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Accounting for Store Credits with Xero

Last updated 26/01/2021

Best practice for accounting for Store Credits.

Overview


Issuing Store Credits requires special treatment. When a Store Credit is issued, it should create a liability until the time at which it is redeemed. As a result, there are a few small changes required in Cin7. In your accounting software, there will be a few processes that you should follow to make sure information passed from Cin7 is accounted for correctly. This article explains in detail the process of accounting for Store Credits issued and redeemed.

Accounting for Store Credits Issued


Setup

In most jurisdictions, you should not collect GST or VAT upon the issuance of Store Credits. Secondly, the redemption of a Store Credit must be entered to a liability account in your accounting software.

To make sure Store Credits are accounted for correctly you'll need to do the following;

  1. Configure your Accounting Dashboard settings.
  2. Alter POS settings.

To Configure your Accounting Dashboard settings;

  1. Whilst logged into Cin7, from the left navigation click Accounting.
  2. Click Xero.
  3. Click on Gear Icon.
  4. Click Settings.
  5. Check the tickbox for Retail.
    • Note: You will notice an additional fields appear below for 'Store Credits'.
  6. From the dropdown box, select the Xero Account for your liability account and for the sales of Store Credits
  7. Click Save Settings.

You will have now successfully configured accounting for Store Credits settings. 

Now update the POS Settings:

  1. Log in as an administrator.
  2. Click on your username, top right, and click on Settings.
  3. Click on POS.
  4. Click the POS Settings link.
  5. From the 'Treat Store Credits as:' dropdown box, select Payments.
  6. Click Save.

Accounting

To ensure your liability account in your accounting software is updated to reflect the outstanding Store Credit balance for a given day you will need to import this information via the accounting dashboard.

To do this;

  1. Whilst logged into Cin7, from the left navigation click Accounting.
  2. Click Xero.
  3. Click on Retail tab.
  4. Select the Store Credits sub-tab.
  5. Select the monthly journals which you would like imported to Xero.
  6. Click Upload Selected.

Migrating to Cin7

If you are moving from another software to Cin7, you will need to make sure you have accounted for all your existing Store Credits correctly.

Ask the Cin7 team to help import your existing Store Credits into the system.

At the cutover date, you will run a report in your old system to show all Store Credits unredeemed, and make sure this figure matches both the liability account in your accounting software, and the Store Credits outstanding in Cin7 - try using the report Gift Vouchers And Store Credits By Expiry Date. 

If you have any questions, your accountant will be able to advise you.

 

Accounting for Store Credits Redeemed


Upon redemption of a Store Credits, POS users will select the payment type Store Credits.

To ensure the liability account in your accounting software is updated to reflect the new outstanding store credit balance for a given month you will need to import a manual journal via the Xero Dashboard. 

To do this;

  1. Whilst logged into Cin7, from the left navigation click Accounting.
  2. Click Xero.
  3. Click on Retail tab.
  4. Select the Store Credits sub-tab.
  5. Select the monthly journals which you would like imported to Xero.
  6. Click Upload Selected