When a Shopify order has been tagged in Shopify to be synced to the connected general ledger, A2X creates accounting entries for this order as part of an A2X core payout and as an individual B2B invoice. There are two separate but linked flows happening simultaneously.
This article goes over the accounting flow of multiple types of payments.
A2X Core Payout
The tagged order is still included in the A2X Core payout.
The order is processed through the A2X core payout, accounting for the sales, discounts, taxes, shipping, etc. This includes the pending payment and payment transactions if necessary. These transactions will remain the same and account for the Income (P&L) transactions for the order.
B2B Invoice
The tagged order is created as an individual invoice in the ledger.
A2X creates a B2B Order payout. This contains the Sales, Discount, Shipping, and Tax transactions. However, these transactions go to a contra asset account, selected in the B2B Settings, as to not duplicate the sales from the A2X Core payout.
If the order is unpaid upon initial creation, A2X will create an additional B2B Payment Payout when the order paid. This payout clears off the remaining balance.
Please note that there are parts of the B2B process that the Bookkeeper will need to take ownership of regarding payment reconciliation. These are addressed below.
There are 4 examples of the order flow and reconciliation process.
1: Order is immediately paid upon creation via Paypal.
2: Order is unpaid upon creation, and later paid via Bank Deposit.
3: Order is unpaid upon creation, and later paid via Shopify Payments.
4: Order is unpaid upon creation, and later paid via an other payment gateway (Afterpay, Paypal, etc)
*Please note these examples all use A2X’s default set of accounts for mapping. This includes a contra asset account called A2X B2B. You can select this account in your B2B settings page.
Reconciliation Recap Table:
How the order was paid | Reconciliation process |
1: Order is immediately paid upon creation via Paypal. | Send deposit to the Paypal clearing account. |
2: Order is unpaid upon creation, and later paid via Bank Deposit. | Pay the B2B Invoice to the bank deposit from the B2B customer. |
3: Order is unpaid upon creation, and later paid via Shopify Payments. | Pay the B2B Invoice to the A2X B2B Contra Account. |
4: Order is unpaid upon creation, and later paid via an other payment gateway (Afterpay, Paypal, etc) | Pay the B2B Invoice to the A2X B2B Contra Account. |
Example #1 - Order is immediately paid upon creation via PayPal.
When the order is created and paid:
The A2X Core Payout contains the income transactions (sales, discounts, taxes, etc) going to the sales accounts. It also contains the Sale Gateway Paypal transaction, purple, going to the clearing account. This will be offset by the Paypal deposit (and necessary fees if applicable). Review the clearing account article for a complete explanation on this.
The B2B Invoice contains the same income transactions (sales, discounts, taxes, etc) (green) but going to the contra asset account, A2X B2B. It also contains a Sale Gateway Paypal transaction, green, going to the A2B B2B contra account, thus clearing off the balance in the A2B B2B account.
Note: if the order is paid right away, or when the B2B tag is added in Shopify, there will only be one invoice of $0, as shown below.
Order Example:
Each color will clear off, leaving just the transaction in white applied to the P&L account.
Example #2 - Syncing an Unpaid Order, that is subsequently paid by Bank Deposit.
When the order is created and unpaid:
The A2X Core Payout contains the Income transactions (sales, discounts, taxes, etc) going to the sales accounts, and a pending payment transaction (blue) going to a current asset account.
The B2B Invoice contains the same income transactions (sales, discounts, taxes, etc) (green) but going to the contra asset account, A2X B2B. This invoice contains the customer's name and is an open invoice in Xero.
When the order is paid via Bank Deposit:
The A2X Core Payout contains the pending payment transaction (blue) to clear off the original pending payment amount. It will also have a Sale Gateway Manual transaction (purple).
The B2B Payment Payout contains a Shopify Payment transaction (green) to clear off the A2X B2B contra account. It will also have a gateway Manual transaction (purple) going to the Manual clearing account, clearing off the balance in the Manual clearing account.
The bookkeeper will then mark the open B2B Invoice in Xero as paid to the bank deposit from the B2B customer.
Order Example:
Each color will clear off, leaving just the transaction in white applied to the P&L account.
Example #3 - Syncing an Unpaid Order, that is subsequently paid by Shopify Payments
When the order is created and unpaid:
The A2X Core Payout contains the Income transactions (sales, discounts, taxes, etc) going to the sales accounts, and a pending payment transaction (blue) going to a current asset account.
The B2B Invoice contains the same income transactions (sales, discounts, taxes, etc) (green) but going to the contra asset account, A2X B2B. This invoice contains the customer’s name and is an open invoice in Xero.
When the order is paid via Shopify payments:
The Core Payout contains the pending payment transaction (blue) to clear off the original pending payment amount. The A2X Core Shopify payment payout will get marked as paid to the Shopify deposit.
The B2B Payment Payout contains a Shopify Payment transaction, green, to clear off the A2X B2B contra account. It will also have a gateway Shopify Payment (purple) transaction going to the A2B B2B contra account, thus leaving an open balance in the A2X B2B contra account.
The bookkeeper marks the open B2B Invoice in Xero as paid to the A2X B2B Contra Account (purple).
Order Example:
Each color will clear off, leaving just the transaction in white applied to the P&L account.
Example #4 - Order is unpaid upon creation, and later paid via an other payment gateway (Afterpay, Paypal, etc)
When the order is created and unpaid:
The A2X Core Payout contains the Income transactions (sales, discounts, taxes, etc) going to the sales accounts, and a pending payment transaction (blue) going to a current asset account.
The B2B Invoice contains the same income transactions (sales, discounts, taxes, etc) (green) but going to the contra asset account, A2X B2B. This invoice contains the customer's name and is an open invoice in Xero.
When the order is paid via Paypal (or another payment gateway):
The A2X Core Payout contains the pending payment transaction (blue) to clear off the original pending payment amount. It also contains the Sale Gateway Paypal transaction, purple, going to the Paypal clearing account. This will be offset by the Paypal deposit (and necessary fees if applicable). Review the clearing account article for a complete explanation on this.
The B2B Payment Payout contains a Shopify Payment transaction, green, to clear off the A2X B2B contra account. It also contains a Sale Gateway Paypal transaction, orange, going to the A2B B2B contra account, thus leaving an open balance in the A2X B2B contra account.
The bookkeeper will then mark the open B2B Invoice in Xero as paid to the A2X B2B Contra Account (orange).
Order Example:
Each color will clear off, leaving just the transaction in white applied to the P&L account.
