Chapter 4: Settlement Models
Prerequisites: Chapter 3: Field Reference
Companion file: Ch4_Settlement_Models.xlsx
Before reconciling, you need to understand which settlement model your account uses. This determines when and how fees are collected.
4.1 Gross Settlement
The short version: You receive the full transaction amount daily. Fees accumulate and are debited from your bank at month-end.
┌─────────────────────────────────────────────────────────────┐
│ GROSS SETTLEMENT FLOW │
├─────────────────────────────────────────────────────────────┤
│ │
│ Daily: │
│ Sale $100 ──► Bank deposit: $100 │
│ Fee tracked: $2.90 (not deducted) │
│ │
│ Month-end: │
│ All tracked fees ──► Bank withdrawal: $XX.XX │
│ │
└─────────────────────────────────────────────────────────────┘How It Works
Transactions settle throughout the day
Gross Settlement Amount= full transaction value (e.g., $500.00)Total Gross Fees= fees tracked but NOT deducted (e.g., -$14.50)Total Net Fees= always $0.00 in Gross SettlementNet Disbursed= equals Gross Settlement (you get it all)At month-end: A
Transfer | Fee Debitrecord initiates bank withdrawal for all accumulated fees
Sample Data: Transfer TRF_001 (Gross Settlement)
Record ID | Type | Gross Settlement | Total Gross Fees | Total Net Fees | Net Disbursed |
|---|---|---|---|---|---|
TXN_001 | Sale | $500.00 | -$14.50 | $0.00 | $500.00 |
TXN_002 | Sale | $250.00 | -$7.25 | $0.00 | $250.00 |
TXN_003 | Sale | $175.50 | -$5.09 | $0.00 | $175.50 |
TXN_004 | Sale | $89.99 | -$2.61 | $0.00 | $89.99 |
TXN_005 | Refund | -$75.00 | +$2.18 | $0.00 | -$75.00 |
TXN_006 | Refund | -$50.00 | +$1.45 | $0.00 | -$50.00 |
TOTAL | $890.49 | -$25.82 | $0.00 | $890.49 |
What this means:
Your bank deposit today: $890.49
Fees tracked (will be debited at month-end): $25.82
Month-End Fee Debit
At month-end, all tracked fees are collected via a single bank withdrawal:
Record ID | Type | Subtype | Gross Settlement | Description |
|---|---|---|---|---|
FEE_002 | Transfer | Fee Debit | -$2,450.00 | January 2026 Fee Debit |
The Transfer | Fee Debit record initiates the bank withdrawal (-$2,450.00).
4.2 Net Settlement
The short version: Fees are deducted from each transaction immediately. Your daily deposit is already net of fees.
┌─────────────────────────────────────────────────────────────┐
│ NET SETTLEMENT FLOW │
├─────────────────────────────────────────────────────────────┤
│ │
│ Daily: │
│ Sale $100 ──► Fee deducted: $2.90 │
│ ──► Bank deposit: $97.10 │
│ │
│ Month-end: │
│ Nothing (fees already collected daily) │
│ │
└─────────────────────────────────────────────────────────────┘How It Works
Transactions settle throughout the day
Gross Settlement Amount= full transaction value (e.g., $500.00)Total Gross Fees= always $0.00 in Net SettlementTotal Net Fees= fees deducted immediately (e.g., -$14.50)Net Disbursed= Gross Settlement + Total Net Fees (fees are negative, so this is effectively subtraction)No month-end fee debit needed (fees already collected)
Sample Data: Same Transactions Under Net Settlement
Record ID | Type | Gross Settlement | Total Gross Fees | Total Net Fees | Net Disbursed |
|---|---|---|---|---|---|
TXN_001 | Sale | $500.00 | $0.00 | -$14.50 | $485.50 |
TXN_002 | Sale | $250.00 | $0.00 | -$7.25 | $242.75 |
TXN_003 | Sale | $175.50 | $0.00 | -$5.09 | $170.41 |
TXN_004 | Sale | $89.99 | $0.00 | -$2.61 | $87.38 |
TXN_005 | Refund | -$75.00 | $0.00 | +$2.18 | -$72.82 |
TXN_006 | Refund | -$50.00 | $0.00 | +$1.45 | -$48.55 |
TOTAL | $890.49 | $0.00 | -$25.82 | $864.67 |
What this means:
Your bank deposit today: $864.67 (already net of fees)
Fees collected today: $25.82
4.3 Side-by-Side Comparison
Aspect | Gross Settlement | Net Settlement |
|---|---|---|
Daily deposit | Full transaction amounts | Amounts minus fees |
Fees deducted daily? | No | Yes |
Which fee column is populated? |
|
|
Month-end fee debit? | Yes ( | No |
Example: $100 sale, $2.90 fee | Deposit $100.00 today | Deposit $97.10 today |
Same transactions, different deposit | $890.49 (fee deducted from this) | $864.67 |