Reconciling Afterpay Settlements at Month-End

Afterpay is one of the more awkward lines in an Australian Shopify close, and not because the amounts are large. The difficulty is that two systems describe the same sale differently. Shopify records the order at its full value. Afterpay pays you a few days later, net of its fee and the GST on that fee, in one deposit that may cover many orders and refunds. Neither record is wrong. They just never line up on their own.

This guide covers how the money moves for online and in-store Afterpay sales, how to clear an Afterpay clearing account to the cent each settlement, and what should be left in that account when you close the month.

How online settlements work

Afterpay's settlement day page says that for online orders, merchant fees and GST are deducted as each order is processed, and the net amount is settled to your nominated bank account. Your merchant agreement sets a settlement period of 1 to 5 business days. Afterpay's merchant fees page puts it the same way: the balance reaches your account "typically up to five business days following the date of the Afterpay purchase," and the fee itself "comprises a fixed fee, plus a percentage amount." The actual rates are in your agreement, not on the public page.

Afterpay's developer documentation on settlement reports says there is one report for each settlement to your bank account, and that you will typically get one settlement per day on which you capture an Afterpay order. The report columns are what make reconciliation possible:

• Afterpay Order ID and Merchant Order ID, which link each line back to the Shopify order;
• Order Amount and Settlement Amount;
• Merchant Fee excl Tax, Merchant Fee Tax and Merchant Fee incl Tax;
• Net Settlement Amount;
• Type, plus Merchant Refund ID, Afterpay Refund ID and Refund Date and Time for refund activity.

The same page notes that monthly tax invoices can be downloaded from the reconciliation tab of the Business Hub. Keep those with the month's working papers.

Why the Shopify side never matches the deposit

Shopify only sees the customer side of the sale. As A2X explains in its guide to Afterpay payouts, "the AfterPay fees don't pass through your Shopify account," so anything built from Shopify data expects the gross amount, while the bank receives the net.

That gives you two differences to explain every time:

1. An amount difference. The deposit is lower than the Shopify sales by the merchant fee and the GST on that fee.
2. A timing difference. The deposit arrives one to five business days after the sales it pays for, so sales near the end of the month are paid in the next one.

A clearing account handles both, but only if you clear it properly.

A worked settlement

Say one Afterpay settlement report shows these lines. The fee figures are illustrative, not Afterpay's rates.

Check it: 1,200.00 − 150.00 − 60.00 − 6.00 = 984.00. The parts sum to the deposit. For simplicity this example puts no fee on the refund line. Your own report has fee columns on every line, so use what it says.

On the Shopify side, the three orders were recorded as $1,200.00 of Afterpay sales (a debit to Afterpay clearing) and the refund as $150.00 back out (a credit to Afterpay clearing). The clearing account holds $1,050.00 for these lines.

When the deposit lands, the journal is:

Debits total $1,050.00, credits total $1,050.00, and those lines in the clearing account are now at zero. How the $6.00 is coded for GST should follow what the Afterpay tax invoice shows and what your accountant has agreed. Decide it once and write it into the close checklist.

Book fees per settlement, not as a month-end plug

A common shortcut is to post deposits against the clearing account all month and then, at month-end, treat whatever is left as Afterpay fees. A2X's guide describes this approach, and notes that sometimes a balance carries forward for "a transaction that hasn't cleared yet."

That caveat is the problem. At the end of the month the clearing balance holds two different things: fees on settled orders, and the full value of orders Afterpay has not yet paid. If your settlement period is several business days, the last few days of sales sit in that balance at gross. Calling the whole residual "fees" overstates fees this month, and next month's deposits then leave the account negative.

Booking fees from each settlement report, as in the journal above, avoids this. The month-end clearing balance then means one thing only: orders captured but not yet settled. You can check it against a list.

Refunds and negative balances

Refunds follow the same report, which carries refund IDs and refund dates, and they reduce the settlement they fall into. Afterpay's settlement day page adds one detail that matters for reconciliation: if refunds exceed sales, you may see a negative balance instead of a settlement. Afterpay does not direct debit your account for it. The balance is offset against future orders, subject to thresholds and limits.

So a quiet, refund-heavy day can produce no deposit at all, and the next deposit is smaller than its orders would suggest. If you match deposits to days one by one, that looks like a missing payment. It is not. The refund lines still clear against the clearing account. They just net into a later deposit.

In-store sales work the other way round

The Afterpay Card is different. Afterpay's Afterpay Card settlement page says these transactions process on your EFTPOS terminal like any other card, so the full sale amount arrives in your EFTPOS settlement, less your EFTPOS provider's fees. Afterpay does not settle to you directly. It direct debits its fee from your nominated bank account 1 to 4 business days after the sale. The debit shows on your bank statement as "AFTERPAY AUSTRAL (AU)", with a reference that starts with the date and includes your Merchant ID. Line-item details are in a separate daily CSV under the Afterpay Card tab.

For in-store sales, then, there is no net settlement to decompose. The sale reconciles with your EFTPOS deposits, and the Afterpay fee is a separate bank debit with no deposit behind it. Code it from the Afterpay Card file, not from a guess on the bank line, or it will end up in suspense.

What to check at month-end

• Every settlement is decomposed and proven. Orders, refunds, fee excluding GST and GST on the fee sum to the deposit before the journal is posted.
• The Afterpay clearing balance ties to a list. It should equal the gross value of orders and refunds captured but not yet settled, to the cent, and those lines should appear on the first settlement reports of the next month.
• No residual has been plugged to fees. Fee expense for the month equals the fee columns of that month's settlement reports.
• Negative balances are accounted for. Any day with refunds but no deposit is traced to the later settlement that absorbed it.
• Afterpay Card fee debits are matched. Each "AFTERPAY AUSTRAL" debit is matched to its daily Afterpay Card file.
• The monthly tax invoice is filed. It supports the GST coding on the fees.

Bringing it back to your close

Afterpay is easy to reconcile once you treat each settlement as a small set of parts that must add back to the deposit. Book the fees from the report, let the clearing account hold only orders in transit, and keep the list that proves it. Then the balance left at month-end is something you can explain.

That decomposition is what we built Vert to do across Shopify Payments, Stripe, PayPal and Afterpay: split each payout into its parts, prove they sum to the deposit, and draft a balanced journal for your approval in Xero or QuickBooks. If you would like to see it on your own settlements, join the pilot.