How are fees recorded for ACH transactions?

STRATAFOLIO uses ACH (Automated Clearing House) transfers to collect rent and other payments. A small processing fee applies to each transaction. STRATAFOLIO automatically records this fee in QuickBooks, depending on who pays it — the Entity (Owner) or the Tenant.

This article explains how STRATAFOLIO applies, posts, and records ACH fees in your accounting system to help you maintain accurate books.

What is the ACH Fee Structure?

• Current Rate: 0.05% per transaction
  
• Minimum Fee: $2.50 per transaction
  
• ACH processing time: Typically 4–6 business days for standard transfers.
  Expedited processing timelines may vary depending on your bank or credit union and Dwolla’s processing schedule.
  
• Returned/NSF Fees: $30 per transaction charged directly to the landlord

STRATAFOLIO automatically calculates and deducts fees through our payment processor, Dwolla. The Entity ACH setup in STRATAFOLIO determines whether the tenant or entity pays the fee.

Scenario 1: Tenant Pays the ACH Fee

When tenants are responsible for ACH fees:

1. Full Invoice Amount Deposited: STRATAFOLIO deposits the full invoiced amount into your bank account without deducting the ACH fee.
   
2. Automatic Posting: STRATAFOLIO automatically posts the payment and syncs it with QuickBooks.
   
3. No Manual Adjustments Needed:
   Since the fee is borne by the tenant, you do not need to make any accounting entries for ACH expense.
   
4. Best Practice:
   Many STRATAFOLIO clients structure leases to pass ACH fees to tenants and add the clause in new or amended leases to formalize it.

Scenario 2: Entity (Owner) Pays the ACH Fee

When the owner covers ACH fees:

1. Net Deposit Received:
   The payment processor deducts the fee from the deposit before transferring it to your bank. Example: A $1,000 payment with a $2.50 ACH fee results in a $997.50 deposit.
   
2. Payment Posting:
   STRATAFOLIO automatically records the payment in full against the tenant’s invoice once the transfer is processed.
   
3. Recording the Fee in QuickBooks:
   Since the payment is recorded at the gross amount but the bank deposit is net, you need to account for the fee as a bank expense.
   
4. There are two common methods:
   • Option 1 – Add Funds to Deposit:
     • Open the deposit in QuickBooks.
     • Add a new line item under Bank Fees (Expense).
     • Enter the fee as a negative amount.
     • This reconciles the deposit total with your actual bank feed.
   • Option 2 – Record a Separate Expense:
     • Create a journal entry or expense transaction.
     • Debit Bank Fees Expense and credit Bank Account for the amount of the ACH fee.
     • This maintains visibility in your expense accounts without modifying the original deposit record.
       
5. Consult Your Accountant:
   STRATAFOLIO recommends checking with your accounting professional to confirm which approach best fits your organization’s reporting preferences.
   

Scenario 3: Mixed Portfolios or Entity-Level Settings

• The ACH fee payer setting is configured per Entity, not per tenant.
  
• Each entity in STRATAFOLIO can choose whether the tenant or the entity will cover the ACH processing fee.
  
• This can be adjusted at any time before initiating a transfer by navigating to:
  
  Entity → ACH Integration → Receive Payment Settings → Edit
  

Example Accounting Entry (Entity Pays Fee)

Result: Tenant’s invoice is fully paid, and the ACH expense is correctly reflected in your general ledger.

Best Practices

• Create invoices by the 20th of each month to keep ACH autopay running smoothly.
• Verify your ACH integration in the Entity’s settings before you start any transfers.
• Review deposits regularly to confirm that STRATAFOLIO correctly records all ACH deductions.
• Encourage tenants to enable autopay to reduce delays and manual work.
• Review our Knowledge Base resources for detailed guidance:
  • Create and Send an Invoice
  • How do I Give a Tenant Access to Their Portal?
  • How Do I See if a Tenant Was Emailed an Invoice?
    

Key Takeaways

• ACH fees are charged per transaction and can be assigned to either the tenant or the entity.
• If the tenant pays the ACH fee, no accounting action is needed.
• If the entity pays the ACH fee, record the fee as a bank expense to reconcile your deposit.
• Always verify your ACH integration settings and consult your accountant for entity-specific guidance.