Common practices like influencer gifting – where orders are processed at zero cost, usually by the user manually applying 100% discount on the order itself – can distort financial figures in Shopify.
These orders impact revenue calculations and, if not accounted for correctly, can skew key financial metrics like gross margins.
There is a way to handle this so that the revenues and financial metrics are not mis-stated by the zero-dollar orders:
- Instruct staff to process influencer gift orders using a separate “Tender Method (Payment Type)” called Influencer Gifting. This allows the order to be closed out at full cost, and that cost can then be allocated to a Marketing Expense. In this way, the margins and financial reports are correct, rather than having them show as regular sales with no money collected.
The key here is to TRACK these gifts separately, and don’t allow users to just manually adjust the regular discount field to 100% for these Influencer Gift orders.
By tracking the gifts separately from regular sales and normal discounts, the team can see how much went into Influencer Gifting that month and then manually move the total to a Marketing Expense as part of the month-end close process.
Bookkeep can handle the custom mapping and then will automatically post the Influencer Gifting Tender totals to the correct Marketing Expense account, on a daily basis. This removes a step from the month-end close process and creates transparency around Influencer Gifting and zero-dollar orders. But the biggest benefit will be that the financial metrics and margins are accurate.
Note that in the Shopify Documentation, there is no mention of setting up a separate Tender Method (Payment Method) to handle Influencer Gifts. Instead, the documentation simply instructs the user to apply a discount to adjust the amount charged for any order, making it seem like manually applying 100% discount will yield the right results.