---
updatedAt: 2026-04-09T13:42:46.000Z
agentTools:
  projectIndex: https://docs.pelcro.com/v2.4/llms.txt
---

# eCommerce Revenue

Detailed guide to eCommerce revenue - how one-time product orders affect Account Receivable, Deferred Revenue, and Taxes.

## 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:

1. **You create a financial obligation** - Customer owes you money (Account Receivable increases)
2. **You create a service obligation** - You owe the customer a product (Deferred Revenue increases as a liability)
3. **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:

1. **Created this month**: Invoice `created` date is within the selected month
2. **Has an order**: Invoice is linked to an order (not a subscription)
3. **Order is active**: Order status is NOT "created" (must be confirmed/processing/fulfilled)
4. **Not deleted**: Invoice has not been deleted
5. **Correct account**: Invoice belongs to your account
6. **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

### 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."

### 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")

### 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.

### 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)

### 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)

### What about digital products that are delivered instantly?

**A:** Digital products follow the same flow:

1. Invoice created → eCommerce Revenue (this row)
2. 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.

### 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.

### 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

# Sibling pages

* [Subscription Revenue](https://docs.pelcro.com/v2.4/docs/accounting-revenue-streams-subscriptions-revenue.md)