The retyping problem
Walk into most small businesses that sell online and somewhere there's a person, often the owner, copying things from one screen into another. Orders from the online store go into Xero as invoices. Bookings from the website become sales. A customer's details get typed in once for the booking system and again for the accounts. At the end of the month someone tries to match the payment gateway payout against a pile of individual sales and spends an afternoon working out why it's eleven dollars off.
That work is slow, it's easy to get wrong, and it scales badly. Double the orders and you double the typing. It is also one of the most common reasons a business comes to us for integration work, because the fix is usually well understood and the payoff shows up in the first month.
Xero is the accounting system we see most often with Australian small businesses, so that's what this piece is about. Most of it applies to MYOB and QuickBooks as well.
What actually needs to sync
Before talking about tools, it helps to be clear about what's moving between systems. For most businesses it's some combination of these.
Contacts are the customers and suppliers. If your website or store has customer accounts, those people may need to exist in Xero too, or you may be happy to post sales against a single generic online sales contact. Your bookkeeper will have a view on which.
Invoices and sales are the core of it. Every order or paid booking becomes something in Xero, either as an individual invoice or as a daily summary of sales.
Payments are the money actually received. An invoice says what's owed. A payment says it's been paid, how, and into which account. Getting this right is what makes reconciliation work.
Tax is the part that matters most in Australia. Each line needs the right GST treatment. Products that are GST-free, shipping, discounts and gift cards all need to be handled consistently, or your BAS is going to be painful. We covered some of the store-side detail in building for the Australian market.
Inventory is optional. Some businesses track stock in Xero, most track it in the store or a dedicated inventory system and keep Xero to the financial side. Trying to keep stock levels in sync in two places is one of the easier ways to make an integration fragile.
Off-the-shelf connectors
For many businesses the right starting point is an existing connector. Shopify, WooCommerce, most booking systems and the major payment gateways all have apps or plugins that push sales into Xero. Some are built by the platform, some by third parties that do nothing else.
These are often perfectly good. If your store is reasonably standard, you sell physical products with ordinary GST, and you're happy with the way the connector summarises sales, you can be up and running in an afternoon with your bookkeeper's help. That's money you don't need to spend on custom work.
Where they struggle is anything outside the standard pattern. Mixed GST on a single order. Deposits and part payments. Trade customers on account alongside retail customers paying by card. Orders that get edited after they're placed. Refunds that are partial, or that come back as store credit. Several sales channels feeding the same ledger. Connectors handle some of these, but each one has its own set of assumptions, and you find out what they are when the numbers don't match.
It's worth trialling a connector properly before committing. Run a week of real orders through it, including the awkward ones, and have your bookkeeper look at what landed in Xero.
When a custom integration makes sense
A custom integration talks to Xero directly through its API, using rules written for your business rather than for everyone's. It costs more up front, and it's something that needs looking after, but in some situations it's clearly the better option.
That usually means your website or app is custom already. If we've built a booking platform, a trade portal or a piece of custom software for you, there's no off-the-shelf connector for it, and the integration is part of the build. It also means your rules are specific enough that you'd be fighting a connector every week. And it means volume, where small errors across a lot of transactions add up to real hours.
The approach is the same as any other integration, which we've written about in our guide to API integrations. Decide which system is the source of truth for each piece of data, send changes in one direction where possible, log everything, and make it obvious when something fails rather than letting it fail quietly. You can see more of how we handle this on our API integration page.
Reconciliation and payouts
This is where most integrations either earn their keep or fall over, so it's worth understanding.
When a customer pays by card on your website, the money doesn't arrive in your bank account on its own. Your payment gateway collects lots of payments, takes its fees, handles any refunds, and then pays you a lump sum a day or a few days later. Your bank feed in Xero shows that lump sum. Your sales show the individual orders. Reconciliation is matching the two.
If the integration just creates invoices and marks them paid into your bank account, nothing will ever match, because the bank never received those individual amounts. The cleaner pattern is to treat the payment gateway as its own clearing account in Xero. Individual sales are paid into the clearing account, fees and refunds are recorded against it, and the payout moves the net amount from the clearing account to the bank. When it's set up properly, the clearing account should come back to zero after each payout, and reconciliation becomes a matter of clicking OK.
Your bookkeeper may already have a preferred way of doing this. Ask before anything gets built.
What usually goes wrong
When we're brought in to fix an existing integration, it tends to be one of a few things.
Duplicates are the most common. An order gets sent twice because of a retry, or an edit is treated as a new sale. Good integrations use a reference that ties each Xero record to the original order so the same thing can't be posted twice.
Tax codes come next. A product set up without the right GST flag, or a shipping line that's always taxed the same way regardless of what was shipped. These are small errors that turn into big ones at BAS time.
Rounding is a quiet one. The store calculates GST on each line, Xero calculates it on the total, and they disagree by a few cents. Across hundreds of orders it adds up. The fix is to decide which system does the maths and send its figures across as they are.
Refunds and cancellations are where connectors are weakest. An order that's refunded in the store needs a matching credit note in Xero, applied to the right invoice, with the refund recorded in the clearing account. If any of those steps is missing, the books drift.
Questions to ask your bookkeeper first
The best integrations we've built started with a conversation with the client's bookkeeper or accountant, not with us. Before you pick a tool or brief a developer, it's worth asking them a few things.
- How do you want online sales to appear? One invoice per order, or a daily summary?
- Which contacts matter? Do you need each customer in Xero, or just trade accounts?
- How should payment gateway payouts and fees be recorded? Is there a clearing account already?
- Which products or services have different GST treatment? Shipping, gift cards, deposits, exports?
- How should refunds, part payments and store credit be handled?
- Who checks that it's working? And how often?
Their answers become the spec. They also make it much easier to judge whether an off-the-shelf connector will cope or whether something custom is warranted.
Getting it right once
A well-set-up integration is one of those things you stop noticing. Orders come in, they turn up in Xero correctly coded, the payout reconciles, and month end takes an hour instead of a day. Getting there takes a bit of care at the start, mostly in working out the rules with whoever looks after your books.
If you're currently retyping orders, or you have an integration that keeps leaving the accounts slightly wrong, we're happy to look at how your site, store and Xero fit together and tell you whether a connector, a fix or a custom integration makes most sense. Get in touch and we'll take a look.
