Use case
Settlement and cash application with Lucius
Definition
Settlement is the journey from a customer payment through a payment processor to the bank. Cash application is matching settled cash back to the invoices and obligations it satisfies, net of fees, refunds, and chargebacks. Most startups reconcile this manually across Stripe, Mercury or Brex, and spreadsheets. Lucius automates settlement and cash application on the stateful ledger so AR, processor balances, and bank cash stay aligned daily.
The problem
- Processors batch payouts, so cash arriving in the bank rarely matches any single invoice.
- Fees, refunds, chargebacks, and FX adjustments make manual cash application painful and error-prone.
- When cash application is wrong, AR aging, revenue, and cash flow reports are all wrong.
How Lucius solves it
- Lucius tracks settlement as a first-class workflow: customer payment, processor capture, payout, and bank settlement are all linked.
- Fees, refunds, chargebacks, and FX adjustments are reconciled against the originating invoices automatically.
- Cash application is automatic when the chain is unambiguous and surfaced for review when it is not.
Workflow
- 1
Invoice issued
Invoice posts AR and (where applicable) deferred revenue to the ledger.
- 2
Processor capture
Customer pays; processor captures funds; Lucius records the in-flight balance.
- 3
Processor payout
Processor batches a payout to the bank; Lucius records the payout and associated fees.
- 4
Bank settlement
Bank deposit matches the payout; Lucius confirms settlement.
- 5
Cash application
Settled cash is applied to the originating invoices net of fees and refunds; ledger reflects final position.
Example data flow
| From | To | What happens |
|---|---|---|
| Invoice | Receivable | Issued invoice posts AR. |
| Processor capture | In-flight balance | Captured but not yet settled funds tracked separately. |
| Payout | Bank settlement | Payout matched to bank deposit; fees posted. |
| Settled cash | Applied to invoices | Cash applied to originating invoices; AR aging updates. |
Frequently asked questions
What is settlement reconciliation?
Settlement reconciliation matches processor payouts to bank deposits and applies settled cash to the invoices that earned it, net of fees, refunds, and chargebacks. In most startups this spans Stripe, Mercury or Brex, and spreadsheets. Lucius automates the chain so AR, processor balances, and bank cash stay aligned on the stateful ledger.
Does Lucius handle Stripe fees and refunds?
Yes. Stripe fees, refunds, and chargebacks post against originating invoices automatically. Lucius ties each processor event to contract and invoice context so cash application is explainable, not a manual spreadsheet exercise at month-end.
What if a payout settles to a different bank account?
Lucius supports multiple bank accounts and matches payouts to the correct operating account. Settlement rules map processor deposits to the bank connection that received them, keeping cash position accurate across entities and accounts.
How does FX get handled?
FX adjustments at settlement are posted to the ledger and tied back to the originating invoice currency.