Things to consider

Consider where you want to record the fees paid to PayPal. You could record them using an existing category such as Bank Charges, or create a category specifically for PayPal fees.

Any new category would need to be created as an Overhead and be visible in both sales and purchases.

How it works

There are three ways to record money received from the customer and the fee charged by PayPal.

• Match the payment from PayPal to the invoice from the bank feed and add an adjustment for the fee
• Create a credit note for the amount of the fee, then match this and the payment from PayPal to the invoice
• Discard the payment from PayPal from your bank feed and create two new transactions; a Customer Receipt for the full value of the invoice and Money Out for the fee

For example:

Your customer invoice is for £12.

Your customer pays £12 via PayPal. Paypal deducts a £2 fee, sending you £10.

Create an adjustment for the fees

This allows you to record the payment and the fees directly from the bank feed at the same time.

1. From the bank feed, choose Match on the payment from PayPal.
2. Select the invoice to pay. In our example, this will match £12, leaving £2 left over.
3. Select the Make Adjustment option next to the Left to Match total.
4. Choose the category to record your PayPal fees.  This could be Bank charges and interest or the new category you have created.
5. Enter the amount of the fee. In our example, this is £2.

Create a credit note for the fee

Matching a credit to the invoice first reduces the outstanding balance and allows you to match the payment from PayPal.

1. From Sales, open the sales invoice you want to pay.
2. Choose Add Credit Note.

3. Enter a line for the amount of the fee. In our example, this would be £2.

   Choose the category to record your PayPal fees. This could be Bank charges and interest or the new category you have created. This reduces the outstanding amount on the invoice. In our example, the amount outstanding on the invoice will be £10.

4. Return to Banking and open your PayPal bank account.
5. From your bank feed, match the payment from PayPal with the remaining value of the sales invoice.

Discard the payment from the bank feed and create two new transactions

1. From Banking, open your bank feed for the PayPal bank account.
2. Select the payment using the check box to the left.
3. Discard the payment using the Bin icon at the top of the page.
4. From Sales, open the sales invoice you want to pay. Select Record Payment and create a Customer Receipt for the total value of the invoice. In our example, this is £12.
5. From Banking, select the PayPal bank account and create a new Money out for the amount of the fees. Consider adding the customer name or sales invoice number as a reference so you can see what the fees were for.
6. Choose the category to record your PayPal fees. This could be Bank charges and interest or the new category you have created.
7. Enter the amount of the fee. In our example, this would be £2.

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