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 exchanges and/or applying return shipping fees or restocking fees.

Discrepancies: Payouts may have previously exhibited discrepancies due to missing return fees or returns/exchanges. However, we have released a fix to ensure that from July onward, these transactions can be accounted for, avoiding discrepancies and ensuring your numbers tie back to Shopify. If you notice discrepancies in payouts before July please reach out to A2X support and they can assist with generating adjustment payouts.

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.

How you Can reconcile the Difference yourself

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

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

To reconcile any discrepancies between Shopify and A2X caused by the new returns changes, follow these revised steps:

1. Export Shopify total sales report for A2X rec tool: To reconcile the returns and/or exchanges, you will need to upload a .csv file to A2X. To do this, 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 Total Sales data set:

You will then need to import this Total Sales 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.

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

Ensure you download the complete list of differences noted. In your sheet we recommend the following to allow for an easier reconciliation.
- Sort by Values: Separate the lines with $0 difference to simplify tracking discrepancies. This categorization helps isolate impactful discrepancies.
- Sort Remaining Lines by Order Number: This organizes the report to align with Shopify's order sequences for easier comparison.

3. Comparing A2X with Shopify Data: Navigate to your Analytics > Reports within Shopify. Search for the report called "Sales over time".

In this report, make sure you select the date range that matches the exported 'Total sales' report from A2X. We also recommend removing the 'comparison to past' option, and changing it to 'no comparison'. This will provide you with the true sales over time of the date range you selected.

After setting the date range, add the following filters:
- Order: Adjustment, Canceled, Discounts, Duties, Payment status, Fulfillment status, Gross sales, Net sales, Order name, Orders, Return fees, Returns, Sale kind, Sale item type, Shipping, Tax, Total sales, Tips, Units per transaction,
- Gift cards: Gift card discounts, Gift card gross sales, Gift card net sales, Outstanding sales,
- Product: Net quantity, Ordered quantity, Product ID, Returned quantity.

4. Export and Sort the Sales over time Report: Export the custom report from Shopify for the date range you are reviewing and add to your sheet. Sort by order number.

5. Review and Hide columns with no data: Hide columns in the report that do not have any $ value entries. In your sheet sort the exported report by 'Order Name' (noted as order number in A2X).

This step focuses the report on financially impactful data.

6. Identify and Confirm Differences: Review the sorted custom report. Confirm that the difference amounts are listed under either the 'Returns' or 'Return Fees' columns.

This workflow provides a detailed and systematic approach to reconciling discrepancies resulting from Shopify’s changes to returns and refunds, ensuring that all relevant financial data is accurately captured and assessed.

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.

Once you have confirmed that these orders are related to either the return creation or the return fees applied and you'd like to see changes applied to historic payouts, please contact our customer success team, and they will assist in generating the adjustment payouts for you to post to your accounting system.

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 now supports the Shopify returns changes, including return fees. This update ensures that payouts will now include these fees, enhancing reporting accuracy and completeness.

Why there will be temporary discrepancies between our Finance Summary and Shopify for particular dates

The recent modifications to Shopify's returns process aim to streamline operations by accounting for refunds before they are fully processed. As a result, you may see historical discrepancies related to the timing issue. If you notice any discrepancies, please reach out to our customer success team for assistance. They can correct these discrepancies and generate the necessary adjustments to post to your accounting system.