Xero Shopify integration: The complete guide that you will need

Looking for a specialist Shopify online accountant? Xero will be a perfect choice for you. Don’t skip this article and let’s discover the guide that you will need for Xero Shopify integration with us now!

What is Xero?

Xero is a cloud-based accounting software solution designed specifically for small businesses and sole traders. It provides a comprehensive suite of tools to help manage your finances, from bookkeeping and invoicing to payroll and tax filing.

Here are some key features of Xero:

Basics:

• Invoicing and Accounts Payable
• Bank Reconciliation
• Expense Management
• VAT and Reporting

Advanced features:

• Payroll
• Project Accounting
• Inventory Management
• Multi-Currency

Xero is ideal for small businesses and sole traders looking for a user-friendly and efficient way to manage their finances. It is particularly popular with freelancers, startups, and e-commerce businesses.

What is Xero Shopify integration?

The Xero Shopify integration is a way to connect your Shopify store directly to your Xero accounting software. This can significantly streamline your bookkeeping and financial management by automatically syncing data between the two platforms.

The features of Xero Shopify integration include:

• Automatic Daily Sales Sync: The integration automatically pulls in all your Shopify sales data (including details like discounts, shipping costs, and refunds) to your Xero account daily, eliminating manual data entry.
• Simplified Invoice Creation: The integration will automatically generate invoices for your Shopify orders in Xero, saving you time and effort.
• Improved Cash Flow Management: Get a real-time overview of your cash flow by syncing your Shopify payouts with your Xero account.
• Detailed Sales Reconciliation: View breakdowns of sales, discounts, shipping costs, refunds, gift card payments, and fees, giving you deeper insights into your revenue and expenses.
• Reduced Errors: Automate data entry to eliminate human error and ensure consistent tracking of your finances.
• Additional Functionality: Some apps offer features like automatic bank reconciliation, inventory management, and purchase order creation.

The Xero Shopify integration is a valuable tool for businesses that want to streamline their accounting and gain deeper insights into their finances.

The advantages of Xero Shopify integration

• Time-saving efficiency: Sales data from Shopify automatically flows into Xero, saving you hours of tedious work. Plus, your sales and accounting processes are seamlessly connected, reducing friction and streamlining operations.
• Enhanced accuracy and consistency: Automatic syncing ensures consistent and accurate financial information. You can get up-to-date financial insights and cash flow tracking in Xero, allowing for better decision-making.
• Deeper insights and business understanding: Gain granular insights into sales, discounts, shipping costs, refunds, and fees, helping you analyze profitable trends. You can keep a close eye on your cash flow with automatic syncing of Shopify payouts and expenses, aiding in financial planning.

Step-by-step instructions on Xero Shopify integration

Method 1: Integrate Xero with Shopify directly

Step 1: Connect your Shopify store

• Retrieve and set up the Xero application within the Shopify platform.
• Select “Install App.”

• Afterward, opt for the payment plan that suits your preferences.
• Agree to the terms and conditions.
• Select “Connect Now.”

Step 2: Connect your Xero organization

• A new popup window will appear, prompting you to log in to Xero and designate the company you intend to associate with Shopify. 
• Select the desired company and click ‘Allow Access.’ This will return you to Shopify, where you’ll need to specify the Xero accounts you want to integrate with Shopify. 
• The provided image illustrates an example of the chosen accounts:

Step 3: Set up the integration

• Moving on to the payment settings, you may encounter an issue where you need to utilize the ‘create a new expense account‘ link. This is because Xero typically categorizes most expense accounts as overheads rather than expenses. 
• By clicking on this link, you will be directed to your Xero chart of accounts, where you can establish a new expense account.

• After creating the account, refresh the Shopify page, and you should now see the newly created account as an option. Once selected, it will appear as shown in the following example.

• Proceed to the Tax Settings.

• Complete the last three steps to configure your preferences. Once finished, click the ‘Complete Setup‘ button to proceed.

• At the top right of the following page, locate the ‘Launch Xero‘ button. Click on it to transition to Xero and verify that the app has integrated correctly. In the Xero Settings/Connected Apps section, you should now observe Shopify listed as an integrated app.

You have successfully linked Shopify to Xero. If you ever need to adjust how Shopify information impacts accounts in Xero, navigate to the app’s tab in Shopify, locate the Xero app, and access the settings for that app.

Method 2: Use the Shopify integration service

If you find yourself less comfortable with technical aspects and are seeking a team of experts to assist you in integrating your Xero with Shopify, we recommend opting for Mageplaza. As a leading company in Shopify development, Mageplaza has a track record of completing numerous Shopify integration projects.

The Shopify API integration service provided by Mageplaza typically involves a straightforward 4-step process, which includes:

• Analyze requirements: Mageplaza will analyze your business objectives, specific data, functionality needed,…, and so on to bring out the most personalized Shopify API integration service for your business.
• Integrate your store: After the analyzing process, Mageplaza will start working on your online store and integrate your store, following your requirements while making some modifications to bring out the best result. 
• QA test & fix bugs: In this workflow, comprehensive testing procedures are executed to validate the integration’s functionality, security, performance, and cross-platform compatibility.
• Support & maintenance: In this final step, the Mageplaza team will address user inquiries, troubleshoot problems, and provide assistance with system improvements

Some advantages you can gain from choosing Shopify Integration services from Mageplaza: 

• Integration experts: Mageplaza boasts extensive eCommerce and API integration expertise. They have a team of specialists who’ve assisted countless businesses in connecting their Shopify stores with a range of platforms and systems over the years.
• Quality: Mageplaza takes pride in delivering top-notch integration services to its clients. Their team adheres to industry standards, utilizes cutting-edge technologies, and guarantees the resilience and dependability of their solutions.
• Quick turnaround time: Mageplaza recognizes the value of time and has optimized its solutions for swift and efficient delivery. They collaborate closely with clients to meet timelines and deadlines, ensuring rapid realization of the advantages offered by their Shopify API integration services.
• Security: Mageplaza prioritizes security and guarantees that its solutions meet industry standards for safety. They are willing to sign NDA contracts, adhering to stringent protocols to safeguard client data and systems.
• Support: Mageplaza offers complimentary two months of post-integration support. Their support team is accessible around the clock to respond to inquiries, resolve issues, and offer technical aid.
• Cost-effective plans: Mageplaza provides budget-friendly plans to deliver exceptional value to clients. Their pricing is transparent, with no concealed fees, ensuring clients receive a competitive and fair price for their services.
• Free 1:1 consultation: You can have a direct interaction with a Shopify expert or developer from Mageplaza, who can provide personalized assistance tailored to your specific business needs
• 30-day all-app free trial: Mageplaza provides businesses with 1 month to test their functionalities and benefits before committing to a subscription. View all their Shopify apps here. 

START YOUR XERO SHOPIFY INTEGRATION NOW!

8 Tips for best practices of Xero Shopify integration

Integrating Xero with Shopify can streamline your business processes and improve efficiency. Here are eight tips for best practices in Xero Shopify integration:

Ensure data accuracy

• Regularly reconcile data between Shopify and Xero to ensure accuracy.

• Check that product information, prices, and inventory levels are synchronized between the two platforms.

Set up automatic syncing

• Configure automatic syncing between Xero and Shopify to reduce manual data entry.

• Set up a schedule for syncing that aligns with your business operations and order frequency.

Map accounts and tax codes

• Ensure that your accounts and tax codes are correctly mapped between Xero and Shopify.

• Consistent mapping will help in proper financial reporting and compliance with tax regulations.

Manage inventory efficiently

• Keep a close eye on inventory levels by integrating Xero and Shopify.

• Sync stock updates in real-time to prevent overselling and stockouts, ensuring a positive customer experience.

Track sales and expenses

• Utilize Xero to track sales and expenses accurately.

• Regularly reconcile sales transactions and monitor expenses associated with Shopify, ensuring a comprehensive financial overview.

Utilize tracking categories

• Take advantage of Xero’s tracking categories to segment and analyze transactions related to different aspects of your business.

• This can be useful for understanding the performance of various product lines, sales channels, or customer segments.

Monitor and audit regularly

• Conduct regular audits of your integrated systems to identify any discrepancies or issues.

• Monitor data flows, especially during peak times or when there are significant changes to your product catalog or pricing.

Implement security measures

• Ensure that the integration is secure, and sensitive customer and financial data are protected.
• Regularly update passwords, enable two-factor authentication, and follow best practices for cybersecurity.

Challenges of Xero Shopify integration

While the Xero Shopify integration offers numerous benefits, it’s not without its challenges. Here are some potential hurdles to consider:

Initial setup and configuration:

• Technical knowledge: Setting up the integration might require some technical expertise, especially for complex features like inventory management or purchase orders.
• Compatibility: Not all Shopify plans or Xero editions are compatible with the integration, so double-check your versions before proceeding.
• Learning curve: Getting familiar with both platforms and navigating the integration options can require some time and effort.

Data management and accuracy:

• Mapping data fields: Ensure proper mapping of data fields between Shopify and Xero to avoid errors and inconsistencies.
• Potential data discrepancies: Minor discrepancies might occur depending on how you record sales and inventory in each platform.
• Limited customization: The integration might not offer complete customization for specific data fields or reporting needs.

Cost and ongoing maintenance:

• Subscription fees: Both Xero and the integration itself have subscription fees, which can add to your monthly expenses.
• Additional app costs: For advanced features like purchase orders or bank reconciliation, you might need additional Xero apps, incurring further costs.
• Maintenance and updates: Keeping both platforms and the integration updated requires ongoing attention and potential troubleshooting.

Additional considerations:

• Limited inventory management: The integration doesn’t offer comprehensive inventory management functionalities.
• No multi-currency support: If you deal with multiple currencies, you might need external solutions for conversion and reporting.
• Not ideal for highly complex businesses: Businesses with intricate accounting needs or specific industry requirements might need more specialized software.

Shopify Xero FAQs

What Data is synced between Shopify and Xero?

Typically, integrated data includes product information, inventory levels, sales orders, customer details, and financial transactions. This ensures that both platforms have up-to-date and accurate information.

Do I need technical knowledge to set up the integration?

While some basic technical understanding can be helpful, many integration processes are designed to be user-friendly. The setup process often involves installing an app, configuring settings, and following step-by-step instructions.

Can I customize the integration to suit my business needs?

Yes, many integration apps offer customization options. You can often choose what data gets synced, how frequently the synchronization occurs, and other settings to tailor the integration to your business requirements.

Is Xero Shopify integration real-time?

The level of real-time synchronization depends on the integration app you choose. Some apps offer near real-time syncing, while others may operate on scheduled intervals. Check the features of the specific integration app for details.

How does the integration handle inventory management?

The integration helps manage inventory by updating stock levels in both platforms whenever a sale occurs. This helps prevent overselling and ensures that inventory data is consistent across Shopify and Xero.

Can I reconcile financial transactions easily?

Yes, Xero is known for its robust financial tools. The integration allows you to reconcile financial transactions efficiently, ensuring that your accounting records accurately reflect your business activities.

How secure is the integration process?

Security is a critical consideration. Ensure that the integration app uses secure protocols and follows best practices for data protection. Additionally, follow recommended security measures for both your Shopify and Xero accounts.

The bottom line

In conclusion, the seamless integration of Xero with Shopify opens up a world of efficiency and accuracy for your e-commerce operations. By following the comprehensive steps outlined in this guide, you’ve empowered your business with a powerful combination of financial management and online retail capabilities.