How to get reconciled Shopify POS accounting
Jun 9, 2020

How to get reconciled Shopify POS accounting

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As a busy retail shop owner, your time is spread across a wide range of activities every week. Whether it’s looking after customers, managing staff or setting up your systems for success, the last thing you want to do is create unnecessary work.

And while simplicity is a virtue in any business, the retail landscape has grown much more complex thanks to the prominence of the internet. Customers expect us to be present on social media, have an online store, and provide a range of shopping options to suit their preferences.

This means that we can reach a much wider audience than what was once possible from our physical location, but it also presents challenges when it comes to managing the backend of our business.

Enter: Shopify POS

Shopify is a Canadian software company that provides a retail operating system for online and physical stores of all shapes and sizes. By using Shopify, you can bridge the gap between digital and in-person, and set your business up for the future of retail.

This article takes a brief look at Shopify POS, and explores the benefits of using A2X to reconcile your accounts and simplify your bookkeeping.

By reading the paragraphs that follow, you’ll discover:

  • One of the most common mistakes that retailers make when it comes to managing their financial records.
  • What settlement accounting is and why it’s important for streamlining your business.
  • How A2X uses settlement accounting to automate the data entry side of your bookkeeping and save you time.
  • What this could mean for the success of your business.

Bookkeeping for retail: why you shouldn’t enter every individual sale into your accounting system

Keeping an accurate record of your business transactions is critical for long term success. After all, how can you know what’s going on in your organization without having the correct information at hand?

Many retailers that realize the need for accurate financials choose to enter every individual transaction in their cloud accounting system. While this solves the problem of not having all your information in one place, entering every transaction into your books separately presents a few issues:

  1. As you grow, your accounts will become more complex and potentially confusing due to the sheer volume of invoices or journals that are recorded. Can you imagine the difficulties that might arise down the line if every customer order has its own entry? If there’s an issue with a transaction or you need to look up information, it’s easy to get lost in the details.
  2. When your settlements are paid out, it can be difficult to determine which transactions relate to each payment.

Instead of treating every transaction as an invoice or journal, there is a better way of managing your financials…

The solution: settlement accounting makes your bookkeeping simpler, more accurate, and easier to navigate

When you use Shopify POS in your retail store, they take care of processing your transactions and looking after the backend so that you can focus on running your business.

In practice, it looks something like this:

  1. Customer buys a product from you and provides their credit card details.
  2. Shop Pay (Shopify’s internal payment processor) charges the customer’s credit card and looks after the backend to make sure that you receive the money.
  3. Your happy customer gets their products and continues with their day.
  4. This process is repeated every time someone shops in your physical or online store.
  5. Every few days, Shopify pays you the total amount charged from all of your sales, minus their service fees (in one bank deposit). These payouts are known as settlements.

From here, you need to get the data into your accounting software. Settlement accounting takes a different approach to recording these transactions in your bookkeeping system.

Under the settlement accounting method, an invoice or journal is created when you receive a payout - instead of having a new entry every time you make a sale. The invoice or journal created includes every transaction that happened during the settlement period.

As a result:

  • Your books are easier to navigate and understand.
  • When you receive the payout, you can effortlessly reconcile your sales activity with just a few clicks.
  • No matter how small or large your company is, you will only ever have one invoice or journal for each settlement period - which makes your systems much more scalable than under the previous method.
  • Consequently, it is possible to reconcile your accounts down to the cent and achieve 100% accuracy every time.
  • In doing so, your transactions can be recorded using accrual accounting. This makes it easy to compare performance between different months and years, and ensures that you have a clear understanding of your bottom line - even when credit terms and stock turnover periods have an impact on your cashflow.

A2X empowers your retail business by making settlement accounting easy

At this point, you might be thinking‘ settlement accounting sounds great, but how do I do it without creating extra work?’

That’s where A2X fits into the picture…

“A2X posts your Amazon and Shopify sales and fees directly into QuickBooks or Xero in tidy summaries that match the payments to your bank account.”

In other words, A2X is an app that connects your Shopify store with your cloud accounting system. By using A2X, you are able to use the settlement accounting method to get accurate financials with ease, and reduce the amount of time spent reconciling payments to just a few clicks per settlement.

It also loads your cost of goods sold data to help you accurately understand the profitability of your business

“Load up your item unit costs and let A2X calculate the cost of goods sold to match your Shopify revenue, giving you reliable sales margins in your Profit and Loss.”

Here’s what it takes to set up A2X in your business:

  1. Download the app and link A2X to your Shopify store.
  2. Connect A2X with your Xero or Quickbooks accounting system.
  3. Customize the accounts that A2X posts your sales, fees and other transactions too. You can go into as much detail as you need, or simply choose from our suggested categories.
  4. A2X loads your Shopify transactions and groups them to match the payouts you receive. It can also backdate sales data to fix errors or mistakes that happened in the past.
  5. Reconcile your books with ease.

A2X is the ideal connector app for both new and established retail stores. Whether you sell in person, online, through Amazon, or a combination of different channels, A2X can make your bookkeeping easier.

Should I delegate or automate?

As your business grows, you are faced with a choice of whether to outsource ongoing tasks to your team or automate them with technology.

For processes that are repetitive and don’t change much in nature (such as revenue recognition), it is best to automate this work. In doing so, you are able to remove the potential for human error and free up your time to focus on higher value activities.

Accounting software you can trust

“It is hard to believe the amount of time we spent on Quickbooks entering all our Shopify and Amazon sales details before we found A2X. A2X is a dream. Once you get through the setup, it just does its own thing and keeps you up to date. Get it if you value your time.”

A2X was founded in 2014 by Paul Grey and Ashley Schroder to overcome the bookkeeping challenges that they we were facing in another company, Export-X.

At the time, Export-X was helping local brands to sell their products on Amazon, but accounting for their activities was challenging at the best of times. So Paul and Ashley created a simple integration to connect their Amazon Seller Central account with their cloud accounting system.

After realizing the potential benefits that this solution could bring to other Amazon sellers, they decided to share it with the world.

A2X was born

In the years that followed, customers were drawn to A2X out of a desire for simplicity, and we experienced rapid growth as a result.

Fast forward to today: our team is now made up of excellent accountants and eCommerce experts located throughout the world, and we also look after Shopify sellers (as you have probably gathered by now).

This is what sets us apart from the rest. While we are a technology company at heart, we’re more than just programmers behind a screen - we practice what we preach and provide realistic solutions that are made for the real world.

Jump off the treadmill and into the jet stream

As a successful retailer, you have enough going on in your life already. So why should you spend hours each week managing your books, or paying someone else to do inefficient tasks that could be automated?

POS acounting should be easy, which is why we show up every day - to help free up your time to create more value and live a more fulfilling life.


If you would like to give A2X a go, click here to get started on your free trial, or head over to our case studies page to find out how people like you are winning with A2X.


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