How To Integrate Etsy And Xero With A2X [Automation Guide]
Estimated reading time: 11 minutes, 30 seconds.
If you’re an Etsy seller, you’re likely driven by creativity and probably didn’t get into business to manage bookkeeping.
Accounting might not be in your comfort zone, but even if it is, there are quicker and more accurate options for managing it besides manually inputting data.
This way, you can get back to what you do best: Making.
Apps and integrations are beautiful things, but you need to understand how they work with, and optimize, one another to get the best out of them. Simply connecting Etsy to Xero won’t necessarily give you the best results alone.
In this article, we talk about best practices for Etsy sellers when it comes to managing your accounts, and the methods and apps it takes to get you there. We’ll talk you through accounting methods, their benefits, and how to integrate your Xero, Etsy and A2X accounts for accurate, seamless accounting anytime, anywhere.
In this guide on Etsy, Xero, and A2X integration:
Table of Contents
Let’s dive in.
Settlement Accounting & Accrual Accounting: The Killer Combo
Some aspects of business bookkeeping come with choices: There are different methods to choose from.
With ecommerce, however, the choice in methods is a pretty clear one, for good reasons.
Settlement accounting focuses on how you record your financial activity, and accrual accounting focuses on the timing that you record the activity.
Whether you manage an Etsy store that you want to maintain as is, or you have an Etsy store that you intend to grow, these accounting styles will be your best bet.
Let’s explore why.
What is settlement accounting?
When we talk about settlement accounting for ecommerce, we’re referring to how your data from Etsy is recorded in your accounting software.
Rather than having an overload of individual orders at the transactional level, the preference should be to manage batches of transactions, which are calculated for you and organized according to your settlement payouts.
Why is that the preference?
This method is highly organized, and easier for both you and your accounting software to digest. As your business grows, neither of you should be overwhelmed and your tech stack will scale with you.
What is accrual accounting?
Accrual accounting is all about the timing of your records. Rather than waiting until a sale has been completed and money is in your account, with the accrual method, a record is made of orders when they come through, even if payment isn’t due yet.
How is this helpful?
Cash flow is the movement of value within your business. You need to know what you’ve got now, but also what’s coming up and when you’ll get it. Recording all future transactions gives you a clearer picture of your business’ performance and more accurate forecasting data.
The benefits of settlement and accrual accounting
By recording your financial activity via settlement batches and the accrual method, you will have:
Quicker and easier reconciliation
As your transaction batches have been calculated and summarized for you, it’s easy to match them against payouts. You have your final bank deposit, with the detail of income and expenses associated with it immediately at your disposal.
Automatic calculations and journal summaries
No more manual calculations. Each bank deposit will have its income and expense lines calculated automatically and grouped into journal summaries so that you can spend your valuable time doing other things - not number crunching.
Accounting software doesn’t work best when overloaded with individual transactions. It’s possible to clog it up, which doesn’t bode well for booming businesses with a lot of financial data. By batching your information, you give your software a break without losing the crucial details you need.
Professional, industry-standard books
Whether you’re managing your books solo or with an accountant, they need to meet certain standards to be efficient, effective, and potentially sellable in the future. Fortunately, the software can categorize and organize your data for you into the right statements and accounts, ensuring that you have books ready for external use.
The bottom line…
Sticking to settlement and accrual accounting can save time and headaches getting industry-standard, actionable financial data organized and reconciled accurately.
The not-so-good news is that whilst Xero is a world-class accounting software provider, it doesn’t do the above for you. But A2X does.
Before we get to that though, let’s take a look at what Xero does, and the gaps left that A2X can fill.
What Xero Does for Etsy Sellers
Accounting software is incredibly important for ecommerce sellers. And Xero is a fantastic option.
Xero is a cloud accounting software. There are no discs or downloads, everything lives in the digital space which you can access anywhere, anytime.
Xero provides a central base for your business financials. It’s dashboard gives you an overview of your cash flow, and its reporting tools help you to analyze how it is performing. You can manage payroll, prepare for taxes, and get a view of your money in one place.
It’s designed for our modern, global business world where people need more automated solutions, accessible from everywhere.
Accounting software is incredibly secure. According to Xero’s security policy, your data is encrypted (coded to prevent unauthorized access) and protected by industry-standard information security management systems (ISMS).
Check out their video summary:
What Xero Doesn’t Do for Etsy Sellers
Xero gives you a bird’s eye view of your finances. It can upload information from Etsy automatically, but what it doesn’t do is provide the granular details.
Your bank deposits are displayed in Xero, but what do they represent? Several expenses and income lines will be associated with those deposits that you, as a seller, need to understand.
Did you collect sales tax? Have any returns been reimbursed yet? How much was your shipping total for a particular order?
You need these crucial details to make smart decisions about what your business sells, and how.
Remember those settlement and accrual accounting methods we talked about? Well, your books aren’t organized that way automatically just by using Xero. You need A2X for that.
How A2X Optimizes Your Etsy Xero Integration
A2X is a connector app that sits between Etsy and Xero.
Rather than Etsy flooding your Xero account with individual orders, A2X intercepts that data flow and organizes it for you.
A2X batches your transactions by settlement payout, calculates all the line items associated with each one, and posts them to Xero in neat journal summaries. All those benefits we discussed from settlement and accrual accounting can be achieved with the help of A2X for Etsy.
Check it out:
A2X also maps your accounts and taxes for you, helps you track and calculate your COGS (costs of goods sold) for accurate profit margins, and can even backdate your books if you’ve been operating without it for a while.
See what our customers think:
“A2X is set up once by mapping accounts and then automatically imports data into Xero. It automatically splits the data between months, so regardless of when your payment comes in (which is every 2 weeks in my experience), the data is in the correct period.
This setup, along with good online accounting software, can make your accounting work extremely easy and quick. Seriously, for the time I spent before doing journal entries, A2X is well worth the price.
- Ryan W., Capterra.
“It makes tax season so much easier. I always have accurate sales data in my accounting software and can track CoGS without issues as well. With a great interface and stellar customer service, the overall user experience is great.”
- Katrina S., Capterra.
“A2X is like a breath of fresh air! It seamlessly pulls all the financial data you need and summarizes it into a journal entry and ships that over to QuickBooks or Xero. You can stay on top of your business and make better financial decisions with ease using A2X. Love it!”
- Teresa S, Capterra.
So now that we’ve covered how A2X enhances the benefits of Xero for Etsy, let’s jump into integrating them.
Step-by-Step: How to Integrate Etsy and Xero with A2X
To integrate Etsy and Xero with A2X, you’ll need a few minutes, an internet connection, and perhaps a cup of tea or coffee.
But the hot drink is optional - you’ll be done before it gets cold.
Step 1: Create an account
- Head to your A2X for Etsy sign-up page to start your free trial. You’ll have three options for sign-in, (click on each for more information):
- Sign in with Google
- Sign in with Intuit
- Sign in with Xero
- If you already have an A2X account, you’ll be able to either continue with that or start a new one by selecting “Continue with New Account”.
- The next page will ask you for some details. Some are optional, but the more details you can provide at this point, the simpler verification processes will be later on.
- You’ll be taken to your new A2X dashboard which will look like this:
Step 2: Connecting A2X to Etsy
- In the top left of your dashboard, you’ll see the option to Continue to Etsy. Click that button.
- There will be two options for you to choose from on the next page. “I’m the owner of an Etsy seller account” is for you to set up your connection yourself.
The other option, “I’m requesting access to an Etsy seller account” is for your bookkeeper or accountant to access your books.
Select the first option if you are the owner, and you’ll be sent to Etsy to sign in.
- You’ll then be asked to Allow Access for A2X to connect to Etsy.
- After allowing access, you will be redirected back to A2X and see your connection activated.
Step 3: Connect A2X to Xero
- Select Connect to Xero from the options given in your A2X dashboard. If you’re interested in manual integration, select Custom Integration shown below and check out more help with this here.
- As you did with your Etsy connection, follow the same login and permission steps to connect your Xero account.
If you ever need to refresh your cache, reset your connection, or disconnect, head to Settings > Connections.
Optional but recommended: Accounts and tax mapping
Having your data automatically mapped as it comes into your accounts will make your life much easier when it comes to reconciliation.
We recommend waiting until some of your data has begun populating in A2X (which should be almost immediately after you connect to Etsy) so that you have a variety of deposits to help set up your mappings as accurately as possible in the beginning.
- Head to Accounts and Taxes.
- You can either set up accounts with A2X as shown below:
Or you can access your Chart of Accounts from your accounting software by clicking the ‘x’ for a drop-down menu:
Choose your account:
- You can access the taxes from Xero too, by also opening the drop-down menu under Tax Rates:
- Once you’re done with your mappings, remember to click Save.
If you create accounts in Xero with A2X open, or make changes, you may need to refresh your cache. Head to Settings > Connections for this.
Step 4: Test it out
Let’s send a test invoice or journal from A2X to Xero to make sure your connection is successful.
Your latest Etsy deposits can be viewed from the Home tab:
All your deposits can be viewed under the Deposits tab:
Each deposit can be reviewed by selecting Review:
Select a deposit, and check the invoice details by opening up this box:
You can review the mappings for this deposit, and then select Send one invoice to Xero.
In Xero, this invoice will show up as either a Draft Invoice or a Draft Bill if it is negative. Here you can approve, match and reconcile your invoice with your Etsy bank deposits.
To get in touch with our support team for any help with setting up your accounts or using A2X, email firstname.lastname@example.org.
Xero and Etsy Integration FAQs
Does Etsy integrate with Xero?
It appears that Etsy and Xero do not currently integrate directly. You will need a third-party API or connector app like A2X to integrate them.
What does Xero integrate with?
Xero has an entire App Marketplace full of integrations for you to choose from. Xero integrations cover things like CRM, accountant tools, billing, customer integration, inventory, POS, reporting, payroll, time tracking, and more.
How do I link Etsy to QuickBooks?
To link Etsy and Quickbooks, start your free trial of A2X for Etsy here, connect Etsy to A2X, and then Quickbooks to A2X. Within minutes you’ll have a powerful, accurate, and seamless accounting stack.
Does Xero have a CRM?
Xero’s App Marketplace has CRM apps and integrations available for you to download and use with your accounting software.
Is Xero any good?
Xero has won awards for its accounting software and is highly rated by its customers. It’s particularly good for small and medium-sized businesses.* Read verified reviews of Xero from Capterra here.*
What apps work with Xero?
The Xero App Marketplace has an abundance of apps and integrations available that work with Xero. With apps like A2X, PayPal, Stripe, Workflow Max, Vend, Hubspot, Mailchimp, and more, you have some of the best in the world at your fingertips for Xero.
Is there a free version of Xero?
Xero does have a free trial but after that, no, there is no free version of Xero. Accounting software comes at a price, but it is well worth it, and Xero does have some of the cheapest pricing plans out there. These start from just $11 USD/month. Check them out here.
How much does it cost to use Xero?
Xero pricing plans start at $11 USD/month for an “Early” account, $32/month for a “Growing” account, and $62 USD/month for an “Established” account. See the pricing plans here.
Is Xero only for small businesses?
Xero is designed for small and medium-sized businesses.
Also on the blog
- Ecommerce Accounting and What Makes It So Different
- Ecommerce Accounting Principles
- Find an Ecommerce Accountant
- What Does Your Ecommerce Platform Development Plan Look Like?
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