Ignition is introducing Net Settlement, a new method for processing payment collection fees. This change simplifies your payment reconciliation process by deducting payment fees immediately from each client payment, rather than consolidating them into a single monthly invoice.
This article explains how net settlement works and provides guidance on what you need to know and the steps to set up even more accurate and streamlined reconciliation in QuickBooks.
Net settlement
Net settlement is our new payment fee processing method, where your payment fees for each payment collection are processed separately and immediately on each payout, rather than compiling them each month on your Ignition invoice.
This means that you will no longer pay fees at the end of the month. Instead, they will be deducted from each payment collection.
With Net Settlement, Ignition automatically creates the QuickBooks Bank Deposit that reconciles each payout to $0 — the same step gross-settlement clients have to build by hand, for every payout, every day.
How does invoice reconciliation work?
If you have QuickBooks connected with Ignition, you will be prompted to set up and select your expense account for payment transaction fees.
Navigate to your Settings → Payments tab / Apps → QuickBooks tab to do this and select Account mapping.
Under the Account mapping section, you will see Sales, Ignition payment fees, and Stripe Capital financing costs (only if you are eligible for Stripe Capital).
Select the accounts you would like for the Sales and Ignition payment fees, and click Save.
Once your Ignition payment fees account has been selected, Ignition will continue to automatically match your payments every time you are paid.
Setting up a bank rule in QuickBooks
By setting up a transfer rule in QuickBooks, payouts move from the practice’s bank account into ‘Undeposited Funds’, balancing the payment and reconciling the invoices.
Please note: The bank rule in this article is only suitable if the Undeposited Funds account in QuickBooks is being used solely to record payment of invoices from Ignition.
How to set up the rule
1. In QuickBooks, go to Banking → Rules → New Rule.
2. Create the following rule and click Save. The transfer rule will then be set up.
How payments are reconciled
1. Your invoice is paid
You send an invoice through Ignition.
The invoice is synced to QuickBooks
When your client pays, Ignition marks the invoice as paid in both Ignition and QuickBooks.
2. The payment is held temporarily
Before the money reaches your bank account, QuickBooks places it in Undeposited Funds. This is a temporary holding account for payments waiting to be deposited.
Once the invoice is paid, QuickBooks records the money in Undeposited Funds.
3. Your payout reaches your bank
When Ignition sends your payout, it appears in your QuickBooks bank feed as a bank transaction.
4. Ignition reconciles everything automatically
As soon as the payout arrives, Ignition automatically creates a Bank Deposit in QuickBooks that matches:
the client payment
any processing fees
the net amount deposited into your bank account
This deposit balances to $0, allowing QuickBooks to automatically reconcile the payout.
Things to know
$0 Bank Deposit: Ignition automatically creates a Bank Deposit that matches the payment, fees, and payout, allowing the transaction to reconcile without affecting your bank balance.
Reconciled (R): The payment is marked as reconciled once the Bank Deposit is created.
Multiple rows: QuickBooks may show the same Bank Deposit as multiple rows. This is a display quirk, not duplicate deposits.
Refunds and Reversals
A reversal is any time money moves back the other way — a refund, a failed payment, or a disputed charge. Under Net Settlement, reversals are handled automatically wherever possible.
Refunds
When you refund a client:
The payment is automatically reversed in QuickBooks
The invoice is updated to unpaid (or partially paid)
No manual QuickBooks entries are required
Note: Standard processing fees are not refunded.
Failed payments
If a payment is later reversed by the bank:
Ignition automatically reverses the payment in QuickBooks
Any returned processing fees are reflected automatically
The invoice is returned to unpaid so it can be collected again
No manual bookkeeping is required
Chargebacks and disputes
Chargebacks are the one exception. If a client disputes a payment:
Ignition records the dispute and notifies you
No accounting entry is created automatically in QuickBooks
If the dispute is ultimately lost, you'll need to record the appropriate adjustment in QuickBooks