Overview
We're excited to announce significant improvements to our Loop Returns integration. This update addresses several key challenges related to tax calculations, exchange handling, and accounting reconciliation. These improvements will provide more accurate financial reporting and simplified reconciliation processes.
This update is automatically applied to all Loop Returns integrations. No action is required from your team to enable these improvements.
Benefits
Improved Accuracy: More precise tax calculations and financial reporting
Better Reconciliation: Easier matching of transactions across Shopify, Stripe, and Loop
Reduced Manual Work: Automated handling of complex exchange scenarios
Clear Audit Trail: Better tracking of exchange transactions and tax applications
What Do You Need to Do?
To ensure the update is working as expected:
Check that exchange transactions are properly reflected in your Loop Exchanges journal entry
Verify tax calculations on recent exchange transactions
Confirm that A/R entries are being created correctly for non-discounted exchanges
Review your Stripe reconciliation for accurate upsell tax recording
What's New
Our latest update introduces five major improvements to handle various exchange scenarios and tax calculations more accurately:
1. Loop Credit Recording for Non ‘loop-discount’ Customers
What's Improved:
New Loop A/R record system for exchanges without loop-discount
Creates offsetting A/R records automatically
Impact:
Eliminates unknown A/R entries
Enables proper reconciliation of non-discounted exchange transactions, broken out into:
product sales impact
for product exchange value
sales tax impact
to net against any sales tax calculated but not actually collected on exchanges
What does this mean for you:
Where orders were previously accurately reflecting detail in Shopify where the order was left with no payment and thus creating unknown clearing entries or A/R.
The updated Loop Exchange A/R records we have created from the Loop API creates appropriate A/R records, broken out into Product Sales and Sales tax. Allowing you to offset appropriately against Sales Tax and accrue a credit liability for the product or record as refund expense, at your discretion.
2. Enhanced Exchange Transaction Recognition
What's Improved:
Better identification of Loop exchange transactions without loop-discount
Shopify transactions that are left without a checkout will now be included in the Loop Exchanges journal entry to remove duplicate revenue recording
Impact:
Corrects over-reported gross sales
Properly categorizes all Loop exchange transactions, regardless of discount status
What this means for you:
Because no refund ($0 refund) is recorded for the return of the originally purchased product, the recording of the revenue related to the exchange transaction results in an over statement of revenue. We have always supported and adjusted journal entry for customers using the loop-discount, we have now updated our loop exchanges journal entry to include an adjustment for customers not using the loop-discount.
When an exchange is fulfilled, we will include an entry to relieve the exchange credit that was originally recorded in the orders journal entry as well as the Gross Sales recorded in the Revenue Recognition journal entry.
3. Enhanced Upsell Reconciliation and Reporting
What's Improved:
Proper recording of sales tax for exchange upsells processed through Stripe
Accurate tax calculation when Shopify isn't handling the tax computation correctly
Impact:
Corrects under-reported sales tax on upsells
Eliminates unknown accounts receivable entries
Enables proper reconciliation with Stripe data
What does this mean for you:
Previously the orders journal entry would reflect the orders not having being checked out when a Loop exchange occurred and show an unknown A/R or Clearing Account entry.
Now the updated orders journal entry will record exchange credit records to account for the portion that is an exchange, allowing the upsell to be correctly recorded and reconciled.
This will then be relieved by the payout from Stripe:
4. Refined Tax Allocation for Exchange Refunds
What's Improved:
More accurate allocation of tax values in exchange-related refunds
Proper reflection of Loop exchange tax adjustments in total refund amounts
Impact:
Eliminates previous understatement of refund expenses and sales tax
Applies to all refunds on original orders that lead to Loop exchanges, regardless of discounts or upsells
What does this mean for you:
The orders journal entry in the Blue Onion app will no longer show offsetting entries between refund expense and sales tax payable for refunds on original orders where Loop will be facilitating the return. Previously you would see this as:
The updated journal entry will appropriately account both the tax and product refund by reallocating the Shopify adjustment. Below is the updated orders journal entry and refund detail:
The handling of exchanges is detailed above can be found by navigating to either the Standard or Filtered Journal Entry. Clicking into refund values will provide the supporting detail.
Questions?
If you have any questions about these improvements or need assistance verifying the changes, please reach out to customersuccess@blueonionlabs.com. We're here to help ensure a smooth transition to these enhanced features.