We recently streamlined the sales income process for a small retail online business here in NZ. I thought I would share learnings and tips as this situation and these issues are common. The client had created and developed a website over a period of time as the business had grown using Shopify. Customer payment types had been chosen based on customer wants. Shopify was being only to manage the website and orders, the onlyso way to record income was when payments arrived in the bank. This became very time consuming to reconcile as the business grew, and the client had to log onto each payment portal and view the settlement statements to calculate domestic and overseas income.
We introduced an app to link Shopify to Xero so all orders in Shopify are recorded as Sales Invoices in Xero with all income and tax information required for GST. There are a few app options out there, and our client chose to implement Xero Bridge due to cost, efficiency and simplicity. Tips for a successful integration How to reconcile Shopify in Xero Lessons learnt
Before activating any automated link to Xero, make sure you review your set up in Shopify as the source information has to be correct. Look at Tax and Shipping set up and check that tax is selected on each product. You can back date the sales information from Shopify at set up time. To go back further than the dates allow (around 2-3 months), it is worth asking for a quote for Shopify support team to do this for you. When the link between Shopify and Xero is created it becomes real-time processing, therefore when information is incorrect it can be a headache to sort in Xero. If there is tax on freight, make sure you select the tick box in Shopify under Settings>Taxes>Tax Calculations (bottom of screen). This tick box is easy to miss! Check that all products in Shopify have tax, which is easy to view in Settings>Taxes. A yellow warning box will appear for you to view and change the products.
There are several options on how to reconcile the payments once the Xero Bridge app is in place. It all depends on your situation and what you are wanting to achieve to determine the process you choose.
Note: Utilise bank rules to speed up reconciling!
Don’t let your customers dictate your payment gateway options. Some gateways can be costly as well as time consuming to reconcile or difficult to get feeds into Xero. When using Shopify make sure you spend the time to get the tax, shipping and product information correct. It only takes one product to not have tax to start creating errors when the information is going into Xero. We chose not to activate the bank feeds for some accounts (i.e. Paypal) as the volume of transactions to reconcile would be too time consuming. We created another process to record account transfers and manage the account balance in Xero. Do not fall into the trap of allowing customers to email you additions to orders. Make them go through the website order process so that the income is recorded in Xero correctly. Remember this is your precious time, you don’t want to spend it on extra admin!