Review merchant processing costs by reconciling gross customer charges, refunds, processor fees, withheld balances and bank payouts over matching periods. Trace each deduction to its record and contract before adjusting earnings. Net deposits alone do not establish wash revenue, and a buyer’s proposed processing rate does not prove the seller’s historical expense was overstated.
- Reconcile sales, processor activity and bank deposits separately.
- Distinguish operating fees from timing and balance movements.
- Test the actual transaction mix before comparing rate quotes.
- Keep historical costs separate from proposed buyer savings.
What question should the processing review answer?
Establish what the wash earned, what payment handling cost and why deposits differ from customer charges. A single net deposit hides these separate questions and the records needed to answer them.
The valuation hub connects the bridge to earnings review. Define the site, merchant accounts, currency and dates, including member renewals and retail receipts that belong to the sale. If locations share an account, keep site IDs so another wash’s receipts and costs do not enter the total.
Request the agreement, prices, statements, transaction exports and payout reports beside POS records, the ledger and bank statements. Save report settings and dates. Show fees deducted before payout apart from invoices or bank debits billed elsewhere, without counting the same charge twice.
IRS recordkeeping guidance explains how source documents support the books. Trace material amounts to those records rather than a seller’s category total. That general principle does not prescribe a deal-specific adjustment or certify the wash’s earnings.
How do payout and balance reports differ?
Choose reports that fit the actual payout method. A payout report explains a transfer, while a balance report tracks money and activity within the processor account.
Stripe’s payout reconciliation documentation describes matching automatic payouts to batches and their itemized transactions. Manual and instant payouts need different review. This is a provider example, not proof that the wash uses Stripe or that another system offers the same fields.
Ask the installed provider which records connect a transaction ID to a payout ID and which show funds not yet transferred. Keep both where needed, with their date settings and account scope. Follow selected sales through the reports rather than assuming the bank posting date is the revenue date.
Check how each report defines its date range. A payout may settle earlier transactions, and its estimated arrival date may differ from the bank’s posting date. Keep those differences in the bridge so a valid timing gap is not misclassified as a missing sale or fee.
Which movements change earnings and which change cash?
Classify each movement before calculating a fee rate. A service charge, refund, held balance and payout can all affect cash while having different accounting treatment.
| Movement | Evidence to inspect | Review question |
|---|---|---|
| Processing charge | Fee detail and applicable pricing | Was this expense recorded once in the correct period? |
| Customer refund | Original sale and refund record | How was the revenue reversal recorded? |
| Withheld balance | Balance report and governing terms | What remains held, and what supports recovery? |
| Bank payout | Settlement identifier and bank entry | Which activity and prior balances explain this transfer? |
| Separately billed service | Invoice and payment evidence | Is it already included in another expense category? |
Have the accountant resolve unclear treatment. A smaller deposit is not proof of an expense or an EBITDA add-back. Support held balances’ ownership, recovery and release terms with actual records.
Keep each source and ledger line beside its category. A separately billed service may already be booked elsewhere. Count it once, stating excluded services for comparisons.
Flag gaps and request detail rather than inventing a fee to balance the bridge. Unsupported totals do not establish economics. Keep cash holds visible even when they are not current expenses.
What does a worked settlement bridge show?
A worked bridge shows how charges, costs and balances explain payouts under stated assumptions. These fictional amounts demonstrate reconciliation, not a wash benchmark or actual deal result.
Suppose an account starts with $4,000, receives $100,000 in customer charges and records $2,000 in refunds and $3,000 in service fees. Assume no other movements and a $6,000 ending balance. Before payouts, the amount is $4,000 + $100,000 − $2,000 − $3,000 = $99,000. Subtracting the $6,000 ending balance leaves $93,000 in payouts.
The $7,000 gap between charges and payouts is not all processing expense. It includes $3,000 of fees, $2,000 of refunds and a $2,000 rise in the processor balance. Each amount has a different role in the review.
Check the real records before deciding revenue timing, expense treatment or recovery of the ending balance. Add lines for any other movements instead of quietly changing the example’s assumptions. Trace payouts to actual bank entries and leave unmatched transfers open for review.
How should the effective fee calculation be defined?
State which expenses and processed amounts the percentage includes. Use matching accounts and dates so readers can reproduce the numerator and denominator instead of comparing unexplained rates.
In a separate fictional comparison, $3,000 of identified fees divided by $100,000 of processed charges equals 3%. That is arithmetic, not a recommended rate. The result changes when payment types, services or the denominator change, so state those boundaries beside the result.
Show whether the cost includes gateway, account, transaction or other service charges. Fees paid outside the settlement report still need their own invoice and payment trail. Keep refunds and held balances distinct from service fees rather than adding every deposit deduction to the cost total.
Review transaction counts as well as dollars. A fixed fee per transaction affects many small tickets differently from fewer large payments. Member renewals and retail charges may use different channels. Compare the actual mix and contract terms instead of applying a headline price to every receipt.
How can settlement timing distort a monthly comparison?
Record the start and end dates and the time zone where relevant. A charge may enter the account before a bank payout arrives, while opening balances can fund later deposits.
Stripe’s balance summary documentation describes starting balance, activity, payouts and ending balance. It does not match each payout to payment transactions. Use the actual provider’s equivalent records, without treating Stripe’s documentation as proof of this wash’s configuration.
The membership revenue cutoff guide addresses recognition periods separately. Cash movement explains what transferred, while accounting review determines which sales and costs belong in earnings. A late deposit or later payout does not automatically change the underlying sale date.
Keep the opening and ending balances with each month’s schedule. Check failed payouts, fees billed elsewhere and bank entries outside the selected dates before assigning a gap. Deposits can exceed current sales when old balances are paid out, so that difference alone is not evidence of new revenue growth.
What must support a claimed buyer cost reduction?
Require a written quote with the merchant entity, channels, transaction assumptions and included services. Compare it to actual historical volume and counts, with outside charges listed rather than ignored.
Keep the seller’s expense, supported corrections and buyer forecast in separate columns. The car wash quality of earnings guide explains why proposed changes must not overwrite source records. A lower quote may inform planning without proving that historical costs were overstated.
Review savings through the add-back framework too. If a cost continues in another form, show its replacement. Check setup, equipment, software and other charges outside the quoted rate so gross savings do not become an unsupported net benefit.
Save open conditions and the proposed start date. A quote does not establish account transfer approval, uninterrupted service or actual future savings. Apply its terms to the wash’s real payment mix and retain assumptions for review. If key terms remain missing, label the calculation a scenario rather than an accepted operating plan.
What should the final review worksheet contain?
Use one row per account and period, with detail for material exceptions. Include charges, refunds, classified fees, other movements, opening and ending balances, payouts and bank matches.
- Define the site, merchant accounts, currency and reviewed dates.
- Match POS activity with processor transaction records.
- Classify fees, reversals and other balance movements.
- Reconcile processor balances and payouts with bank entries.
- Compare the resulting schedule with the ledger and earnings bridge.
- Document proposed buyer pricing separately and assign unresolved items.
Attach source references, report scope and export date. Matching a deposit supports that transfer, not every sales or expense entry.
State what reconciles, what remains unexplained and which assumptions affect the buyer’s budget. Assign a reviewer and next action to each material gap rather than hiding it inside fees. Keep later corrections dated and retain the earlier evidence so the review can be repeated.
The bridge supports earnings and cash review, not account certification or guaranteed future savings. Keep history and forecasts separate. Carry open terms and timing items forward until evidence resolves them.