Accounting & Reconciliation (Loop-Discount Off)
The following document outlines a Loop exchange and the reconciliation tools offered for merchants who have the Loop-discount configuration turned OFF on new exchange orders.
- 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 OFF, please follow the accounting best practices outlined below
- If the Loop-discount is ON, please visit Accounting (loop-discount On)
- If you don't know if the Loop-discount is on/off for your Loop instance, please reach out to firstname.lastname@example.org to confirm
How does Loop facilitate an exchange?
- Customer submits an exchange via the Loop customer portal
- When the exchange processes, Loop marks the returned products as 'returned' in Shopify without refunding money to the customer
- This interaction triggers an order adjustment in Shopify. These order adjustments can be identified and removed using Loop reporting (more info below)
Exchange orders without the Loop-discount
Exchange orders placed by Loop when a customer submits an exchange will contain full total amounts. This includes subtotal, tax, and total values.
This is the configurations that we suggest for merchants using Avalara. Avalara relies on subtotal values within Shopify to calculate taxes, meaning it is essential for exchange orders to have accurate subtotal values so that taxes flow into Avalara.
- When the original product is market returned, the tax is removed from the original order. To ensure tax is properly reflected in Shopify, Loop includes the tax value on exchange orders.
- Orders that contain upsell transactions will reflect the full amount of the return credit plus any upsell value (the total cost plus tax of all new items). For visibility into the upsell amount collected via Stripe. Loop includes all Stripe data within the order attributes of a new exchange order. These can be viewed within the admin and within the order data.
An example is shown below:
Here's a look at the full lifecycle of an exchange (without Loop-discount) within Shopify reporting:
The following data is accurate within Shopify:
- Gross sales, Discounts, Tax
- Product level sales - sales by product report will reflect accurate sales on items included in new exchange orders
The following data is not accurate within Shopify:
- Returns - returns will be understated (they should be more negative) by the amount of the order adjustment for every exchange
- Net sales - net sales will be overstated by the amount of the order adjustment for every exchange
- Total sales
How to get accurate sales data in Shopify
Accurate reporting in Shopify relies on two action being taken:
- Offset order adjustments caused by exchanges and gift card returns
- Offset order adjustments caused by refunds of exchanges
Here's an exchange with the order adjustment removed:
Reconciliation within Shopify can be done by leveraging Loop's Sales Adjustment report. The report delivers the offsets for order adjustments created by exchanges, gift card refunds, and refunds of exchanges. Merchants can leverage the totals row for quick access to the total values to be applied to Returns and Net Sales in Shopify. This report can be found within the Reports interface within the admin.
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 email@example.com.