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Order Profit Calculation – Cash vs Accrual


Overview

When calculating profits, Sellercloud allows you to switch between Accrual Accounting and Cash Basis Accounting. The difference lies in the time when the revenue and costs of an order are recognized. Revenue for Cash Basis Accounting is recognized after payment is received and is based on the Amount Paid. Revenue for Accrual Accounting is recognized when the order is placed and is based on the Order’s Grand Total.

Configure Accounting Basis

You can switch between these two profit calculation options using the Accounting Basis client setting (Show me where!). To access all profit-related configuration options, go to Settings > Client Settings > General Client Settings > Reporting.

Refer to the definitions below for a detailed description of each type.

ACCOUNTING BASIS DEFINITION
Cash Basis

 The profit on an order would be recorded when the payment for that order is received.

Select Cash Basis to apply the Cash Profit calculation method when building the P&L report for an Order.

When the Cash Basis option is selected, the profit for an Order is determined as follows: (Total Payment Amount – Total Refund Amount) – (Item Cost + Total Fees Amount).

Note: If a return is initiated and a refund has already been issued, it will be recognized as a loss until the units are received back in stock.
Accrual Basis The profit on an order would be recorded when the order is placed, regardless of when the payment is received.

Select Accrual Basis to apply the Accrual Profit calculation method when building the P&L report for an Order.

When the Accrual Basis option is selected, the profit on an Order is determined as follows: (Grand Total Amount – Return Grand Total Amount) – (Item Cost + Total Fees Amount).

Track Profit on Orders

The configuration of the Accounting Basis setting will reflect the profit value in the Profit & Loss report for an individual order.

  1. Go to Orders > Manage Orders.
  2. Open the requested order.
  3. Click Toolbox, and select Profit & Loss.

Profit and Loss on Order

Changing the value of the Accounting Basis client setting will affect how your Order’s Profit and Loss data is displayed by default, including in all Profit and Loss Reports. To switch to a different default method, manually adjust the client setting based on your preference as described above.

For more information on Profit & Loss, refer to Order Profit & Loss Overview.

SellerCloud offers two ways to calculate profit:

  • Cash Profit – This is based on the Payment amount of the order. Calculation: (Payment – Refunds) – (Item Cost + Total Fees) + Adjustments.
  • Accrual Profit – This is based on the Grand Total amount of the order. Calculation: Sum(Grand Total) – (Item Cost + Total Fees) + Adjustments.

    Note: Sum(Grand Total) = Order Grand Total – Return Grand Total. 

Orders

In SellerCloud, you can switch between these 2 options with the Client Setting Accounting Basis (Cash Basis or Accrual Basis).

This setting will reflect on the P&L of the individual orders. Hovering over the Profit value will display the other calculation.

Reports

Profit and Loss Reports can be generated in both ways using the Profit Calculation button on the top right.

This button will automatically change the Client Setting Accounting Basis after you run the report, switching the P&L method on the orders, as shown above.

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