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Community > Using Xero Connected Apps >

Xero and Shopify integration

Started by Chris Martucci -   in Using Xero Connected Apps

I’m a little confused about how these Shopify integration apps actually work. A lot of the apps talk about importing new Shopify orders as “invoices,” but that’s not how our business works - we don’t invoice our Shopify customers, they just pay us when they check out, and we ship the product. I want new Shopify orders to show up in Xero as “sales" but not "invoices."

Also, I’m not sure what the relationship is in Xero between invoices and sales. If I import Shopify orders as “sales,” do these transactions show up in the “Bank Accounts” section AND in the “Sales” section? Also, Shopify periodically deposits money into our bank account, so how would I reconcile these deposits with any sales the app imports? I don’t want sales to get counted twice.

Finally, what about people who check out in Shopify using PayPal? I've added my PayPal account to Xero, but now I'm worried those transactions will get counted twice. How do these apps deal with PayPal?

Thanks!
I have a very similar situation - I don't know whether I should have my transactions coming in via the Shopify feed or Paypal feed (or both?).
I'd also like them to be identified as paying VAT or not, depending on where the customer is, so that when it comes to reporting, I can say "50 of the 100 transactions were EU therefore subject to VAT, therefore I owe £X". Do either of those feeds do that?

 

Susi Weaser  

I could be wrong, but I'm pretty sure all sales are via Invoices. Our system, www.airsquare.com, works exactly the same way. When an order is received, an identical invoice is created to record the sale and is waiting for you to reconcile against the PayPal feed (or merchant account). Reconciling a lump payout from Shopify could be tricky. Is there anyway to get a bank feed of these payments?

Re: VAT, in our system you can setup tax zones to nominate rules around VAT (including reduced rates). Shopify may have the same setup, perhaps look under countries and see if there's a way to determine tax rates. The Xero integration 'should' set the right tax rate accordingly and your VAT liability will be in the VAT return in Xero.

Dave Quested
www.airsquare.com



 

Dave Quested  

Hi Chris

First, let me appreciate the fact that you raised a very valid concern.

To answer your question, First of all, the main difference between Invoice and Sales receipt is:

A sales receipt is issued when complete payment is done upfront. On the other hand, if a payment is done in parts, an invoice is issued.

Now coming back to your question, In Xero, all sales are done via Invoice only. If a customer pays full payment upfront, then in that case invoice acts as sales receipt only.

The answer to the second part of your question, If you choose 'Deposit account' as bank account in Xero, your sales will be shown in your bank account. As you are choosing your 'bank account' as the deposit account, the chances of double counting does not come in the picture.

To answer the 3rd part of your question, ZapStitch tracks and syncs Payment fee for all your orders. So, it does get double counted and you don't have to track the payment fee manually. To know more about, how Zapstitch does it, please check here

Hope it helps. Do write back if you have any other queries regarding this.

Cheers !!!
 

Vijay Khandekar  

Chris, did you find a solution to this? we are just trailing Xero and Shopify now have a free app which we have connected.

Like you the problem is our payment gateway deposits our sales money into our account as 'lumps' of money every few days which i had shown as sales on our bank account. You can reconcile these lumps of money with the invoices the xero app creates so we are effectively double counting our income. Im sure this can just be a Xero issue and must have come up before?
 

Leigh Skilton  

Hi Leigh,

I ended up not installing a Shopify app. Instead, I just let Shopify deposit lumps of money into our business checking account, and I set up a Bank Rule in Xero to automatically recognize these transactions and code them to my "Online Sales" revenue account, so it's easy to reconcile them. It's actually not been super important for my accounting needs that I'm able to break down these sales invoice-by-invoice.

I don't have experience with any Shopify apps, so I'm not sure if I can help you there. I'm not sure if anything is actually getting "double counted," however -- if you use the Match function when you're reconciling your bank account, you can tell Xero to match a transaction against a previously created invoice, so the money isn't actually getting counted as income twice.
 

Chris Martucci  

Hi Chris, thanks for your advice. Shopify have just release a beta app that is going to be free so i thought i would give it a test drive. Seems to have a few bugs though!

I was initially planning to do the same as you and just record the money we receive from our payment providers as sales income and not use all the customer invoices. I just wasnt sure from an official accounting perspective if that was correct and if we needed the additional detail behind each transaction.

It took me long enough to work out the conversion balances and the shopify invoices have just thrown another spanner in the works. I was hoping it was going to be easy to pick up but its not been so far. My spreadsheet accounting is fine until we grow and it takes up a lot of time.
 

Leigh Skilton  

Hi Leigh,

As far as I know, it is not GAAP or anything like that to have that kind of detail behind each transaction. As long as you're recording revenue as income, you should be okay. Other than that, it's just a matter of what kind of detail you want for managerial purposes. For me, it's never been an issue to simply get that kind of detail from Shopify's reports when I need to.

Believe me, I struggled with Xero in the beginning as well -- especially as a manufacturer, I needed a lot of help getting set up. I ended up using a really great service called Cloudsourced Accounting, which I highly recommend. It was only a few hundred dollars (if I recall), and they got me up and running over a couple of weeks (I still email them occasionally if I ever get stuck with an accounting question, and they've always been extremely helpful).
 

Chris Martucci  

Chris, many thanks for taking the time to reply. I contacted Xero support who advised i needed to use the match function for the shopify imported invoices. The only downside i can see is that we may have one payment from our getway provider but three invoices against it. Xero have advised that is possible but it means knowing which invoices to assign against which 'lump' of money. Sounds a longer process than your approach which im more than happy to go with.

thanks again
 

Leigh Skilton  

Leigh,

Ah yes, I forgot about that problem. Yeah, you would need to know exactly what invoices the lump sum was comprised of, which sounds like a terrible annoyance. Way too much upkeep for what it's worth.

I'd just do what I do and forget about Shopify integration and reconcile Shopify deposits directly as sales. There's not much point to having these sales show up as "invoices" in Xero -- at least for me, it's not like I'm actually "invoicing" our customers when they make a purchase. There are no payment terms, and the money is due immediately, so there's no chance of bad debts or anything like that. Sure, it would be nice if I could see my "accounts receivable" from Shopify in Xero, but I can just check that in Shopify where it tells me my "Pending Balance" for future payouts.

I think invoices are most useful if you're actually sending an invoice to a customer, so you can track unpaid invoices, overdue payments, and get a sense of when you can expect income for cash flow purposes. With Shopify, there's no need to "keep an eye" on your invoices in this way (at least not for us -- it could be different perhaps if you didn't authorize payments automatically and used a different payment gateway).
 

Chris Martucci  

Hey guys,

I just wondered if anyone had another solution other than just reconciling a lump sum deposit by your gateway provider to your bank account within Xero to a revenue account? In our situation, we only sell online, but a substantial proportion is sold overseas (30% of orders). If we were to reconcile the deposit amount to a sales account in xero, then we are remitting GST on the overseas sales which are a GST free supply. The only solution I can think of is to run a monthly report in shoppify to work out how many orders were from overseas customers, and then do a manual journal entry in xero to make an adjustment to the sales & GST accounts at the end of the month.

I have looked at some of the apps that integrate shoppify & xero, and it appears they all create invoices within xero for each sale. Given we do anywhere from 30-80 orders a day, reconciling a single deposit into our bank account within xero would take forever to complete.

Can anyone suggest any better solutions, apps or work arounds?

Thanks in advance
 

Anthony Jacob  

We have the exact same problem as Anthony Jacob. We'd love to somehow automate the lump deposits with shipping and GST amounts (we have an extra step to matching up payments because 20% of our Shopify customers pay by PayPal which isn't included in the lump sum). It's someone's full time job right now to match up these payments.
 

Eight Ounce Accounts  

Hey Guys
We just recently jumped the shark from Woocommerce to Shopify and notice our Xero exports of Shopify Payments and PayPal don't automatically match or flag matches. We are running HO over 50++ orders a week online and I cannot spend all night every night reconcile orders in Xero. Like to match Payments to orders for line item break down and monthly reports. Did anyone find a way around the issues highlight above?

Cheers Dermott @BeerCoAu
 

Dermott Dowling  

Not sure if this is of any help to anyone but the way we've found of doing it is:

Create a rule to flag incoming bulk payouts from stripe/shopify as a new transaction called "Duplicate - delete me"

This makes it easy to find the payouts and then delete them on the reconciliation page (ignoring all the warnings)

This leaves us with a load of transactions that are "unreconciled" (the ones the shopify integration automatically created)
Following this guide https://community.xero.com/business/discussion/2379221 we can then batch "Mark as reconciled", which effectively recreates the transactions, but this time each item has its own transaction rather than being lumped together. (again, ignoring warnings)

A little messy and most definitely not ideal, but it seems to work. If anyone has any comments / why this might be a bad idea please let me know! :D
 

Chris Guest