Shopify integration revenue recognition

Welcome to the Community, @dielotopacio. I can assist you with your inquiry about revenue recognition in Shopify integration. With my knowledge and expertise, I can guide you through the process and help you gain a better understanding of how it works.

Revenue recognition allows you to register a payment for the goods or services that you will be providing in the future. It helps businesses of all sizes to recognize their revenues in a consistent way over time.

However, that keep in mind QuickBooks Online solely depends on the data that is given by a third party, such as Shopify.

Additionally, here is an article I can share with you so that you can learn how to run basic reports in QuickBooks. You'll be able to stay organized and keep track of them: Run reports in QuickBooks Online.

Do you have any concerns about integrating Shopify? No worries, just drop a comment below and we'll get you sorted out around the clock. Have a great day!

Hi James,

Revenue should be recognized from time of sale and not payout (payments received from merchants). Inside QuickBooks, revenue is recorded after a payout and payout is not even a payment. 

Data is available as I can see them in the "Commerce" section under "Order". That should be the basis for recording sales/revenue and not the payout.

Getting paid thru different payment merchants in Shopify means transaction has already been paid regardless of payment method/merchant. In accounting, you recognize/record the revenue from that point of sale and receiving the payout from different payment merchants does not signify sale nor revenue is earned. It's more of a receivable from payment merchants has been settled/paid/remitted. 

The current Shopify integration seems to record sales/revenue at payout and not from point of sale which is what goes in "App Transaction" which is not right. This method even created more work as it only recognized payments made thru Shopify Payment. Any other payment merchant such as PayPal needs to get categorized from "Bank Transaction" to revenue but it will require additional work as it needs to get reconciled with sales/revenue from Shopify first since the payout will not match the sales data.

I understand that business need to recognize their revenue in a consistent way but it's not right in this current setup. Is there a way to get revenue recognized from time of sale and not from time of payout? 

Hi James,

Revenue should be recognized (or recorded as sale/revenue) from the time of sale and not at the time of payout. Payout in this case is not even a payment from the actual sale but rather a receivable from payment merchants.

In terms of availability of data from Shopify, it is available and is being retrieved/transferred to QB in the 'Commerce' section under 'Orders'. Sales data (including gross sale, discount, shipping and sales tax) is there which just needs to get recorded against a clearing account. 

The issue is that QB record sales at the time of payout and specific to one payment gateway/merchant only which is 'Shopify Payments' which is what goes in the 'App Transactions'. For other payment gateway/merchant, it creates a more work to get recorded as simply categorizing them from 'Bank Transactions' as sale/revenue is wrong.

Is there a way to automatically record the revenue based from actual sales instead of payout? Or do have to leverage on third party apps to do this? 

Thanks James!

Sorry forgot to mention that out accounting method is accrual and not cash which is why it's confusing as to why revenue is getting recognized by the system at time of payout instead of time of sale.

Thanks for the prompt response and the in-depth details you shared about your concern. I recognize the relevance of the streamlined process in handling your Shopify transactions in QuickBooks Online (QBO).

Please know that the latest transactions or payments from your sales for completed orders will be synced as payouts into QBO, and it works as designed in the current offerings of Shopify. QBO only depends on how Shopify sends your sales data. Thus, it will exported to the program when you receive the payout and not from the actual sale.

You'll want to check out these articles for more information about this process:

• Review and add payouts to your books in QuickBooks Online with Commerce
• Connect a sales channel with Commerce in QuickBooks Online

Regarding the payments from other payment merchants, you're correct that it will not sync in your App Transactions page but in the Bank Transactions instead. It is because if you use a third party for payments, like PayPal or Stripe, you'll have to manually record your sales and fees since the payouts for those sales won't import to QuickBooks. You can refer to this article for more details: Record third-party sales and fees in QuickBooks Online.

Nonetheless, I recommend communicating with the Shopify Support Team to check if they can allow such an option as you desire. Otherwise, you may look for a third-party app that is best suited for your business type and needs.

Please let me know if you have further questions or concerns about Shopify and QBO integration. I'll be more than happy to help. Keep safe!

Hi @Kevin_C ,

Appreciate the insights and I'm starting to get more clarity on this but I just have a follow up question.

I get it now that there doesn't seem to be an existing QB way to solve this but, with regards to the data being pushed by Shopify to QB, the data from the actual sale is being synced to QB as well. If you look at the attached image, it comes from the 'Commerce' section under 'Order', that's the actual sales data regardless of the payment gateway and is just a matter of getting recorded as sales.

If you check the images below, the sales data is synced. 'App transactions' only sync payout from "Shopify Payment" which is the current offering of Shopify as you mentioned however, the sales data is still synced regardless of payout. It's just a matter of QB creating an entry out of those orders to record the sales. I totally understand that this doesn't exist yet but it there a way to have it looked at? The data is there, synced from Shopify, just a matter or creating a workflow in QB to make a sales entry out of these data. 

Thanks for getting back, dielotopacio.

Let me share some insights into why the actual sale is being synced from Shopify to QuickBooks Online (QBO).

The configuration process will present you with various options where you can choose how you want your Shopify and QuickBooks Online integration to work. Therefore, the synchronization of your data will depend on the option and workflow you choose during the configuration process between Shopify and QBO.

Moreover, I'm adding this article as your reference for running financial reports in QBO: Run reports in QuickBooks Online.

Return to this post if you have other concerns about syncing your data between Shopify and QBO. The Community is always here to help.