Accounting for Shopify Pending Refunds

According to Shopify:

“When you issue a refund through Shopify Payments, the refunded amount is deducted from your next available payout. Initially, the refund status will be marked as Pending for up to 2 business days, during which the funds are processed back to your customer.”

During this 2 day period, the refund is created, but the actual issuance of funds is pending. Bookkeep notifies you of this scenario and updates to capture the completed refund transaction once processed and approved.

Pending Refund Scenario

When accounting for these refunds, you may encounter scenarios where the initial refund is created, but the actual transaction of issuing the refund back to the customer is pending. Therefore, when Bookkeep encounters such a scenario, you may see an order adjustment under refunds:

Refund Completion

Once the refund transaction is processed and no longer pending, Bookkeep automatically updates to capture the refund being completed. This process can span multiple days, resulting in the refund being captured on the first day with the issuance of funds back to the customer on a future date.

For this specific order, there was a $10.08 shipping charge and $84.00 of products refunded, totaling $94.08 refunded.

In Shopify, you may see the following indicating that a refund is in a pending state for an order:

Order Adjustment

This order adjustment of 94.08 above represents the pending refund.

Once the refund transaction is approved in Shopify, you will see this called on the individual order as shown below:

Once Bookkeep receives a confirmation from Shopify that the pending refund has been completed, we will rerun the specific day in question, showing the updated journal entry as shown below:

In the above example, the order adjustment is removed, and the balance for the refund is in pending payments since the refund transaction did not occur on June 12th.

Final Confirmation

Looking ahead at the journal entry for June 13th, the refund transaction was approved which reversed in pending payments (shown at the bottom of the image below) and reduced the Shopify Payments Balance since this money given back to the customer:

This refund is corroborated in Shopify as shown on the 13th when the refund was actually issued back to the customer.

This demonstrates the complexity of pending refunds as the full refund impact can span multiple days, but Bookkeep correctly monitors and captures the entire impact for a Shopify store.

If you have any questions, please feel free to contact [email protected] so we can help ensure your accounting is accurate.