What are gross, fee and net in a payout?
Three numbers on every payout line, and the reason recording only one of them quietly breaks your accounts.
Gross is the amount the customer paid. Fee is the amount the payment processor kept for handling it. Net is what is left, and net is what turns up in your bank account. Every payout line carries all three, and every accounting problem in this area comes from recording only one.
A worked example
| Line | Amount |
|---|---|
| Gross, what the customer paid | 100.00 |
| Processor fee, 2.9 percent plus 0.30 | 3.20 |
| Net, transferred to the bank | 96.80 |
If you record 96.80 as revenue, three things go wrong at once. Your income is understated by 3.20, your costs are understated by the same amount, and the payment does not match the invoice you raised for 100, so the invoice sits open forever or gets written down by hand.
Why the fee is worth tracking separately
Processing fees are one of the few costs that scale directly with revenue, which makes them worth watching. A business collecting a million a year at 2.9 percent is paying around twenty nine thousand for collection alone. You cannot negotiate, restructure or even notice that cost if it never appears as a line anywhere.
Where the three numbers diverge further
- Tax on the fee. In several countries the processor charges tax on its fee, which is a fourth number and often recoverable.
- Currency conversion. A cross border payment may have a gross in one currency and a net in another, with a rate applied between them.
- Refunds. Refunding a sale usually returns the gross to the customer while the original fee stays with the processor, so a refunded sale costs money.
- Chargebacks. These add a separate dispute fee on top of the reversed amount.
- Reserves. Part of a payout can be held back, so net paid and net earned differ for a while.
The rule to follow
Record gross as income, fee as an expense, and check that the difference equals the deposit on the bank statement. That single check catches missing fees, missed refunds and payouts that never arrived. Karchu writes the fee as its own line automatically when a payout report supplies all three figures, which is described on the processor analyzer page. The report itself is explained in what is a settlement report, and the totals feed pay in and pay out.