Accounting & Reconciliation (Loop-Discount On)

OVERVIEW

The following document outlines a Loop exchange and the reconciliation tools offered for merchants who have the Loop-discount configuration turned ON for new exchange orders (most common). There is not a “one-size-fits-all” configuration due to different merchant data workflows, processes and preferences, but Loop offers two primary offerings to help with exchange accounting, which are outlined in this article. 

  • Visit Exchanges in Shopify to understand how Loop & Shopify facilitate exchanges
  • Visit Exchange Accounting Options to understand the loop-discount functionality and which configuration is best for your business (Loop-discount on/off)
  • If you have the Loop-Discount ON, please follow the accounting best practices outlined below
  • If the Loop-discount is OFF, please visit Accounting (loop-discount Off)
  • If you don't know if the Loop-discount is on/off for your Loop instance, please reach out to support@loopreturns.com to confirm

Please scroll to the bottom for step-by-step reconciliation steps


Video Walkthrough


How does Loop facilitate an exchange?

  1. Customer submits an exchange via the Loop customer portal
  2. When the exchange processes, Loop marks the returned products as "returned" in Shopify without refunding money to the customer
    1. This interaction triggers an order adjustment in Shopify. These order adjustments can be identified and removed using Loop reporting (more below)
  3. When the exchange process, Loop creates a new order in Shopify containing the product(s) selected in the exchange and marks it as paid, triggering fulfillment

Using the Loop-discount on exchange orders:

The order within Shopify will contain a discount for the amount of return credit the customer uses when placing an exchange.

Notes:

  • When the original product is marked returned the tax is removed from the original order. To ensure tax is properly reflected in Shopify, Loop includes new tax values on exchange orders. These values are suppressed from displaying within the order total as not to present a balance to the customer, but they still come through in reporting.
  • Upsell transactions will have a remaining balance for the amount above and beyond the return credit. This is to ensure that new revenue collected through Stripe is properly reflected within Shopify.

Let's take a look at the full lifecycle of an exchange (with Loop-discount) within Shopify reporting:

The following data is accurate within Shopify:

  • Gross sales, Tax

The following data is not accurate within Shopify:

  • Discounts - discounts will be overstated by the amount of return credit (Loop-discount) on every new exchange order
  • Returns - returns will be understated (they should be more negative) by the amount of the order adjustment for every exchange
  • Net sales - For orders that contain tax, this value will be overstated by the amount of tax on the returned items

How to get accurate sales data in Shopify

Accurate reporting in Shopify relies on two action being taken:

  1. Remove order adjustments caused by exchanges and gift card returns
  2. Move the loop-discount value to net sales for exchange orders

Here's an exchange with the order adjustment removed:

Reconciliation

Reconciliation within Shopify can be done by leveraging Loop's Sales Adjustment report. This report delivers the offsets for order adjustments, and also includes the necessary values to move discounts into net sales. This report can be found within the Reports interface within the admin.

Here are the step-by-step instructions:

  1. Export Shopify Sales Report 
  2. Go into Loop admin
  3. Open Analytics > Reports 
  4. Click Sales Adjustment Report
  5. Export to CSV or Excel
  6. Go to Exports, download file
  7. Open up Excel and import the Shopify Sales Report
  8. Open Loop Sales Adjustment Report 
  9. Add the Loop aggregate figures in the Returns, Discounts, and Net Sales columns to the corresponding columns on the Shopify Sales report 
  10. Once the figures are added together, then you have the properly reconciled figures 
SUMMARY

As we’ve learned in Exchange Accounting Options and this article, there are two configurations to support your exchange needs. If you’d like to check or change your current settings or have questions to determine the best settings for you, please reach out to support@loopreturns.com.

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