Payment processing is a key element in accounting. Properly determining the state of financial resources has a significant impact on the accurate representation of a company's assets, and transactions are also associated with generated revenues and incurred costs.
The Paypal payment system represents an important business solution that is widely used by business entities. It's one of the more prevalent solutions among so-called "fintech" providers. Its popularity is undoubtedly linked to the growing online sales, but it's also one of the most credible and reliable systems. It has been in the market for many years, and there's hardly a web platform that doesn't allow integration with Paypal.
DILEMMA:
However, when a business starts using Paypal, a dilemma arises as to what this kind of operation actually entails. As mentioned earlier, it's important to realize that it's a payment system that significantly affects the rest of the accounting. In other words, Paypal isn't just something casual; it needs to be carefully handled and also correctly recorded for transactions through this system.
LET'S GET TO KNOW PAYPAL:
In terms of its content, Paypal is most similar to an actual transaction account. In this sense, it's much more similar than some other online payment processing platforms (e.g., Stripe). The reason is that it actually allows both receiving payments and making payments (sending). There are also certain costs incurred (transaction costs). Paypal also enables you to maintain a balance of funds in their account – meaning that funds do not necessarily have to be automatically transferred from the Paypal account to a regular bank account (TRR).
All of this means that Paypal transactions need to be practically treated the same way as payment processing in transaction accounts at banks.
Paypal transactions can represent settling obligations with suppliers, payments from customers for your goods or services, or even reimbursement of expenses (if a business owner reimburses certain expenses from the Paypal account). As mentioned earlier, Paypal also charges certain fees and other costs. This means that these need to be considered as expenses when preparing the financial statement. Then there's also the aspect of VAT, which we'll discuss separately in another post.
To sum up, it's important to understand that consistent handling of Paypal is crucial for accurate accounting of various accounting categories.
SOLUTION: While processing this data, errors and issues can arise if you manually enter data from PDF outputs or various Excel files. That's why the solution DigiAs was developed, which greatly speeds up the work, relieves you of manual data entry, and is, above all, completely accurate. This way, your financial statements will always be correct.
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