This help guide helps you to set the relevant chart of account codes in Xero for subscription and recurring product sales and bank fee expenses.
Chart of Accounts Codes
There are two chart of account codes that you will need to set up in Xero and tell Connectably about in its settings:
- Sales - Subscriptions
- Merchant Fees / Bank Fees
Sales - Subscriptions: this is a dedicated 'Revenue' account code for recurring transactions - e.g. weekly or monthly subscriptions. When you set products up in Xero against this account code, and you add them to order forms in Connectably, Connectably will immediately recognise those products as recurring transactions or subscriptions. Sales that are staged over a number of payments also fall into this category.
Go to Accounting > Chart of Accounts to set up the new 'Sales - Subscriptions' Revenue account:
Once added, it will appear on the Chart of Accounts list:
Merchant Fees / Bank Fees: these are processing fees for bank transactions. When you set up Connectably, we'll also ask you to set up your free account, or re-authenticate with an existing account with GoCardless (which handles electronic bank transfers and direct debits) and Stripe (for debit and credit card transactions). This 'Overhead' account code is the code that will be used by Connectably to map their processing fee expenses to in your Xero account.
By default, in Xero, there's a "Bank Fees" account code, code 404, that comes coded in new Xero accounts. If it makes sense to you to use that code, or whatever you've renumbered / named it to, to map GoCardless and Stripe merchant fees to this account code, then you do not need to create new account codes for GoCardless or Stripe fees. Speak to your accountant or bookkeeper if unsure. Or, if you'd prefer to set up separate codes per provider (e.g. 'Bank Fees - Stripe' and 'Bank Fees - GoCardless') then Connectably will also allow you to map those two codes in Connectably's Xero Settings section. Most users just use the default 'Bank Fees' code, however:
New Bank Accounts
Because you'll likely be processing payments using GoCardless and/or Stripe in future, you'll need these bank account codes to be set up in Xero. Connectably does this for you. On first connection, it automatically sets up two new 'bank accounts' in your Xero account, if they don't already exist:
The bank account codes will be set up with code 20x and 20x, where 'x' is the next available number after 200, see below.
Once you've completed the steps on setting up a 'Sales - Subscriptions' revenue account code, and have confirmed you have an appropriate 'Bank Fees' code set up for GoCardless and Stripe processing fees, proceed to the next help article on managing your products in Xero (previously known as 'Inventory' in Xero).