Recording revenue on the settlement date makes reconciliation with bank deposits easier, but it can shift revenue into the wrong reporting period. Recording it on the sale date reflects true performance, but often makes reconciliation more complex.
How are other Shopify sellers handling this tradeoff between accuracy and simplicity?
Most Shopify sellers record:
Revenue on the sale date accrual basis to reflect true performance and accurate monthly reporting.
Use payout/settlement reports separately for bank reconciliation.
In practice:
Sales reports = performance tracking
Payout reports = reconciliation
This keeps financial reporting accurate while still making bank matching manageable.
Thanks
That makes sense but in theory. My only question is around edge cases.
If revenue is recorded on the sale date and payouts are used purely for reconciliation, how can we handle:
In higher-volume stores, I’ve seen those timing differences create small but compounding reporting gaps.
In simple terms in your finance software you would debit credit card receivables and credit sales. Then when you get paid out, you debit bank account and debit credit card fees expense, and then credit credit card recievables account. The amount in your bank account plus the credit card fees expense equal your total amount you originally input into cc receivables.
Shopify transactions may not cut off at 12a. So, you have to look at a couple payouts to look at the last order number for each to see when your cut off time is. They are consistant. Then for month end reconciliation, you should be able to reconcile. Our cut off time is 7p thus, for orders placed about the 28/29/30 of the month after 7p will not get paid out until the following month.
We don’t delay capture unless it’s a medium/high risk order because we ship within a few days for 99% of our orders. That would be difficult to reconcile, but I would think there would be a way to filter out pending payments so you could reconcile.
Generally refunds or chargebacks are handled the day they occur and your entry into your financial software will reflect that. Refunds go against sales and charge backs go to bad debt expense.
Not legal advice, but disclosure - On refunds, most states want you to amend your sales tax return for the month the sale originally occurred. That is a nightmare. As long as you have enough tax collected in the month you issued the refund, you should be fine. As a prior sales tax auditor, I would educate, but let it go because I recognize the time for both the business and revenue department on handling amended returns. They’d be constant. We’d be amending the each months return at least 2 times a year. Noone wants to do that. However, if it was a large dollar amount on a single item, yes I’d amend the return. But for the few cents/dollars, no. It will just be used to offset the current month. Just keep good records.