How to Record Scheme Fee True-ups and Network Cost Adjustments
Accounting for the variance between estimated daily network costs and the final monthly bill from Visa/Mastercard.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost of Sales - Scheme Fees (Adjustment) | Expense (+) | 2,500.00 | - |
| Accrued Network Liabilities | Liability (+) | - | 2,500.00 |
💡 Accountant's Note
Card networks update their fee schedules twice a year. FinTechs use an 'Estimated Cost Engine' to record COGS daily. When the final network invoice arrives (often 15 days into the following month), there is usually a discrepancy. This entry 'trues-up' the accrual to the actual network cost, ensuring the prior month's margin is corrected.
Practitioner & Systems Framework
💻 ERP Architecture
Requires a 'Cost Variance' analysis report. If the variance is consistently >2% of total scheme fees, the FinTech's internal pricing engine needs to be recalibrated to reflect the latest interchange and scheme fee categories.
⚠️ Audit Flags
Large Year-End True-ups. Auditors will look for 'hidden' network costs that weren't accrued during the year, which could result in a massive profit write-down in December.
📄 Required Documentation
Monthly Network Invoice (Quarterly Settlement Statement), Internal Cost Engine summary, and the variance reconciliation workpaper.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.
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