How to reconcile Fresha payouts in Xero

First, check whether you need to do this by hand at all

Fresha now has a native Xero integration. You connect it from your Fresha workspace settings, map your sales, payments, fees and payout accounts, and it pushes activity into Xero for you. If you run a busy salon and want the least admin possible, connect it and see how it behaves for a few payout cycles before deciding anything else.

Two caveats. The integration is newer than Fresha's core product, and its documentation is thin on exactly how each payout lands in Xero, how fees and refunds are split, and which regions get which features. Some owners find every payout matches cleanly. Others find the posted figures need checking, or they simply have not connected it yet.

So this guide covers the manual method in full. Use it if you are not on the sync, and use it to sanity-check what the sync posts. Either way, you need to understand what is inside a Fresha payout, because that is where reconciliation goes wrong.

Why the payout never matches your sales

Fresha does not pay you your gross takings. Card payments land in your Fresha wallet first. Fresha deducts its charges there, then pays the remainder to your bank. By the time the money arrives, several things have been netted off:

• Card processing fees on every transaction Fresha processed.
• The marketplace new-client fee, a one-time commission of roughly 20% when a first-time client books you through the Fresha marketplace rather than your own link.
• Refunds issued during the period.
• Sometimes other charges, such as paid features or SMS charges, depending on your plan and region.

Meanwhile the payout also contains money that is not income at all: VAT you collected on behalf of HMRC (or GST for AU/NZ owners), tips owed to your team, and deposits for future appointments. If you code the whole payout to Sales, you overstate or understate revenue, misstate your VAT position, and lose track of what you owe staff.

For a fuller breakdown of every line that can appear, see what your Fresha payout actually contains.

Get the exact split for the payout

Before you touch Xero, you need the gross-to-net breakdown for the specific payout you are reconciling. In Fresha, open the payout under Payments (or Balance, depending on your version) and view its detail. Cross-reference with the Sales summary and Payments reports for the same date range. You are looking for six numbers: gross services and product sales, VAT collected, tips, refunds, card processing fees, and any new-client commission.

Pulling these apart from Fresha's reports takes a few minutes per payout and it is easy to mix up date ranges. The Fresha payout decomposer does the arithmetic for you: give it the payout figures and it returns the exact split, ready to post as a journal or to compare against what the sync pushed into Xero.

Whichever route you take, confirm the split sums to the net payout before you post anything. If it does not, the reconciliation will not balance and you will be hunting for the difference later.

Set up the accounts in Xero

You need a handful of accounts in your chart of accounts before the journal will work. Most Xero defaults get you close; add the rest under Accounting, then Chart of accounts:

• Sales — your existing revenue account, or separate service and product income accounts if you track them apart.
• Merchant fees (expense) — for Fresha's card processing charges.
• Fresha marketplace commission (expense) — keep this separate from card fees so you can see what new-client acquisition actually costs you.
• Sales refunds (revenue, used as contra-revenue) — refunds sit here as a deduction from income rather than an expense.
• Tips payable (current liability) — gratuities you owe staff are not your income.
• Customer deposits and gift card liability (current liabilities) — if you take deposits or sell gift cards, the cash is a liability when received and only becomes revenue when the appointment happens or the card is redeemed.

If you are building this from scratch, our salon chart of accounts has a full recommended structure with account types and VAT settings.

Post the payout as a manual journal

In Xero, go to Accounting, then Manual journals, and create a new journal dated the day the payout hit your bank. The logic is simple: debit what you received and what you gave up, credit what you earned and what you owe. Suppose a payout of £1,130.50 covers £1,000 of sales (ex VAT), £200 of VAT, £50 of tips, a £50 refund, £24.50 of card fees and £45 of new-client commission. The journal is:

If the period included deposits taken or gift cards sold, credit those liability accounts too, and release them to Sales when the service is delivered.

Set the VAT treatment on each line deliberately. If you post Sales with a VAT rate applied, do not also credit the VAT account separately, or you will double-count. The cleanest manual approach is to post everything as No VAT amounts and let the figures carry the tax explicitly, but agree the method with your bookkeeper so your VAT return picks it up correctly.

Reconcile the statement line, then make it faster

Once the journal is posted, open your bank feed under the Reconcile tab. The Fresha payout appears as a single statement line for £1,130.50. Because your journal already debited the bank account for exactly that amount, Xero should offer it as a match. Click Match, confirm, and the line turns green. That is the whole reconciliation: one statement line against one balanced journal.

Two Xero features take the drudgery out of doing this weekly:

• Bank rules — create a rule that recognises the Fresha payout reference on your statement. Rules work best when the split is stable in percentage terms; since Fresha's deductions vary per payout, use the rule to flag and pre-fill rather than blindly auto-code.
• Repeating manual journals — if your payout mix is stable, set up a repeating journal as a template, then edit the amounts each period instead of rebuilding the lines from scratch.

If you are on the native sync, the same matching step still applies. Check that the entries Fresha pushed add up to the statement line, and spot-check one payout a month against your own breakdown. If the sync's split disagrees with the payout detail in Fresha's reports, trust the reports and adjust with a journal.

The VAT-on-fees wrinkle, and a final word

UK owners have one extra thing to watch: Fresha's own charges can carry VAT. If they do, part of what you paid in fees is input VAT you may be able to reclaim, provided you hold a valid VAT invoice from Fresha and you are VAT registered. Download the fee invoices from your Fresha account and code the VAT element accordingly, rather than expensing the gross fee with no VAT. AU and NZ owners should apply the same thinking to GST on fees. Small amounts per payout, but they add up across a year.

A short disclaimer: account names, VAT rates and the treatment of tips, deposits and fees vary by country and by business. This article is bookkeeping guidance, not tax advice. Confirm the specifics with your accountant, especially your VAT registration position and how tips flow through payroll.

Next step: pick your most recent Fresha payout, pull its breakdown, and post the journal while the numbers are fresh. Once you have done one, set up the bank rule or repeating journal and the next one takes five minutes.