Freeagent and Shopify Integration

[coors]

Hello,

First post and it is a grumble. I have used FreeAgent with another business which works superb and it is clear and easy for me to understand cashflow, what is in the (carried forward) dividend pot, it has one bank account connected to it.

I now have a second FreeAgent which is for a different business in Ecommerce which is sales of items through Shopify. I found that you can integrate Shopify to Freeagent meaning every sale made shows as an invoice/transaction automatically in Freeagent under a shopify bank account.

The problem with this:
There is one bank account in Freeagent reading all transactions in and out in the bank.
There is a second bank account (called Shopify) which is also recording all sales made.

This means when reading the cashflow chart, looking at the cashflow income/outgoing for last 6 months or simply wanting to know what is available in Dividends (carried forward/distributable) all of these figures are wrong (almost doubled).

As a business owner I don't have a clear vision of how we are performing, what money is available and what the true cashflow snapshots are. I considered simply deleting the integration between Shopify and Freeagent but fear what impact this might have, what I will lose etc.

Freeagent support seem unhelpful in this instance despite trying to get help. Has anybody else faced a similar situation? I can't be the only person with a Shopify to Freeagent integration, can I?

Thanks.

 

[johndon68]

From what you say, it appears that the integration is recording the money received in the 'Shopify' bank account and that you are also recording the money received in the main bank account?

Can you not either:

1. Stop recording the sales in the main bank account and do a transfer from the Shopify bank account to the main bank account.
2. Can the integration not be configured to post the money received into your main bank account instead?

John

 

[coors]

Hi John,

I appreciated the swift reply. Both options seem sound to me and kind of match what Freeagent have said (see below)

One thing that I would suggest you look into is the recording of all income from Stripe, Clearpay, Laybuy, Klarna, Amazon etc as "Sales" where I believe at least the majority if not all to be Shopify related. If that is the case then all income will be double counted as sales from the invoices created by Shopify and the bank transactions also recording the sales.
The Shopify bank account to should reconcile balance at zero when ‘payouts' are explained as transfer of funds between bank accounts in FreeAgent.
All Shopify fees are recorded in FreeAgent via the integration, however, it may be that any fees deducted by the other payment processors are not recorded so this article may help with that: How to split a transaction for commission or charges deducted
Once the task of reviewing and likely re-explaining the Sales transactions as transfers and accounting for payment processor fees, I expect the figures in your accounts to be more accurate and be closer to as expected.

--This point appears to match what you are saying in point 1. I just don't understand how to do this and if it should have happened automatically or if I should be doing it. The Shopify "bank" account to should reconcile balance at zero when ‘payouts' are explained as transfer of funds between bank accounts in FreeAgent.

 

[johndon68]

So, at the moment, if the money received from the Shopify sales is also going to the main bank account, how are those transactions getting there, are you entering them manually or are they coming in automatically from a bank feed?

 

[coors]

So, at the moment, if the money received from the Shopify sales is also going to the main bank account, how are those transactions getting there, are you entering them manually or are they coming in automatically from a bank feed?

They come in automatically from a bank feed - Starling Bank.

Income will either be drip fed in from Amazon, Shopify (Stripe), Paypal etc. E.g.
Paypal £100
Stripe £50

However, the Shopify bank account in FreeAgent might show this as:
Invoice receipt Shopify Customer £20
Card Payment Fee £5
Invoice receipt Shopify Customer £70
Card Payment Fee £5

(something like that anyway).

 

[Spur Support Services]

Hi Coors
If you would like to see the Cashflow on one or two particular bank accounts, you can do this on the Cashflow page (accessible in the "Banking" tab). This shows the cashflow for the past 2 months and the next 3 months. You can change the view to from "Balance" to "Income/Outgoings".
You also have the ability of choosing which bank accounts are reflected in the data.

However, if you want to consider what is available for dividend distribution, then you should be looking at your accounts and considering retained earning b/fwd, tax and other accounting adjustments.

 

[Spur Support Services]

I wouldn't advise getting rid of the integration as you need visibility of your sales before deductions for your accounts and to assess your VAT position.

 

[coors]

Appreciate the advice.

This is also the bit I don't understand. I was not advised to add the integration at the time, that was just me intrigued that there was an integration piece available.

1. If I wouldn't have added the integration then how would have this all been assessed initially?
2. When you say before deductions, what deductions do you mean?

Surely all I need to explain everything in Freeagent is:
Money in - every transaction into Starling bank (sale, refund, loan)
Money out - expense, cost of goods
- When looking at a bank statement we don't see any fees that Clearpay or Klarna or PayPal charge) as the money they drip feed to us has had these fees already deducted. if they were going to pay us £100 but there was some fees owed to them, they might pay us £96.

So, I am still at a loss as to why I shouldn't just remove the integration and have one single bank feed.

 

[Spur Support Services]

Is your accountant able to help you set it up? They should have detailed knowledge of your business and the software that they have recommended.

It may be they offer a set up and optimisation service for a separate charge, as it does take time to implement the initial set up.

The Sales value to the end customer is what should be included in Turnover/Sales.
All the other costs that are nibbled away by the Payment service providers need to be recognised as costs/expenses.

If the Shopify integration isn't bridging the gap between the sales to end customers and the receipts in your final bank account, then you may need to look at adding extra bank feeds for Clearpay/Klarna/Paypal. You can then set up bank rules to automate postings.

Care should be taken with any cross border activity to ensure correct VAT rates are applied and if your business website trade with the EU in total exceeds €10k you will be liable to report VAT in EU countries.

 

[coors]

Appreciate the advice, do you offer such services and accounting packages? I would be interested to get some contact details/your name and pricing.

Thanks

 

[Spur Support Services]

I do offer such services, but your first port of call should be your current accountant.
They should already have access to your accounts and as they recommended FreeAgent they should be well placed to help you.

By helping you, they actually make their own year end compliance tasks a lot easier, so it's a win win.

 

[Spreadsheet Accountant]

and the next 3 months.

Cashflow forecast? That;s very interesting thank you

 

[coors]

Yeah I didn't mean cashflow forecast. I meant to see what the cashflow has been. It would be great if I could see into the future!

Thank you for the all the advice. We have to go through all of the current bank account transactions in FreeAgent which have been explained as 'Sales' and change them to 'Transfer from Account', then choose the Shopify account, up the price to include the fee which the bank account does not know about, then explain the fee as a separate transaction 'bank fees'. This is then reducing the amount shown in the Shopify bank account which is slowly bringing the cashflow and everything else in to line.

Thanks again.