In this article we will cover how to post Shopify Payments payouts and PayPal payouts to Xero using A2X for Shopify.
Let's look at the Shopify Payments payout shown below:
This payout corresponds to the below bank deposit in Xero, awaiting reconciliation:
The payout contains the following transactions:
When we send it over to Xero, it will appear as a draft invoice:
The transactions on the invoice in Xero will have the account and tax rate mappings you've previously set up in A2X, and you will need to approve this invoice, so that it changes from 'Draft' to 'Awaiting payment'.
Once the invoice is approved, you will be able to reconcile it against the payment in Xero's bank feed as shown below - click "OK" to match the bank deposit to the invoice from A2X:
After it has been matched the invoice will be marked as paid:
and the accounting will appear in your financial statements as shown below:
PayPal payouts (via PayPal clearing account)
In this second example, we will look at a PayPal payout. In this situation the payout won't match directly to a specific payment and A2X will use gateway clearing accounts to capture the payment amounts.
Let's look at this PayPal payout which covers one month:
The main difference between a Shopify Payments payout and a payout from another gateway is the Gateway transactions shown below:
This transaction reflects the expected payment from the PayPal gateway for the orders in this payout.
Hint: For a more detailed explanation on how these gateway transactions work, please refer to this article.
In our example, we have mapped this transaction to a PayPal Clearing account. When it posts to Xero, the invoice will have a zero balance because no cash payment is expected, and the expected payment has been allocated to the clearing account as shown below:
The corresponding deposits in the Xero PayPal account would look something like this:
You can see the two deposits for 23.99 and 40.00 that will be allocated against the clearing account, and will clear out the expected 63.99 from A2X.
The PayPal Fee amounts of 1.25 in the example above should be directly allocated to payment processing fees.
You can then allocate the PayPal deposits to the clearing account. You can also create a bank rule that will do this automatically for you.
Once the payments have been allocated to the clearing account, we can run an account transactions report to see how the clearing account received the expected payments from A2X, and then had those payments applied:
You can see that the clearing account has fully cleared out as the payments for the orders have arrived. For high volume stores you may expect a small residual balance in the clearing account, as it can take some time for payment deposits to arrive corresponding to the orders A2X has imported.