Blog Post

Updated January 26, 2021

The main difference between accrual and cash based accounting lies in the timing of when revenue and expenses are recognized. With Accrual accounting, revenue and expenses are recognized and recorded when they occur. With cash based accounting, revenues and expenses are not booked until cash exchanges hands.

Cash based accounting is easier to maintain, whereas accrual accounting portrays a more accurate portrait of a company's health by including accounts payable and accounts receivable.

Commerce primarily focuses on cash-based accounting as events happen. Here are a few examples:

When you make a sale on Etsy, payment is immediately collected. When you issue a refund, the money is immediately sent to your original buyer.

On Shopify, you can configure your shop to either collect payment immediately, or once it is fulfilled. Commerce will import unpaid sales, but they will be open and non-exportable on Commerce until payment is collected.

For Amazon Seller, Commerce only syncs sales that match fulfillments. If you settle with Amazon in multiple currencies, Commerce will not know the final exchange rates until a payout occurs. Therefore, the transaction will display as open.
-> Learn how Commerce maintains transaction state for Amazon.

Each integration on Commerce is unique in how it provides and presents transaction data. Commerce works to normalize your transaction data with careful attention, ensuring your transactions are in a state ready for export to an accounting program. For accrual based organizations, Commerce supports exporting transactions as unpaid invoices (bills or sales) to a target accounting system.

Commerce Mailbox can also create transactions as bills or invoices and export them as unpaid bills to QuickBooks Online (QBO) or Xero.

Any expense/purchase on Commerce can be exported to your Xero account as either a Bill or Bill + Payment. Exporting transactions as bills simply creates an unpaid bill in Xero. The same logic applies for sales. Any sale on Commerce can be exported to your Xero account as either an Invoice or Invoice + Payment. Exporting transactions as invoices simply creates an unpaid invoice in Xero.