Skip to content
English
  • There are no suggestions because the search field is empty.

Xero: How Does Reconciliation Work?

Xero reconciliation is the process Pinch goes through each time we deposit funds to your business bank account. 

Note: The process  starts before the deposit, so this guide begins from when you first link Pinch to your Xero account.


Step 1 – Pinch Account Creation

When you connect your Pinch account to Xero, we automatically create a new ledger account called the “Pinch Payments Clearing Account.”

You can rename this account or adjust the description, but the account code must remain unchanged.


Step 2 – Payment Taken

When a customer makes a payment, Pinch finds the matching invoice in Xero and marks it as paid. That payment is allocated to the Pinch Payments Clearing Account created in Step 1.

This means you can clearly see all funds we’ve collected on your behalf that are not yet settled to your bank.

The reference shown in Xero matches the payment ID in your Pinch portal.


Step 3 – Settlement (Handled by Pinch)

This is where we handle all of the reconciliation steps for you.

You do not need to create bills, invoices, or transactions manually – Pinch does this automatically in Xero.

When we transfer funds to your bank, Pinch does the following on your behalf:

  • Creates a bill for the Pinch fees (and marks it as paid).

  • If you surcharge fees, we raise the surcharge invoice to your customer and mark it as paid.

  • Creates the account transaction in Xero for the net deposit so that you can reconcile with your bank feed in one click.

 

For clarity:

  • We automatically create another ledger account called the “Pinch Payments Fees Account” when your first settlement occurs. This tracks all fees paid to Pinch. Please do not change the account code.

  • The bill we create for fees is paid from the Clearing Account, so that account always balances back to $0 once settlement is complete.

  • The account transaction we create always matches the exact amount deposited into your bank account, regardless of how many payments were included in that settlement.

 

You can see full settlement details, including invoices and fee breakdowns, in the Settlements tab of the Pinch portal.