Did you finally land your first sale on Shopify? If so, congratulations! You are one step closer to your dream of entrepreneurship. Dozens of thoughts might be filling your head, like “Should I charge tax on Shopify?” or “Does Shopify remit sales tax?”
Another question that might be lingering relates to getting paid. There can be time delays when it comes to clearing payments, making it important to understand the average turnaround time, factors that impact clear time, the frequency of payments, and the typical sales process.
How Long Does It Take Shopify to Pay You?
Shopify has straightforward payouts, but it does take some time to get used to the system. Sellers on Shopify don’t have the luxury of instant payouts, with your first payout taking an average of seven business days to process.
Shopify’s backend team needs to verify the legitimacy of your account before authorizing payments, which is why it’s important you have the right Shopify bookkeeping controls in place.
Once your account is verified, payments will process in around 3 working days after the third-party credit card company processes the payment. Working with a Shopify CPA can help you through cash flow delays.
What Causes Delays in Shopify Payments?
There can be various factors that cause delays in payments. For one, there can be time delays in provider payments. Customers are immediately charged when they submit the order. However, Shopify Payments or other third-party providers don’t always receive the funds instantaneously.
Additionally, there can be lags between clearing payments in Shopify and seeing the money in your account. If you clear payments on a weekend, they most likely won’t show up until the next business day.
Timing delays make bookkeeping for Shopify an essential component of running your business. You want to be sure that revenue is properly recorded in the right months, especially around year-end.
How Frequently Does Shopify Make Payments?
Shopify allows sellers to have daily payouts during working bank days. You can automate this process, with money being transferred to your bank each day.
If you do choose to use a third party for payment processing, you will need to manually transfer money each time. Common third-party payment platforms include PayPal, PayFast, and Amazon.
Opting to use Shopify Payments can save you time and money on transaction fees, but this service isn’t available in all countries.
What is Involved in the Sales Process?
If you are using Shopify to clear payments, the payment will first go to your Shopify account. Sellers that use third-party services will notice that the sale amount sits in the service account. Then, you will withdraw the money into your account, regardless of if you use a third-party payment company.
Only payments cleared using Shopify will be reflected in your account. If a third-party platform is used, you will need to log in to that account to see the funds. Keep in mind that Shopify allows you to use over 100 payment gateways to add convenience for your customers.
However, if you choose to use multiple methods, consider working with a Shopify accountant to ensure your accounting records are accurate. Accounting software, like QuickBooks Online, allows you to connect multiple interfaces to generate singular accounting records.
The downloaded transactions will need to be adjusted for Shopify state sales tax and other fees since only the net amount clears your bank.
Furthermore, when you clear customer payments, the amount being transferred is usually made up of multiple orders. Receiving one lump sum can make it difficult to track sales by product lines. Working with a Shopify CPA can help you leverage insights in your storefront while ensuring accuracy in your accounting records.
Does Geographic Location Impact Payments?
Yes, Shopify Payments is not a global feature. Only Shopify stores based in the United States, Canada, the United Kingdom, Puerto Rico, Ireland, New Zealand, and Australia can utilize Shopify Payments.
Additionally, the turnaround time from payment clearing to seeing the funds in your account can vary by location. Sellers won’t be able to transfer funds to their bank account on national holidays and weekends.
Summary
Are you unsure which payment method to use for your Shopify store? How about confused on the bookkeeping for your Shopify storefront? It’s important that you understand when you can expect payments to clear your store to properly manage your cash flow. For more information on Shopify payments, reach out to one of our Shopify accountants today.
