Case Studies
When Payment Processors Aren’t Reconciled, Nothing Makes Sense: A Cleanup Case Study
Payment processors are not set and forget accounts. When Stripe, Square, and PayPal are ignored, the balances drift, the reports distort, and the financials stop telling the truth.
This marketing company relied on multiple payment processors to collect revenue, but none of the accounts were reconciled. Transactions flowed in from Square, Stripe, and PayPal with no structure, no clearing workflow, and no review process. The result was a set of balances that made no sense and reports that could not be trusted.
Payment processors are liabilities until cleared. When they are not maintained, the numbers drift quickly. This case study shows exactly how the drift happened and what was required to stabilize the file.
Structural Review
The root causes behind the payment processor discrepancies
The Complete Check always starts with the same four diagnostic questions. These markers exposed the underlying issues inside the payment processing workflow.
What Was Broken
None of the payment processor accounts had been reconciled. Square showed historical activity with no clearing entries or matched deposits. Stripe displayed a negative balance that contradicted actual payouts. PayPal was recording incoming transactions inconsistently. The balances in QuickBooks did not match the processor records or the bank deposits.
Why It Broke
Each processor was functioning independently with no unified clearing workflow. Deposits were recorded manually or duplicated from the bank feed. Fees were not captured accurately. Old transactions were left unresolved for months and years. The business added more processors without updating its accounting structure, creating contradictions across every account.
How the Pattern Showed Up
Square showed a dormant balance that did not match actual deposits. Stripe held a negative balance of 35.88 due to unmatched or missing entries. PayPal transactions did not align with payouts to the bank, leaving unreconciled amounts. The inconsistencies caused revenue to be overstated in some periods and understated in others, depending on which processor had been ignored longest.
What Needed Reconstruction
All processor accounts were reviewed individually. Old entries were corrected or cleared. Stripe discrepancies were resolved and the account was brought back to zero. Square activity was reconciled and the account retired. PayPal transactions were matched to actual payouts. A single merchant clearing account was implemented to consolidate and track all processor activity going forward, creating consistent accuracy across the file.
The impact of rebuilding the payment processing workflow
Once the accounts were reconciled and the clearing workflow was implemented, revenue finally aligned with actual activity. Fees were tracked correctly. Deposits matched payouts. The processor balances reflected real numbers instead of leftovers from outdated processes.
Rebuilding this structure allowed the business to rely on its financials again. Decisions were no longer based on inconsistent reports, and revenue patterns became clear instead of confusing.
Frequently Asked Questions
Why do payment processors cause so many issues?
They hold funds temporarily and charge fees at different times. Without proper clearing, the balances in QuickBooks rarely match the actual payouts, creating discrepancies across revenue and liabilities.
Should payment processors be reconciled?
Yes. They should be reconciled monthly to confirm that all payments, fees, and deposits match the actual activity recorded by the processor.
What is a merchant clearing account?
It is a single account where all payment processor activity is aggregated before being deposited to the bank. This prevents discrepancies, simplifies tracking, and eliminates duplicate revenue.
How do unreconciled processors affect reports?
Revenue becomes inaccurate, fees are misstated, and cash flow reporting becomes unreliable. The longer the accounts go unreconciled, the worse the structural drift becomes.
Ready for reports that finally make sense?
If you're unsure whether your file needs a rebuild or a cleanup, the Complete Check diagnoses the structure, the COA, and the patterns creating the confusion. It is the fastest way to see what your QuickBooks file is actually doing.
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