Read this if
You have either one of the accounting integrations (i.e. Xero or QBO) connected to your TradeGecko account.
This article gives you an overview of why TradeGecko Sync works the way it does with your accounting integrations (i.e. QBO & XERO). It helps you understand the logic behind how each information flows between the platforms, how the integrations work together, and are managed.
We will explore why TradeGecko syncs each transaction to Accounting ledgers in three sections:
Once an invoice is created in TradeGecko and is synced to Xero/QBO, the Accounts Receivables account is debited (⬆increased) and the Sales account is credited (⬆increased).
- The Accounts receivables are debited as you are awaiting payment from the customer for the goods sold, which indicates an increase in your assets.
- The Sales account is credited as your Revenue increases with the goods sold.
Payment on Invoice
Once payment is created for the invoice in TradeGecko, it syncs over to QBO/Xero as a payment for the corresponding invoice. In this scenario, the Accounts Receivable account is credited (⬇ decreased) as we have received the payment for the goods sold, while the Payments account is debited (⬇ decreased) to balance the payment owed.
Fulfill Sales Order
Once the Sales Order is fulfilled, the COGS account is debited (⬆increased) as the cost of the goods sold is taken into account once fulfilled (i.e. shipped out to buyer). Meanwhile, the Stock on Hand account is credited (⬇decreased) as the goods are taken out of your inventory and being fulfilled.
Create a Sales Return
Once a Sales Return is created in TradeGecko, a Credit note will then be created in QBO/Xero. Here, the Sales account is debited (⬇decreased) as the amount made for the sale would be returned to the customer. The Accounts Receivable account is then credited (⬇decreased) as there is no longer a payment being received.
Update Sales Return
Updating a Sales Return on TradeGecko will update the Credit Note on QBO/Xero accordingly.
Receive Sales Return
Stock on Hand is debited (⬆increased) as stock from the Sales Return is added back to your inventory. COGS is credited (⬇decreased) here to reverse the effect of fulfilling the Sales Order.
Create Purchase Order
The Purchase Order itself is not synced to QBO/Xero due to API limitations. Instead, a bill is created in Xero/QBO to indicate that there is a payment pending - to be paid to the Supplier when goods are received or at the agreed date/term.
TradeGecko uses a double-entry method for Purchase orders.
In context, once the Purchase Order is created, the Purchases account is debited (⬆increased) as your expenses go up, while your Accounts Payable is credited (⬆increased) to indicate an outstanding payment to the supplier.
Update Purchase Order
Updates Bill respectively QBO/Xero.
Receive Purchase Order
Once you receive a purchase order in TradeGecko, a stock journal will be created in QBO/Xero. Stock on Hand will be debited (⬆increased) as you are adding stock to your inventory, while Stock Purchases is credited (⬇decreased) to balance the increase when the Purchase Order is created.
It is possible to enable a toggle in TradeGecko's backend that will only sync the bill when the purchase order is received (as opposed to when it is created). To do so, please contact our friendly Gecko Gurus from the support team to assist you.
In this case, when you partially receive Purchase Orders, the bill’s value will only be aligned correctly when the entire Purchase Order has been received.
3Stock Level Management
If you make a positive stock adjustment in TradeGecko, Stock on Hand will be debited (⬆increased) as you are adding stock to your inventory. The inventory adjustment ledger account is credited (⬇decreased) to account for and align with the change.
On the contrary, if a negative stock adjustment is made in TradeGecko, Stock on Hand will be credited (⬇decreased) as you are removing stock to your inventory. The inventory adjustment ledger account is debited (⬆increased) to account for and align with the change.
Creating a Stocktake via stock control in TradeGecko will affect the Stock on Hand value of your Products and the corresponding Cost Of Goods Sold. The increase/decrease in SOH and COGs will sync to QBO/Xero as part of a daily batch.
Creating a StockTake will always use the current MAC as the Cost Per Item which will not change the MAC.