Reconciling PayPal Orders with Post to Xero by Hyve

Overview

Reconciling PayPal is different from other gateways because Xero connects directly to your PayPal account via a bank feed. Sales, refunds, and fees are imported automatically into Xero from PayPal.

How it Works

• Orders are posted: Post to Xero by Hyve posts each PayPal order to Xero as an invoice and marks it as paid.
• Payment allocation: The payment is allocated directly to your PayPal Bank Account in Xero.
• Fees: PayPal fees are supplied directly to Xero through the PayPal bank feed. Post to Xero by Hyve does not push fees into the bank feed. However, if you map a fee account in the app settings, Post to Xero by Hyve will create a Bill in Xero for each PayPal fee. This Bill can then be matched against the corresponding fee line in the PayPal bank feed during reconciliation.

Recommended Xero Setup

To automate PayPal reconciliation, your PayPal account must be connected to Xero as a bank feed.

1. Connect the Bank Feed: In Xero, go to Accounting > Bank Accounts > Add Bank Account and select PayPal. Follow the prompts to log in and authorize the connection.
2. PayPal currencies: Select the same currency for your PayPal account as the one used by your Shopify store. For example, if your Shopify store uses AUD, select AUD for PayPal.

3. Map the gateway: In the Post to Xero by Hyve app settings, ensure the PayPal gateway is mapped to the same PayPal Bank Account you just connected in Xero.

Important — if you were previously using a clearing account:

• Set your Clearing Account back to Not Applicable.
• Any orders already posted to the clearing account that you want to reconcile using the bank feed will need to be manually reposted so that they go to your newly configured PayPal Bank Account.

1. How to Reconcile PayPal Transactions

Once the bank feed is active, transactions will appear in the Reconcile tab of your PayPal account in Xero.

1. Reconciling Sales

When a customer pays via PayPal, a Money Received line appears in the PayPal bank feed.

• Xero will usually find a match to the invoice/payment created by Post to Xero by Hyve.
• If the line turns green, click OK to reconcile.
• If it does not match automatically, use Find & Match to locate the invoice payment.

2. Reconciling Fees

PayPal fees appear as separate Money Spent lines in the PayPal bank feed. How you reconcile these depends on whether you have a fee account mapped in Post to Xero by Hyve.

• If a fee account is mapped: Post to Xero by Hyve creates a Bill in Xero for each PayPal fee. Use Find & Match to match the fee line in the bank feed to the corresponding Bill.
• If no fee account is mapped: Use the Create tab or a Bank Rule to code these lines directly to your Bank Fees or Merchant Fees expense account.

Reconciling fees — either way — ensures your PayPal balance in Xero matches your actual PayPal statement.

3. Reconciling Transfers to your Bank

When funds are transferred from PayPal to your business bank account:

1. In the PayPal bank feed, use the Transfer tab and select your main business bank account.
2. In your Main bank feed, match the incoming deposit to that transfer transaction.

Frequently Asked Questions

Do I need to enter a PayPal fee schedule in Post to Xero by Hyve? No fee schedule is needed. PayPal supplies the exact fee amounts to Xero via the bank feed, which prevents rounding discrepancies.

If you map a fee account in Post to Xero by Hyve, the app will also create a Bill in Xero for each PayPal fee. You can then match the Bill to the corresponding fee line in the PayPal bank feed during reconciliation. If no fee account is mapped, fees are reconciled directly against an expense account using the Create tab or a Bank Rule.

Why does my PayPal balance in Xero not match my actual PayPal balance? This usually occurs when:

• Fee transactions have not been reconciled.
• A PayPal withdrawal/transfer was coded as "Income" instead of a "Transfer."
• Ensure all fee lines are reconciled to an expense account and all withdrawals are recorded as transfers.