Accounting For Shopify Gift Cards With A2X
Here at A2X, we’re always looking to make sellers’ lives as easy as possible when it comes to their accounting. Find out below how a new feature we have developed streamlines a tricky aspect of accounting for Shopify.
As a Shopify seller, you might already know that the platform allows the issue of gift cards in two main ways:
- Gift cards are sold to customers to use in the future, processed via checkout like any other order, and,
- Gift cards are issued manually as credit, perhaps for returned goods or as a goodwill gesture to help resolve a problem.
Our friends at Bean Ninjas Australia saw an opportunity. One that would streamline how sellers account for these gift cards in their books, avoid costly errors, and minimize the need for manual intervention.
Eager to make sellers’ lives as easy as possible, we teamed up with the clever people of Bean Ninjas to craft this solution. And together, we have.
Here at A2X, we have adapted our functionality to better help sellers track different types of gift card transactions.
Here’s how.
A2X’s Shopify Gift Card report
“Accounting for Shopify gift cards can be challenging. A2X is helping us solve this problem by breaking down the various transactions and summarizing in a monthly report that we can use to accurately record this gift card activity.”
- Kerri Heinemann, Senior Bookkeeper at Bean Ninjas.
We recently introduced a brand new type of report in A2X, dedicated specifically to Shopify gift cards. This report provides an accumulated total of all gift cards sold, issued, expired, or disabled within each month.
There are four gift card status types that need to be accounted for accurately:
- Gift cards sold. A2X tags these as gift card sales.
- Gift cards used. A2X accounts for these as sales made via a gift card payment gateway.
- Gift cards issued. These are not counted as transactions - they are simply recorded in the gift card report.
- Expired or disabled gift cards. Similar to the above, these are non-transactional but recorded in the report for reference.
All of these actions are accounted for in the monthly report generated by A2X. Types 3 and 4 from the list are included in A2X’s report but not in Shopify payouts received by A2X.
How To Set Up The Shopify Gift Card Report In A2X
Our Customer Support team will need to enable the Shopify Gift Card report for you.
You will then need to disconnect your A2X and Shopify accounts, and reconnect them again. Don’t worry, you won’t lose any precious data!
After re-establishing the connection, you’ll see a new Gift Cards tab along your dashboard header:
Your report will run monthly and display accumulating totals of the following:
What the headings in your report mean:
- Total number of cards. A tally of all gift cards that have been sold or issued to customers. It does not count disabled cards.
- Total value. Sum of the value of all gift cards. This is the sum of the Shopify ‘balance’ column in the Shopify gift card report. This excludes disabled card values.
- Sold value. Sum of gift cards that have been sold to customers. These will come through A2X and exclude disabled card values.
- Issued value. Sum of gift cards that have been issued by the seller. They might have been gifted as an apology or as part of a return. They do not include disabled cards.
- Expired value. Sum of value where the expiration date is less than the date the report is run. It excludes disabled card values.
- Disabled value. Sum of value where there is a disabled value.
How to use these reports to ensure your accounts are accurate:
- Accounting for gift cards issued manually
To account for gift cards that have been manually issued to customers (e.g: to compensate for a late shipment), the ‘Shopify Gift Card’ liability account should be increased to reflect the increase in the value of redeemable gift cards.
This can be done via a manual journal entry to credit the ‘Shopify Gift Card’ liability account by the value of manually issued gift cards (shown in the ‘issued’ column of the report) and debit the relevant expense account to show the cost of credits provided to customers.
- Adjust for expired gift cards
To account for expired gift cards, the ‘Shopify Gift Card’ liability account should be reduced to reflect the decrease in the value of redeemable gift cards. This can also be done via a manual journal entry. In this case, you would debit the ‘Shopify Gift Card’ liability account by the value of expired gift cards and credit an income account to reflect the funds originally received for the sale of the gift card.
If you’re interested in setting up the Shopify gift card report in A2X, get in touch with our Customer Support team today via contact@a2xaccounting.com.
You can find further guides and tutorials for app updates and improvements via our support center.
