Reconciling customer payments means matching each payment in your bank account to the invoice it settles, so your accounts show the right invoices as paid and your bank balance agrees with your books. In Xero or QuickBooks that happens as you match bank transactions to invoices, and the hard cases are part payments, one transfer covering several invoices, payments without a reference and SEPA direct debits that are later returned or refunded. Match against the invoice the customer names, record fees separately from payments, and reopen any invoice whose payment comes back.
In this article
The short version
- Reconciling means matching each bank payment to the invoice it settles.
- Split one transfer across several invoices using the customer's remittance advice.
- Reopen any invoice whose SEPA direct debit is returned or refunded.
- Record provider fees as an expense, not as a cut to the payment.
- Payments taken through Adfin are marked paid in Xero or QuickBooks.
The reconciliation rules in one line each
Each of these holds whether you reconcile daily, weekly or at month end. The rest of the guide covers how to apply them.
- Match every payment to the invoice the customer says it's for, not the oldest open invoice, unless the customer agrees.
- Record a part payment against the invoice it relates to and leave the balance open, rather than writing it off.
- Split a single transfer that covers several invoices across each of them, using the customer's remittance advice.
- Hold an unidentified payment in a suspense or unallocated account until you know who paid it, rather than guessing.
- Treat a provider's fees as a cost of their own, never as a reduction in what the customer paid.
- Reopen any invoice whose SEPA direct debit is returned or refunded, and chase it again as unpaid.
- Reconcile at least as often as you chase, so reminders don't go to customers who've already paid.
What reconciliation involves in Xero and QuickBooks
In both Xero and QuickBooks, reconciling customer payments means taking each transaction that arrives in your bank account and matching it to the record it settles. For a customer payment that's usually a sales invoice. Once matched, the invoice shows as paid, the payment is recorded against the right customer, and the bank balance in your books agrees with the balance at the bank.
When the payment and the invoice match exactly, with the same amount and a reference the customer copied from the invoice, the match takes seconds. The time goes on everything else: amounts that differ from any single invoice, references that are missing or wrong, deposits from payment providers that bundle several payments together, and money that comes back after you've marked an invoice paid.
Reconciliation also keeps your credit control accurate. An aged debtors report is only as reliable as the matching behind it, and a payment sitting unmatched in your bank account can mean a reminder goes to a customer who's already paid. Reconciling before reminders go out helps avoid that.
Payments that don't match one invoice
Many reconciliation questions involve a payment that doesn't line up neatly with a single invoice. Each of the common cases has a straightforward rule.
| Situation | What to do |
|---|---|
| Part payment | Record it against the invoice it's for and leave the balance outstanding |
| One transfer for several invoices | Split it across the invoices named in the remittance advice, or ask the customer which ones it covers |
| Payment larger than the invoice | Match the invoice and record the excess as a credit on the customer's account until you agree whether to refund or offset it |
| No reference or the wrong reference | Hold it as unallocated, identify the payer from the bank details, then match it |
| Payment includes late payment interest | Allocate the invoice amount first, then the interest and any compensation you charged separately |
| Customer paid the same invoice twice | Match one payment, hold the second as a credit, and agree with the customer whether to refund it |
A clear payment reference on every invoice, usually the invoice number, with a line asking customers to quote it, helps cut down these cases. So does asking regular customers who pay several invoices at once to send remittance advice, even a one-line email listing the invoice numbers.
SEPA direct debits that come back
A SEPA direct debit can be reversed after you've treated it as paid, so it helps to know the ways money comes back and how long each window stays open.
- A reject happens before the payment settles between the banks.
- A refusal is the customer asking their bank not to pay before settlement; after settlement it's handled as a return.
- A return happens after settlement and is started by the customer's bank, for reasons such as insufficient funds or a closed account.
- A refund is a customer claim after settlement. Customers can claim a refund of any SEPA direct debit within eight weeks of the debit date with no questions asked, and within 13 months if the collection wasn't authorised.
- A reversal is you, as the business collecting, refunding a collection that shouldn't have been taken.
Whichever way it happens, the reconciliation step stays the same. Record the money leaving your bank account against the original invoice, so the invoice shows as unpaid again, then chase it like any other overdue invoice.
Because of the refund rights, a direct debit marked paid in your books can still come back for at least eight weeks, so an invoice from a recent month may reopen after you've closed that month.
Deposits from payment providers
A payment provider doesn't always send each customer payment to your bank account on its own. Some group several payments into one deposit, and some take their fees out before the money reaches you.
If your provider deducts fees from the deposit, the amount in your bank will be less than the invoices it covers. GoCardless, for example, pays out in one lump sum minus its transaction fees. To reconcile, record each customer payment in full against its invoice and record the provider's fee as an expense, so the total equals the deposit. Recording only the net amount would understate your sales and leave each invoice slightly short.
Timing can also separate the invoice and the deposit. Stripe makes SEPA direct debit funds available six business days after the charge, so a payment collected near month end may not reach your bank until the following month. Match it when it arrives, and treat the gap as timing rather than a missing payment.
A month-end reconciliation checklist
Work through this list once a month, even if you reconcile more often, so nothing unmatched carries into the next month unnoticed.
- Match every bank transaction for the month to an invoice, bill or expense, and leave nothing unreconciled.
- Review the unallocated or suspense account and clear anything you can now identify.
- Check each provider deposit adds up to its payments less its fees.
- Look for SEPA direct debit returns and refunds, and reopen the invoices concerned.
- Compare the closing balance in your books with the bank statement for the same date.
- Run the aged debtors report and check that every invoice shown as overdue really is unpaid.
- Look at customer credits and agree with each customer whether to refund or offset them.
Payments marked paid automatically
Much of the matching above disappears when the payment and the invoice are linked from the start. Adfin is a certified Xero app and a certified QuickBooks app with two-way sync, and payments taken through Adfin are marked paid in Xero or QuickBooks automatically, so you don't match each of them by hand. Customers pay by SEPA direct debit, card, Apple Pay, Google Pay or bank transfer through payment links sent by email, SMS or WhatsApp.
Payments that arrive outside Adfin, such as a transfer straight to your bank account, still need matching in Xero or QuickBooks in the usual way.
Adfin's free Essential credit control adds statements, unlimited reminders by email, SMS and WhatsApp, and an aged debtors view where you can give each debtor an owner and a next step. Pricing is 20c + 1% per successful payment, with the 1% part capped at €2 on SEPA direct debit and bank transfer; cards aren't capped. You won't pay a monthly fee or setup fee, and you aren't tied to a contract.
Common questions
What does it mean to reconcile customer payments? It means matching each payment in your bank account to the invoice it settles, so the invoice shows as paid and your bank balance agrees with your accounts.
How do I reconcile a payment that covers several invoices? Split the payment across each invoice it covers, using the customer's remittance advice. If there's no remittance, ask the customer which invoices they meant to pay.
What should I do with a payment I can't identify? Hold it in an unallocated or suspense account, use the bank details to work out who sent it, and match it once you know which invoice it's for.
Can a SEPA direct debit be reversed after I've reconciled it? Yes, a customer can claim a refund of any SEPA direct debit within eight weeks with no questions asked, and within 13 months if it wasn't authorised. Reopen the invoice when that happens.
How do I record payment provider fees when reconciling? Record each customer payment in full against its invoice, then record the provider's fee as an expense. The payments less the fee should equal the deposit in your bank.
Does Adfin mark invoices as paid in Xero and QuickBooks? Yes, it's a certified app for both with two-way sync, and any payment taken through it is marked paid in Xero or QuickBooks automatically.
Sources
- European Payments Council - 2025 SEPA Direct Debit Core Rulebook, version 1.0 (accurate as of November 2026) https://europeanpaymentscouncil.eu/sites/default/files/kb/file/2024-11/EPC016-06%202025%20SDD%20Core%20Rulebook%20version%201.0.pdf
- Bank of Ireland - Direct Debit Creditor Guide (accurate as of November 2026) https://businessbanking.bankofireland.com/app/uploads/4293010_3240302-Direct-Debit-Creditor-Guide-Apr23-V02-FA.pdf
- GoCardless - Receiving a payout (accurate as of November 2026) https://support.gocardless.com/hc/en-gb/articles/17485089478940-Receiving-a-payout
- Stripe - SEPA Direct Debit payments (accurate as of November 2026) https://docs.stripe.com/payments/sepa-debit
