How Rechargly's Clearing House Works
Rechargly automates the reconciliation of invoices and Stripe payouts by using a clearing house account in Xero. This process ensures that payments from clients are correctly matched to invoices without manual intervention. When you set up our auto-reconciliation, a clearing house is created to reconcile the relevant invoices from a Stripe payout.
How auto-reconciliation works:
Client payment: Stripe charges all clients who have set up their payment method for recurring charges from Rechargly.
Payout to bank: Stripe deposits a lump sum into your bank account. This lump sum corresponds to multiple invoices in your Xero.
Clearing house allocation: The relevant invoices are marked as paid towards the clearing house.
Fees: The fees that correspond to the payout are automatically assigned to the P&L.
Reconciliation: The payout is transferred from the clearing house to the bank account assigned during the auto-reconciliation setup, bringing the balance to zero.
What happens with refunds:
When a refund is required, it can be handled through the clearing house. A credit note is raised towards the customer. Rechargly then creates a payment in the clearing house, which brings the balance to zero.
Why your clearing house may have a non-zero balance
1. Unauthorised transfers or transactions
Issue: Employees may mistakenly allocate unrelated transactions to the clearing house, causing discrepancies.
Solution: Educate your team that the clearing house is an automated process. Any manual entries will likely need to be reversed. If a transaction has been incorrectly allocated, identify and correct the entry in Xero.
2. Payments couldn't be allocated
There are several reasons why a payment might not be correctly assigned to an invoice:
a) Missing invoice in Xero (archived contact)
Issue: A client's contact record has been archived, preventing Rechargly from creating an invoice.
Solution: Reactivate the contact in Xero and request Rechargly support to trigger invoice creation again.
b) Payout can't be allocated due to invoice modifications
Issue: A firm employee manually reduced the total of a Rechargly invoice in Xero after it was created. Since the actual payment from Stripe is higher than the new invoice total, Xero rejects the allocation.
Solution: Reverse the manual changes to restore the original invoice total, then contact Rechargly support to reconcile the payment.
c) Double payment was processed
Issue: A client has paid twice, either due to a manual payment or a duplicate charge.
Solution: Notify Rechargly support, who will generate a duplicate invoice to account for the extra payment. You can then refund the invoice through Rechargly or apply a credit to a future invoice.
d) Invoice marked as paid outside of Rechargly
Issue: A Rechargly invoice has been manually marked as paid in Xero before auto-reconciliation occurs.
Solution: The payment needs to be reversed so Rechargly can complete the reconciliation process correctly.
e) Non-Rechargly payment processed through Stripe
Issue: A client made a payment directly through your Xero/Stripe connection (outside of Rechargly). This payment lands in the same Stripe account and can interfere with the auto-reconciliation process, causing the clearing house balance to be incorrect.
Solution: Identify the non-Rechargly payment in Stripe (it will not have a corresponding Rechargly invoice). If the payment was legitimate, you will need to manually reconcile it in Xero outside of the clearing house. You will also need to go into the Rechargly branding theme and remove Stripe from the payment method.
f) Reconciliation failed due to a Xero lock date
Issue: Your Xero organisation has a lock date set (Accounting > Advanced > Financial settings). When Rechargly tries to mark an invoice as paid or post the clearing house payment with a date that falls inside the locked period, Xero rejects it with an error such as "The document date cannot be before the lock date." The reconciliation will keep failing on re-run until the lock date no longer covers that date.
Solution: In Xero, go to Accounting > Advanced > Financial settings and move the lock date back (or temporarily remove it) so it no longer covers the invoice or payment date. Then re-run the reconciliation in Rechargly, or contact Rechargly support to re-trigger it. Once it succeeds you can restore the lock date. If you are unable to change the lock date, contact Rechargly support and we can advise on aligning the posting date.
g) Stripe minimum balance preventing reconciliation
Issue: If your Stripe account has a minimum balance (reserve) configured, this can prevent payouts from matching expected amounts. The reserved amount is withheld from the payout, causing the clearing house to show a discrepancy because the payout deposited to your bank is less than the total of the invoices being reconciled.
Solution: Check your Stripe Dashboard under Settings > Balance > Minimum balance. If a minimum balance is set, remove it or set it to zero. Then attempt to reconcile again in Rechargly. If the issue persists after removing the minimum balance, contact Rechargly support to manually trigger reconciliation for the affected payout.
Best practices and tips
Below are a handful of tips that will ensure you have minimal interruption with your auto-reconciliation.
1. Avoid sending invoices from Xero
Rechargly handles payment reminders automatically. If you send individual invoices manually from Xero, it increases the likelihood of a duplicate payment in the future. If you do send invoices manually and they are paid, please go to Rechargly and mark the invoice as paid outside of the platform.
2. Use a dedicated Rechargly invoice template
During setup, we recommend creating a Rechargly-specific invoice template that does not have any payment methods attached. It reduces the likelihood of double payments occurring.
3. Educate your team on Rechargly's role
Ensure that firm employees understand how Rechargly manages software disbursements. If they see an invoice related to software, they should check before making any changes to prevent reconciliation issues.