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Setting Up Chart of Accounts for 3P Financial Reconciliation with LOOP’s Balance

Effective mapping of 3P transaction types with your GL accounts is crucial for accurate 3P financial reconciliation. This guide outlines the essential steps to set up your 3P Journal entries.
AB
Akshay Balaj
Updated 2 months ago

1. Loop Over/Short Entry

Purpose: Balance journal entries.

Recommendations:

  • Option 1: Create a separate Loop Over/Short account.

  • Option 2: Map to an existing over/short account.

Note: This entry balances to zero when all transaction types are included in Loop.


2. Setting Up GL Codes for 3P Fees

Accurate categorization of 3P fees ensures precise financial reporting.


a. Commissions

  • Description: Fixed costs from delivery provider agreements.

  • Mapping: Assign to a dedicated FEE account.


b. Marketing Spend

Description: Variable expenses from campaigns, seasonal events, and promotions.

Super Category: Marketing Spend, and the sub-categories are

  • Marketing Ad Spend: Online ads, banners, etc.

  • Marketing Promo Spend: Promotional discounts (e.g., "buy one, get one free").

Mapping Options:

  • Single Marketing Spend GL account.

  • Separate GL codes for Ad Spend and Promo Spend.

  • Map both sub-categories to the same GL account with separate line items.

  • Recommendation: Split Marketing Spend and Commissions into separate GL accounts for clearer tracking.


c. Miscellaneous Fees

Description: Fees labeled as MISC by Delivery Service Providers (DSPs).

Mapping Options:

  • Same fee account as Commissions.

  • Separate GL account for Miscellaneous Fees.


d. Unaccounted Variances

Description: Discrepancies between deduction amounts and DSP reports (e.g., rounding errors).

Mapping Options:

  • Same fee account as Commissions.

  • Separate account for Unaccounted Variances.


3. Managing Customer Refunds and Won Disputes

a. Customer Refunds

  • Description: Chargebacks and customer-initiated refunds (order issues, cancellations).

  • Mapping: Assign to a Sales Adjustment account.

b. Won Disputes

  • Description: Refunds initially disputed and later recovered.

  • Mapping: Assign to a Sales Adjustment account.


4. Configuring Payouts - Payouts are net amounts from 3P platforms after deductions.

Description: Debit entry recording payouts from 3P platforms.

Mapping: Corresponding Bank deposit account or and Undeposited funds account.

Tip: Use location-level GL accounts via Manage Customisations in the Chart of Accounts if each location has a separate deposit account.


5. Handling 3P Sales and Taxes - Synchronize your POS system with the 3P platform for sales and tax entries.


Sales (Excl Tax): Unique Sales Revenue accounts for each delivery partner.

Taxes: Tax Liability account (Sales Tax Payable).

Taxes Withheld (Credit/Debit): Taxes collected by the marketplace on your behalf.


Mapping Recommendation:

  • You can either choose credit or debit based on POS tax handling.

  • If POS ignores taxes for Marketplace liable locations, leave unmapped.

  • Otherwise, consult your Loop Balance Point of Contact (POC) for optimal setup.


6. Customer Tips - Ensure tips are accounted for separately from regular sales.

Mapping: Assign to a Tips Payable account.

Note: If tips are disabled on 3P delivery sites, review the Income Statement on Loop for fee breakdowns. Contact your DSP POC if tips appear unexpectedly.


If you have any additional questions feel free to reach out to us at support@tryloop.ai
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