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HollyJ12
January 20, 2021
Question

How do I use a resolving transaction to account for payment processing fees that were taken out of a full payment of an invoice prior to its deposit in my account?

  • January 20, 2021
  • 3 replies
  • 0 views
I've tried many times to use this feature, but when the resolving transaction I enter in the amount of the payment processing fees makes the total for the payment match the total on the invoice, I still keep getting an error msg that says, "The selected and downloaded transaction amounts don't match. To continue, resolve the difference." Is there something I need to do first before adding a resolving transaction?

    3 replies

    R
    Ryan_M
    January 21, 2021

    Hi @HollyJ12,

     

    Let me help you out with your concern about the Resolve difference feature in QuickBooks Online (QBO).

     

    An alternative way I can suggest is to add this processing fee when you create an invoice. This way, you no longer need to resolve the difference later. 

     

    You'll need to create an expense account and a service item to record the fees.

     

    Create the expense account first:

     

    1. Highlight the Accounting tab.
    2. Select Chart of Accounts.
    3. Press New.
    4. Set the Account Type to Expenses, then set the Detail Type to Bank Charges. (You have the option to set the Detail Type to something else.)
    5. Enter a name for this expense account.
    6. Hit Save and Close.

    Then, create the service item second:

     

    1. Highlight the Sales tab.
    2. Select Product and services.
    3. Click New.
    4. Choose Service.
    5. Enter a name for the service.
    6. Change the Income account drop-down menu to the expense account created above.
    7. Hit Save and close.

    You can then include this service item in your invoices. 

     

    If you want to continue using the Resolve difference feature, I suggest you open your browser's private window. It isolates the cache, which is the common factor of a browser's unusual behavior. 

     

    • Google Chrome: Ctrl + Shift + N
    • Microsoft Edge: Ctrl + Shift + P
    • Firefox: Ctrl + Shift + P
    • Safari: Command + Shift + N

    If that works, go back to your regular browser, then clear its cache. Otherwise, open an alternative browser that's available for you.

     

    Check out this article: Categorize and match online bank transactions in QuickBooks Online. It has the steps on how you can add, match, and review bank transactions.

     

    Let me know if you have other concerns with your online bank transactions in QBO. I'll handle them for you. 

    H
    HollyJ12Author
    January 21, 2021

    Ryan, thanks for responding.

     

    A couple things—I can't know how a customer is going to pay for an invoice when I create it. Some customers pay by check, some by Paypal & some by credit card. All of those methods mean different processing fees that I can't calculate up front. So it's impossible to determine any applicable payment processing fees when I create the invoice. Consequently, your first suggestion doesn't solve my problem.

     

    Second, I cleared my cache & attempted to resolve the transaction again this morning again as you suggested. But (see attached screenshot) it still gave me the same error msg saying that I need to resolve the difference between my invoice total and my payment total even though, with the resolving transaction of the processing fees, they do, in fact, match.

     

    Do I need to do something special with the payment processing fees prior to adding them as a resolving transaction? I tried separately adding them as an expense prior to matching the payment to the invoice, but that didn't work either.

     

    Otherwise, what is it that I don't understand about how to use QB's resolving transaction feature? Can you speak to how that specific feature works instead of giving me workarounds?

     

    We're scaling up and will face this bookkeeping issue more and more often in the future. I want to streamline this process now, not have our work multiply unnecessarily when QB has a feature that should make it easy.

     

    Thanks.

      R
      ReyJohn_D
      January 21, 2021

      I'll help match your transactions in QuickBooks, @HollyJ12.

       

      First, thanks for following the suggestions given by my peer above. I've got other solutions you can perform to get around the matching issue you're having.

       

      Yes, you can't calculate those processing fees directly since you received those payments from third-party merchant services, like PayPal, etc. There are bank service fees that the credit card company will deduct from the payment. Thus, the payment amount that shows on the bank register won't match the deposit amount in QuickBooks Online.

       

      In this case, you can enter the bank service fee amount directly into the register. This way, the register balance matches the bank statement balance. 

       

      Here's how:

       

      1. Go to the Accounting menu, and then choose Chart of Accounts.
      2. Select the right account, and then click View register from the Action column.
      3. Add the bank service fee, and then click Save.


      After that, you can now enter the fee as a negative amount on the Bank Deposits screen when depositing a payment.

       

      To do that:

       

      1. Click + New, and then select Receive Payments.
      2.  Enter all the payment information, and then choose the checkbox next to the invoice you would like the payment to be applied to.
      3. Select the Undeposited funds account from the Deposit to drop-down.
      4. Click Save and close.


      Then, it's time to create a bank deposit:

       

      1. Click + New again, and then select Bank deposit.
      2. Select all the payments you want to deposit.
      3. Go to the Add other funds to this deposit section, and then enter the amount of the bank service fee charged to you by the credit card company as a negative amount.
      4. From the Account section, select the Expense account you usually use in tracking bank fees.
      5. Check and fill out other necessary information.
      6. Click Save and close.


      For more details, please refer to this handy article: Enter a bank service fee while using a third-party merchant service.

       

      Next, you can do the usual matching process.

       

      Also, QuickBooks will create an adjustment or journal entry when you use the Resolve difference feature. You usually do this when you're matching the same transactions, but their amounts don't quite add up.

       

      When you're all set, you can begin your usual reconciliation. This way, you can ensure your books are accurate.

      I'm still around to help if you need more banking insights. I'd be glad to extend a helping hand. Have a great day!

      H
      HollyJ12Author
      January 21, 2021

      Thanks ReyJohn_D. I appreciate your help.

       

      But I already understand how to make sure that the processing fees and the deposit are both showing up in my account via the method that you suggested.

       

      What I'm trying to understand is how to use QB's Resolving Transactions feature when matching an invoice, instead of having to do this in the roundabout ways that you and your colleagues have suggested. None of the answers I've received have specifically explained how to use the Resolving Transactions feature that I'm having trouble with when I try to match an invoice to a payment and add an accounting of the payment processing fees via QB's Resolving Transactions feature.

       

      As our transactions multiply, using QB's Resolving Transactions feature would be the cleanest way to solve my problem. So I'd really appreciate it if someone could reply to me specifically explaining to me what I'm doing wrong in using your Resolving Transactions feature instead of explaining workarounds that don't involve QB's Resolving Transactions feature.

        D
        Dereeko
        April 18, 2021

        Hi @HollyJ12 

        Did you fix the problem? I have exactly in the same situation and getting the same error message. How did you fix the problem?

        Regards

        Derko.

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