eCommerce Revenue

What is eCommerce Revenue?

eCommerce Revenue represents order invoices created during the reporting month. These are one-time purchases of products (physical or digital), as opposed to recurring subscriptions.

When you create an order invoice:

You create a financial obligation - Customer owes you money (Account Receivable increases)
You create a service obligation - You owe the customer a product (Deferred Revenue increases as a liability)
You collect tax on behalf of the government - Sales tax liability is recorded (Taxes increases as liability)

This row appears when the order invoice is created, not when it's paid or fulfilled.

Invoices Included in This Row

An order invoice appears in "eCommerce Revenue" when ALL of the following are true:

Created this month: Invoice created date is within the selected month
Has an order: Invoice is linked to an order (not a subscription)
Order is active: Order status is NOT "created" (must be confirmed/processing/fulfilled)
Not deleted: Invoice has not been deleted
Correct account: Invoice belongs to your account
Correct currency: Invoice currency matches the selected currency

Real-World Examples

Example 1 - Simple Product Purchase:

Customer orders a t-shirt for $25 + $2 tax = $27
Invoice created on October 15
Result in October's Report:
- Account Receivable: +$27
- Deferred Revenue: -$25 (you owe a t-shirt)
- Taxes: -$2

Example 2 - Digital Download:

Customer purchases an eBook for $15 + $1.50 tax = $16.50
Invoice created on October 20
Result in October's Report:
- Account Receivable: +$16.50
- Deferred Revenue: -$15
- Taxes: -$1.50

Example 3 - Order with No Tax:

International order, no tax applicable: $50
Invoice created on October 25
Result in October's Report:
- Account Receivable: +$50
- Deferred Revenue: -$50
- Taxes: $0

Example 4 - Abandoned Cart (NOT included):

Customer adds product to cart but doesn't complete purchase
Order status = "created"
Result: NOT included in eCommerce Revenue (order must be beyond "created" status)

Columns Affected

eCommerce Revenue affects three accounting categories:

Column	Effect	Sign	What It Means
Account Receivable	Increases	Positive (+)	Customer owes you money
Deferred Revenue	Increases	Negative (-)	You owe customer a product
Taxes	Increases	Negative (-)	You owe taxes to government

Account Receivable

What Does This Number Mean?

Account Receivable for eCommerce revenue is the total amount customers owe you for orders placed this month. This includes the product price plus all applicable taxes.

Think of it as: "IOUs from customers for products they ordered"

The Exact Calculation

For each order invoice that meets the criteria:
  Add: invoice.total (includes product price + taxes + shipping)

Result is shown as a POSITIVE number

Example Breakdown:

Order	Product	Tax	Shipping	Invoice Total	AR Contribution
Order #1	$25	$2	$5	$32	+$32
Order #2	$15	$1.50	$0	$16.50	+$16.50
Order #3	$50	$0	$10	$60	+$60
Total				$108.50	+$108.50

Why Is This Number Positive?

Account Receivable is an asset - money customers owe you. Assets are shown as positive numbers. The more customers order, the larger this number becomes.

What This Number Tells You

Higher number: More orders invoiced this month (good for sales, but money not yet collected)
Compared to Cash: Shows the difference between sales made and payments received
Aging concern: If this stays high month after month, customers aren't paying

Factors That Affect This Number

Makes the number LARGER:

More orders placed
Higher-priced products sold
Additional shipping charges
Higher tax rates

Makes the number SMALLER:

Fewer orders placed
Lower-priced products
Tax-exempt orders
Free shipping promotions

Common Scenarios

Scenario 1: New Product Launch

Launched new product line, 50 orders @ $30 average
Account Receivable: +$1,500
Explanation: High volume of new orders creates large receivable

Scenario 2: Slow Sales Month

Only 5 orders placed @ $20 average
Account Receivable: +$100
Explanation: Low order volume means small receivable

Scenario 3: High-Ticket Items

2 orders for expensive items: $500 each + $50 tax each
Account Receivable: +$1,100
Explanation: Even few orders can create large receivable if high-priced

Deferred Revenue

What Does This Number Mean?

Deferred Revenue for eCommerce represents the value of products you still need to deliver to customers. This is a liability - you owe customers products or services.

Think of it as: "Products we owe to customers"

The Exact Calculation

For each order invoice that meets the criteria:
  Calculate: invoice.total - invoice.tax
  Multiply by -1 to show as liability

Result is shown as a NEGATIVE number (liability)

Example Breakdown:

Order	Invoice Total	Tax	Product Value	DR Contribution
Order #1	$32	$2	$30	-$30
Order #2	$16.50	$1.50	$15	-$15
Order #3	$60	$0	$60	-$60
Total	$108.50	$3.50	$105	-$105

Why Is This Number Negative?

Deferred Revenue is a liability - you owe products to customers. In accounting, liabilities are shown as negative numbers. The more orders you receive, the more negative (larger liability) this becomes until you fulfill the orders.

What This Number Tells You

More negative: More unfulfilled orders (higher obligation to deliver)
Fulfillment tracking: Compare to Recognized Revenue to see delivery progress
Inventory concern: Large deferred revenue means you need inventory to fulfill

Factors That Affect This Number

Makes the number MORE NEGATIVE (larger liability):

More orders received
Higher-priced products
Shipping charges included
Slower fulfillment

Makes the number LESS NEGATIVE (smaller liability):

Fewer orders received
Lower-priced products
Faster fulfillment (moves to Recognized Revenue)
Immediate digital delivery

Important: Tax Excluded

Deferred Revenue excludes taxes because:

Tax is a separate liability owed to the government
Product value represents what you owe the customer
Tax doesn't represent an obligation to deliver goods/services

Example:

Invoice total: $110 ($100 product + $10 tax)
Deferred Revenue: -$100 (product obligation only)
Taxes: -$10 (separate tax liability)

Common Scenarios

Scenario 1: Physical Products with Shipping

20 orders @ $50 product + $5 shipping + $5.50 tax = $60.50 each
Deferred Revenue: -$1,100 (20 × $55 product+shipping value)
Explanation: Shipping is part of the service you owe, tax is not

Scenario 2: Digital Downloads (Immediate Fulfillment)

10 instant downloads @ $20 + $2 tax = $22 each
Deferred Revenue initially: -$200
Recognized immediately: +$200 (fulfilled instantly)
Explanation: Digital products may be recognized immediately upon purchase

Scenario 3: Pre-Orders

50 pre-orders @ $100 + $10 tax = $110 each
Product ships next month
Deferred Revenue this month: -$5,000
Deferred Revenue next month: +$5,000 (when recognized)
Explanation: Large liability until products ship

Taxes

What Does This Number Mean?

Taxes for eCommerce revenue represents sales tax collected from customers on their orders. This is a liability - you collected it on behalf of the government and must remit it.

Think of it as: "Sales tax we're holding for the government"

The Exact Calculation

For each order invoice that meets the criteria:
  If invoice.tax > 0:
    Add: -1 × invoice.tax
  Else:
    Add: $0

Result is shown as a NEGATIVE number (liability)

Example Breakdown:

Order	Product	Tax Rate	Tax Amount	Taxes Contribution
Order #1	$30	8%	$2.40	-$2.40
Order #2	$15	10%	$1.50	-$1.50
Order #3 (international)	$60	0%	$0	$0
Total			$3.90	-$3.90

Why Is This Number Negative?

Taxes are a liability - you owe this money to the government. Liabilities are shown as negative numbers. You're acting as a tax collector on behalf of the government.

What This Number Tells You

More negative: More tax collected (need to remit to government)
Tax remittance: This shows how much sales tax you'll need to pay
Tax-exempt tracking: Helps identify what portion of sales were tax-exempt

Factors That Affect This Number

Makes the number MORE NEGATIVE (more tax collected):

Higher tax rates in customer locations
More domestic orders (vs international)
Higher-priced products (tax is percentage-based)
Fewer tax-exempt customers

Makes the number LESS NEGATIVE (less tax collected):

Lower tax rates
More international orders (often tax-exempt)
More tax-exempt customers (resellers, non-profits)
Tax-inclusive pricing (tax already included in price)

Common Scenarios

Scenario 1: Domestic Orders Only

20 orders @ $50 product + $5 tax (10% rate) = $55 each
Taxes: -$100
Explanation: All domestic orders subject to sales tax

Scenario 2: Mixed Domestic and International

10 domestic @ $50 + $5 tax = $55 each
10 international @ $50 + $0 tax = $50 each
Taxes: -$50 (only from domestic orders)
Explanation: International orders often tax-exempt

Scenario 3: Tax-Exempt Customers

5 orders @ $100 + $10 tax = $110 each (regular customers)
5 orders @ $100 + $0 tax = $100 each (tax-exempt resellers)
Taxes: -$50 (only from regular customers)
Explanation: Resellers with tax-exempt certificates don't pay sales tax

Common Questions

Q: What's the difference between eCommerce Revenue and Subscription Revenue?

eCommerce Revenue: One-time product purchases (t-shirt, book, single issue)
Subscription Revenue: Recurring billing for ongoing service (monthly membership, annual subscription)

eCommerce is "buy once, deliver once" while subscriptions are "pay recurring, deliver recurring service."

Q: When does an order appear in eCommerce Revenue?

A: When the invoice is created, not when:

Customer adds to cart (must complete checkout)
Payment is received (tracked in "Payments Received")
Product is shipped (tracked in "Recognized Revenue")

Q: Why are abandoned carts not included?

A: Orders with status "created" are excluded because they haven't been confirmed. Only confirmed orders (processing, fulfilled, etc.) appear in eCommerce Revenue.

Q: What happens when the order is fulfilled?

A: Fulfillment appears in a different row (Recognized Revenue - eCommerce). That row shows:

Deferred Revenue: +$100 (liability decreases)
Recognized Revenue: -$100 (income earned)

Q: Is shipping included in eCommerce Revenue?

A: Yes! Shipping charges are included in:

Account Receivable (total amount owed)
Deferred Revenue (service you owe)
NOT in Taxes (unless shipping is taxable in your jurisdiction)

Q: What about digital products that are delivered instantly?

A: Digital products follow the same flow:

Invoice created → eCommerce Revenue (this row)
Product delivered → Recognized Revenue (recognition row)

Even if delivery is instant, accounting tracks both steps. The time between them may be seconds instead of days.

Q: Can I see which specific orders are included?

A: Yes! If you have the appropriate permissions, there's a download icon next to the eCommerce Revenue row that lets you export detailed transaction data with all order details.

Q: What if an order is refunded?

A: Refunds appear in the "Refunds Made" row, not in eCommerce Revenue. eCommerce Revenue only shows new orders created this month.

Summary

Quick Reference:

What appears here: Order invoices created this month for one-time purchases

Inclusion criteria:

Invoice created this month
Linked to an order (not subscription)
Order status beyond "created"
Not deleted
Correct account and currency