Set up a PayPal integration

This article explains how to connect FreeAgent to PayPal so you can take online payments from your customers.

Connecting FreeAgent to PayPal can make it easier for your customers to pay for your invoices and helps you get paid faster.

Connecting to PayPal from 25th November 2024

If you’re connecting FreeAgent to PayPal for the first time, navigate to the drop-down menu at the top-right of the screen and select ‘Connections & Add-ons’.

Next, select 'Get started' in the 'PayPal' section.

Select ‘Connect your PayPal account’.

If you've never used PayPal before, you can create a new account before signing in. If you already have a PayPal account, sign in to connect your PayPal account to FreeAgent.

Transaction start date

Use the date picker in the ‘Bank feed’ section to select the date that you’d like transactions to import into FreeAgent from. You can backdate transactions from a maximum of 12 months. Please note that you won’t be able to choose a date that is in a locked accounting period or before your FreeAgent start date.

Currencies

Select which currencies you’d like to import into FreeAgent by ticking the box to the left of each currency. These are the currencies that you’ll already have enabled in your PayPal account.

A bank account will be created in FreeAgent for each currency selected and transactions in those currencies will be imported into the relevant bank account(s).

Opening balances

Enter the balance of your PayPal accounts as at the start of the day on your FreeAgent start date. This will be the same as the balance at the end of the previous day. So if your FreeAgent start date is 6th April 2023, you'd put in the balance from your PayPal statement as at the end of 5th April 2023.

If you opened this account after the FreeAgent start date, this will be zero.

Select ‘Complete setup’ at the bottom of the screen to complete the process and your transactions should import into FreeAgent shortly.

After your bank transactions have been imported, you will be able to view them in the Banking area of FreeAgent, where you can explain them. Once you’ve started explaining transactions, FreeAgent’s popular Guess feature will attempt to explain your transactions automatically to save you time and reduce the risk of data entry errors.

You can also start taking invoice payments with PayPal.

Taking payments

If you connect a single PayPal account to FreeAgent, invoice payments will automatically be paid into this account if you select the PayPal option on your invoices.

If you connect multiple PayPal accounts, you’ll need to choose which PayPal account invoice payments are paid into when creating the invoice as only one PayPal account can be selected at a time.

When your customer pays you, these payments will be reflected in your FreeAgent PayPal account automatically and your invoices will be automatically marked as paid once the payment has been received.

Find out more about taking invoice payments with PayPal.

What happens next?

Once the PayPal feed is enabled, all transactions from the date chosen when setting up the account will start to import into FreeAgent.

If you need to import historical transactions that are outside the scope of the PayPal feed, you will need to either upload bank statements or enter transactions manually.

If you disable a feed or disconnect from PayPal and then enable the feed again in future, the feed will only import transactions from the date it was enabled again going forwards. Therefore, if you have any transactions during the period the feed was disconnected, you’ll need to either upload bank statements or enter transactions manually.

How FreeAgent accounts for foreign currency transactions

FreeAgent automatically accounts for your foreign currency PayPal transactions in the base currency of your FreeAgent account, using the latest exchange rate on xe.com. Any currency transfers made between different PayPal accounts in FreeAgent will be automatically explained, therefore it’s important to enable all currencies that you work with when setting up the integration.

This means that the figures on your accounting reports (such as your balance sheet and profit and loss report), and the figures you see on your Overview screen will be displayed in your base currency. FreeAgent revalues your accounts every day against the current exchange rate and updates your converted figures accordingly.

Managing the PayPal integration

To manage the PayPal integration, navigate to the drop-down menu at the top-right of the screen and select ‘Connections & Add-ons’.

Select 'Manage' in the 'PayPal' section.

You can either disable individual feeds (if you have more than one currency set up) or disconnect the integration.

Select the ‘Mange’ button to the right of the PayPal account.

Disabling individual feeds

To disable the feed(s) for a specific PayPal account(s) in FreeAgent, deselect the currency you’d like to stop importing the transactions into FreeAgent for.

Select ‘Save changes’ at the bottom of the screen to complete the process. Any transactions relating to that currency will then need to be uploaded or entered manually.

Disconnect from PayPal

To disable the integration completely, select ‘Disconnect PayPal account’ in the top-right.

Select ‘Yes, disconnect’ in the pop-up window to complete the process.