How to reconcile Shopify sales paid via Klarna

With Shopify, merchants have the ability to accept payments via Shopify Payments and also through a whole host of other payment gateways too.

The good news is that Link My Books works for all payment gateways through one single connection to your Shopify account.

For sales paid for via Shopify Payments, Link My Books generates one settlement summary report for each payout you received from Shopify. This means that the invoices you send to Xero or QuickBooks from Link My Books will match exactly the amount Shopify deposited into your bank account. So these are nice and easy to reconcile directly on your bank reconciliation page in Xero or QuickBooks.

If you are accepting other payment gateways (such as Klarna) via your Shopify store, Link My Books will generate a settlement summary report once per month for each gateway summarising the sales and refunds.

These monthly summaries will be cleared through the Shopify Gateway Clearing - (Klarna) account, which we create in your chart of accounts automatically. We'll refer to this account as the "Klarna clearing account" from now on in this article.

The Klarna clearing account is an account on your balance sheet where funds from Klarna that are in transit or as yet undeposited into your bank account are accounted for.

We use the Klarna clearing account to record the funds that are expected from Klarna, which have yet to be deposited into your bank account.

If you're accepting payments on Shopify through other payment gateways (PayPal, Clearpay, Afterpay, and so on) then we'll create one clearing account for each of them. Don't worry we create these in your chart of accounts for you automatically if they are needed so no action is required from your side.

In this article, we'll focus on Klarna, but the principles are the same for other payment gateways. For PayPal, since there is an option to have a PayPal bank feed we have a specific help article on that which you may find useful.

STEP 1: Send the Link My Books settlement summary report for Klarna to Xero or QuickBooks. This will debit the clearing account with the net value of your sales minus any refunds that were paid for via Klarna.

STEP 2: Allocate any deposits into your bank from Klarna to the Klarna clearing account. This will credit the clearing account.

STEP 3: Download your monthly fees invoice from Klarna and account for those directly in Xero or QuickBooks separately. (See the full breakdown below for exactly how to account for these fees)

👉 There can sometimes be a balance left in the clearing account at the end of each month, nothing to worry about - this is usually down to funds yet to be deposited into your bank account for sales that occurred during that month.

Below is an example of a Klarna settlement summary report produced by Link My Books. We will use this example to walk through the entire process from start to finish.

👉 Important: Even though this example is for Klarna, the same general process applies to any other payment gateway too, except PayPal gateway sales where you have the PayPal bank feed set up - in which case you should read this help article.

Step 1 - Send the Link My Books settlement summary report for Klarna to Xero or QuickBooks.

Let's use this Klarna settlement summary for September as an example:

If we view the settlement by clicking on the Action dropdown and then selecting View then we will see this detail:

Link My Books has broken down the Klarna sales and refunds for September and the total comes to £900.

This £900 has then been allocated to the Klarna clearing account:

Once we send this it will look like this in Xero:
​

Or like this in QuickBooks:
​

👉 Note: The amounts shown on Xero/QuickBooks are Tax Exclusive hence why the figures are different. The VAT is shown separately below the subtotal.

If we now check the balance sheet we will see that Link My Books has allocated the £900 to the Klarna clearing account:

In Xero:

In QuickBooks:
​

STEP 2: Allocate any deposits into your bank from Klarna to the Klarna clearing account.
​
We will split this up by bookkeeping software, Xero then Quickbooks.
​

For Xero, we can see the weekly deposits from Klarna on our Xero bank statement reconciliation page:

👉 Your payout schedule may be different so you may see more or fewer deposits from Klarna accordingly.

To make this easy we will set up a bank rule so that each time we receive a deposit from Klarna it is allocated to the Klarna clearing account automatically.

To set up the bank rule on Xero click the options link above any deposit from Klarna and then select Create bank rule:

Your rule should be set up like this:

Once you save the rule you will see that your deposits from Klarna now automatically match against the rule and all you need to do is click the blue OK button to allocate the rule:

Now if we check the balance sheet again we will see that the balance has changed:

For QuickBooks, we can see the weekly deposits from Klarna on our QuickBooks bank statement reconciliation page:
​

👉 Your payout schedule may be different so you may see more or fewer deposits from Klarna accordingly.

To make this easy we will set up a bank rule so that each time we receive a deposit from Klarna it is allocated to the Klarna clearing account automatically.

To set up the bank rule on QuickBooks click the row of any deposit from Klarna and then select Create a rule:

Your rule should be set up like this:

Once you save the rule you will see that your deposits from Klarna now automatically match against the rule.

Now if we check the balance sheet again we will see that the balance has changed:

STEP 3: Download your monthly fees invoice from Klarna and account for those directly in Xero or QuickBooks separately.

You can download your Klarna fees invoice from the Klarna Merchant Portal via the Settlements > Invoices page:

Enter the Klarna fees invoice into Xero or QuickBooks as a bill. It should look something like this:

Line 1: Fee amount as a negative (-) to the Shopify Gateway Clearing ( Klarna ) account with the tax rate as No VAT

Line 2: Fee amount as a positive (+) to your chosen Klarna Fees or Bank Fees account with the tax rate as No VAT

Once we save that bill then if we check the balance sheet one more time we'll see that there is now no balance showing on the Shopify Gateway Clearing ( Klarna ) account.

Here is a breakdown of the transactions that have passed through the Shopify Gateway Clearing ( Klarna ) account:

4x Deposit transactions totalling £850
1x Fees for £50
1x Sales invoice for £900

The net result being a perfect balance of the deposits plus the fees versus the sales invoice line added by Link My Books.

👉 If you have any follow up questions after reading this article then please get in touch with support via the blue message widget at the bottom right of this page.