customer, so the net payout still matches.

The transfer went to the wrong bank account

Transfer to account starts with the first bank account in your list, not necessarily the one the money went into. Check it before you click Continue.

Related topics

New to bookkeeping in QuickFile? Start with Sole Trader Bookkeeping - The Basics or Limited Company Bookkeeping - The Basics.

• Sole Trader Bookkeeping - The Basics: How sales, purchases and bank tagging fit together for a sole trader.
• Limited Company Bookkeeping - The Basics: The same basics for a limited company.
• Handling payments from merchant accounts: Tag a batch of payouts on your current account and record sales in bulk.
• Setting up an online payment provider: Let clients pay your invoices online through Stripe, PayPal, GoCardless and others.
• Split bank credits across multiple clients (community discussion): A staff answer on handling one card-provider payment that covers several clients.