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Shopify changes to Returns and Refunds
Shopify changes to Returns and Refunds

Understand Recent Changes to Shopify Returns Processing and Impact on A2X Settlements

Mariko Newman avatar
Written by Mariko Newman
Updated this week

Shopify recently implemented updates to its returns process, affecting how returns and refunds are managed across all store levels (Shopify Plus users must activate these changes via Test Drive). These changes have affected the way A2X payouts are generated.


Key Changes in Shopify Returns Processing

Distinction Between Returns and Refunds

Shopify has made a clear distinction between returns and refunds:

Returns are recognized when Shopify is notified of an item being returned. This is before any subsequent action is taken on the returned item.

Refunds refer to the monetary reimbursement provided to the customer.

New Features in the Returns Process

  • Returns created by the Shopify merchant or a 3rd Party App will now use the new return process.

  • Shopify now includes returns in the finance summary reports at the time of return notification, a change from the previous process, which included returns only after the refund was issued.

  • While Shopify includes the refund values in its finance summary when a return is commenced, it does not include a liability for refunds owed to customers at the same time.

  • Stores can now charge a restocking fee and a shipping return fee, which are included in the returns process.

  • The fees can be applied when a customer requests a return and when the merchant creates a return from within the order.


Impact on your A2X account

Affected reports: Changes impact the A2X finance summary report generated on or after the beginning of March 2024, particularly for stores creating returns and/or applying return shipping fees or restocking fees.

Discrepancies: Payouts may exhibit discrepancies due to missing return fees which are not yet captured.

Limitations Due to Shopify Updates

The recent updates have some limitations:

  • The distinction between returns and refunds can cause timing issues in financial reporting, as returns are now reported at the time of notification rather than when the refund is processed.

  • Currently we are working on supporting the additional fees Shopify has introduced, during this time if you are adding these fees to your returns you will see a discrepancy for those orders with returns.


How you Can reconcile the Difference yourself

The following instructions detail how to complete return reconciliation and confirm whether any return discrepancy you see between Shopify and A2X is caused by the new Shopify returns change.

Note: We recommend you use a spreadsheet (In Excel, Google Sheets or a similar platform) to copy and complete the reconciliation process.

1. Accessing A2X Reports: Log in and navigate to the A2X Finance summary reports page and update the date range to the specific month you would like to review.

2. Export Shopify returns report for A2X rec tool: To reconcile the returns, you will need to upload a .csv file. Then, you will need to access your Shopify finance report by clicking on the blue link, as shown.

This will take you directly to your Shopify store account where you can export the specific return data set:

You will then need to import this returns CSV into A2X to run the Reconciliation report tool.

Tip: Please refer to this support article HERE for steps on how to run the reconciliation report.

3. Downloading the A2X Report: Once the reconciliation report has been generated, download the 'difference' CSV report and copy it to a spreadsheet:

4. Comparing A2X with Shopify Data: Go to the ‘orders’ page and click the search/filter button. Select the filter option of ‘Return status’ and then choose Return in progress, Return requested & Returned. You will also need to select the filter option 'Payment status' and select Payment: Authorized, Expired, Overdue, Paid, Partially paid, Partially refunded, Pending, Refunded, Unpaid, Voided.

Additionally, you may need a date filter to get to the earliest order number in the list. Once the filters have been applied, you will have a list of orders related to returns.

5. Matching orders between A2X and Shopify: Confirm that the orders shown in the A2X reconciliation report you downloaded match the orders shown in the Shopify orders filtered page.

  • If the orders don't match, this means they are not related to the returns change.

If the orders do match, you can move onto reviewing the Shopify returns report.

6. Review Shopify returns report: Navigate to the Shopify finance summary with the date range you have been analyzing, and click the blue 'Returns' text to view returns.

Export returns report and filter the report to include just the orders causing the difference in the reconciliation report.

7. Review the totals of filtered items: As you have already confirmed that the orders within the A2X reconciliation tool match the orders listed on the filtered Shopify orders page, the final step is to ensure that the filtered returns report only includes the orders causing the difference within the A2X reconciliation report. Review these filtered items, and they should total the difference.

Seeking Assistance: Once you have confirmed that these orders are related to either the return creation or the return fees applied, this tells us that the difference is caused by the changes Shopify has introduced to handling returns/refunds.

The difference between the finance summary is evident in this process. Filter the orders page by the filter options mentioned above, then review returns for the date of the differences. You will notice that the difference amount corresponds to the refund amount owed within each order.

This discrepancy demonstrates why including it in the A2X finance summary report from the moment the return is commenced is impactful from an accounting perspective. We are actively liaising with Shopify to address the impact this discrepancy causes.

Note: When running the reconciliation report, you may notice some orders shown as missing from A2X. These may not be related to the return creation or return fees but to how a third-party app you may be using is affecting your finance summary report. An example of this is the way Shopify currently supports exchanges. This can cause accounting discrepancies when using third-party apps like Loop Returns.

  • If you notice an order related to Loop within your reconciliation report, here is an article that Loop covers on their side about how to reconcile the differences: Loop reconciliation


Conclusion

A2X support for return fees

A2X is working on integration support to reflect return fees in payout reports. However, our team is actively working to incorporate this feature, enhancing reporting accuracy and completeness. In the meantime, you can account for these fees by exporting your returns report for the date range you are investigating and checking the 'return fees' column. This will list the fees you are currently missing due to the changes in Shopify.

Why there will be temporary discrepancies between our Finance Summary and Shopify for particular dates that will be resolved when the refund is paid

Temporary discrepancies may arise due to timing differences between return creation and refund issuance. While initial return creation may cause imbalances, refunds subsequently issued will align with A2X payout reports and Shopify data.

Shopify's inclusion of an additional transaction line to account for refunds means that once refunds are added to an order, A2X will match Shopify, ultimately balancing out the discrepancies.

The recent modifications to Shopify's returns process aim to streamline operations by accounting for refunds before they are fully processed. While these changes may enhance efficiency on the Shopify side, they pose challenges for A2X settlements. As a result, discrepancies may arise in settlement reports. It's important for users to be aware of these potential limitations and to prepare for any inconsistencies that might occur in their financial reporting.

We encourage you to contact Shopify support if these discrepancies are causing issues with your accounting.

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