How Toast Data Flows
When reviewing your daily Toast sales alongside the journal entries posted to your accounting software, you might wonder how credit card processing fees are handled.
Toast captures credit card payments at gross value whenever a guest pays at the terminal or online. However, when Toast deposits those funds into your bank account, it sends a net payout (your gross card collections minus transaction processing fees).
To ensure your financial reporting remains accurate without creating headaches during bank reconciliation, Omniboost automates a balanced, two-sided entry within your daily financial journal.
Why Processing Fees Need an Offset Line
In standard double-entry bookkeeping, two important things must happen at the same time:
Accurate Profit and Loss (P&L): Processing fees are an operational business expense. They need to be recorded on your Income Statement under an expense account (such as Processing Fees) so you can track merchant costs over time.
Simple Bank Reconciliation (Balance Sheet): When Toast transfers money to your bank account, the bank statement line shows the net amount collected. If your card clearing account only holds the gross receipts, matching the bank deposit leaves an unresolved difference equal to the fees.
The Two-Sided Solution
Omniboost solves this by booking two complementary lines for processing fees:
Fee Expense Line: Increases your processing fee expense on your Profit and Loss statement.
Fee Offset Line: Credits your card clearing account on your Balance Sheet by the exact same fee amount.
Because the fee offset reduces the card clearing account directly, the ending balance in your clearing account changes from the gross card total to the exact net deposit that Toast sends to your bank.
Understanding Your Daily Journal Entry
Below is an example of how your daily sales, card payments, processing fees, and taxes appear in your accounting software.
As shown in the journal entry above:
Sales and Revenue: Your sales (such as Food and Beverage) are credited to your revenue accounts according to your menu categories and revenue centers.
Taxes and VAT: Tax handling reflects your regional setup and software capabilities. For UK and Australian setups (such as Xero), sales lines are booked net of tax with the appropriate tax type applied directly to the line. For North American setups, taxes are typically sent to dedicated sales tax liability ledger accounts.
Card Payments: Each card payment type (Visa, Mastercard, Amex, Discover) is booked at its full gross amount into your Card Payments clearing account.
Merchant Processing Fees: The transaction fee is debited to its own Processing Fees expense account.
Processing Fee Offset: The exact same fee amount is credited to Processing Fees - Offset within your Card Payments clearing account, reducing the balance so it matches your net payout.
How It Clears in Your Bank Feed
Here is the step-by-step numerical breakdown showing how your card clearing account reconciles with your bank statement:
Step 1: Gross Card Payments Received
Across all card brands (Visa, Mastercard, Amex, Discover), the gross total debited to your Card Payments Account (2300) is:
Visa: £2,550.07
Mastercard: £1,422.85
American Express: £1,152.57
Discover: £7.95
Total Gross Card Takings: £5,133.44
Step 2: Processing Fee Offset Applied
In the exact same journal entry, the processing fee offset is credited to the same account:
Gross Card Takings: £5,133.44
Less Processing Fees Offset: -£92.68
Net Remaining Balance on Card Payments (2300): £5,040.76
Step 3: Fee Expense Recorded
Simultaneously, the £92.68 is debited to Processing Fees (7905), ensuring your merchant costs are fully visible on your operational reports.
Step 4: Reconciling Your Bank Deposit
When Toast disburses the batch settlement to your bank account, your bank feed shows:
Deposit received from Toast: £5,040.76
To reconcile in your accounting software:
Open your bank reconciliation screen.
Select the incoming deposit of £5,040.76.
Match it against your Card Payments Account (2300).
The balance on Account 2300 reduces to £0.00, confirming that your card sales and processing fees are completely reconciled.
Account Setup Best Practices
To make sure this flow works smoothly, check that your integration setup follows these basic guidelines:
Card Clearing Account: Make sure all credit card tenders (Visa, Mastercard, Amex, etc.) point to your central card clearing account.
Processing Fee Expense Account: Point this to the expense account where you want to monitor your merchant fees.
Processing Fee Offset Account: Always point the fee offset to the exact same clearing account as your credit card tenders. This is what allows your clearing account balance to automatically match the net bank payout.
Quick Reference Summary
Stage | Toast POS Reports | Daily Accounting Journal | Your Bank Feed |
Sales Revenue | Net and gross sales breakdown by category | Credited to revenue accounts | Not shown individually |
Gross Card Sales | Total card sales grouped by tender | Added to Card Payments clearing | Not shown individually |
Processing Fees | Fees shown on settlement report | Added to Processing Fees expense | Deducted before deposit |
Fee Offset | Deducted in settlement summary | Deducted from Card Payments clearing | Adjusts clearing to net payout |