The immense growth potential of ecommerce stores has increased the complexity of their accounting.
What starts as a simple ecommerce store might soon turn into a web of transactions across marketplaces, DTC stores, payment processors, and shipping partners. And, the worst part? Each platform reports data differently and operates on its own timeline.
Now, this is what you should never do if you’re trying to expand your ecommerce business - manage accounting manually. ❌
If you do, it’ll only lead to delay in reconciliation, bookkeeping errors, fragmented inventory, and missed tax liabilities, which can stall growth and eat up your profits.
This is where leading accounting platforms with powerful automation capabilities can help!
Xero has established itself as a prominent online accounting system. When paired with the right integration tools, Xero automation makes handling your books easy and becomes the financial backbone supporting your expansion plans.
What is Xero automation?
Xero automation simplifies your accounting by getting repetitive tasks off your plate. Instead of entering transactions manually, categorizing expenses, or reconciling accounts, Xero uses automated workflows and real-time data to handle it all for you.
With built-in features like bank feeds, automatic reconciliation, and recurring invoices, Xero keeps your books accurate and up to date.
The best part? Xero connects directly with ecommerce platforms and apps. This means orders, payments, fees, and taxes from all your sales channels flow straight into your accounting system.
Let’s dive-in to know the benefits of automating your ecommerce operations using Xero:
- Automates repetitive tasks: These include data entry, invoicing, and reconciliation
- Minimizes manual intervention: Leads to more accurate financial records
- Automated invoicing and reminders: Helps ensure timely payments and better cash management
- Automated reporting and analytics: Offers up-to-date visibility into business performance
Xero's built-in automation features you should be using
If you’re struggling with automating accounting, using these native Xero features can eliminate hours of manual work. Here are some you should start using today:
1. Automatic bank feeds & reconciliation
Xero connects directly to your business bank accounts and credit cards, automatically importing transactions daily.
Why it matters:
You no longer have to enter bank transactions or worry about missing payments. When combined with automation rules and integrations, Xero can match these transactions to sales, refunds, and fees, making reconciliation fast and effortless.
Pro tip: For marketplaces like Amazon and Shopify Payments, Xero can reconcile lump-sum deposits against hundreds of individual transactions via integrating with tools like Webgility.
2. Recurring billing & invoicing
Xero allows you to set up invoices that automatically recur on a predefined schedule - weekly, monthly, or custom, enabling auto-emailing and auto-reminders to reduce late payments.
Why it matters:
If you offer subscriptions, wholesale contracts, or services like dropshipping arrangements, recurring invoicing ensures your clients are billed on time.
3. Rules-based transaction categorization
Xero lets you create rules that automatically assign categories, tax rates, and tracking codes based on transaction details. You can adjust these rules anytime and they work seamlessly with bank feed automation.
Why it matters:
You can set up rules to auto-categorize Amazon fees, shipping costs, PayPal charges, or Shopify payouts, eliminating repetitive data entry and reducing errors.
4. Real-time reporting & dashboard automation
Xero provides real-time dashboards and financial reports that update as transactions are processed. It allows you to create customized reports, share them with your accountant, or schedule regular email delivery so you never miss a beat.
Why it matters:
You always have up-to-date visibility into cash flow, profitability, expenses, and outstanding invoices. It means no more waiting for end-of-month reports.
Best Xero automation tools and integrations
Whether you're a marketplace-only seller or managing multiple DTC channels, you can achieve faster growth by selecting the right tool for your ecommerce model.
Here are some of the best Xero automation tools for high-volume, multichannel sellers:
1. Webgility: Unified dashboard bringing accounting and inventory in one place
Webgility is an advanced ecommerce accounting automation platform built to work seamlessly with Xero. It's designed for high-volume, multichannel sellers who need accurate, real-time syncing of orders, inventory, fees, and financial data across multiple platforms.
Features:
- Multichannel synchronization: Connect 70+ platforms with automatic syncing of orders, fees, taxes, payouts and refunds to Xero
- Real-time inventory management: Instantly update stock levels across all channels to prevent overselling and stockouts
- Automated order processing: Transform complex marketplace settlements into detailed Xero transactions
- Advanced COGS tracking: Automatically calculate COGS, allowing you to see the cost associated with each product sold
- 3PL integration: Track fulfillment fees and shipping costs from Amazon FBA, UPS, FedEx, and others
Pros
- Sales, taxes, shipping costs, and refunds are automatically broken down into proper journal entries, ensuring your books are always current and accurate
- Every order, fee, and customer detail from your ecommerce platforms (like Shopify, Amazon, eBay) is automatically recorded in Xero, saving 10–15 hours of manual data entry each week
- Categorize all tax data accurately and ensure it is audit-ready to avoid last-minute filing hassles
- Generate detailed profitability reports by channel and product with real-time dashboards
- Match transactions automatically across platforms while flagging discrepancies for review
Cons
Webgility offers robust features, but for businesses with straightforward needs or only a single sales channel, the platform may provide more functionality than required
Pricing
- Free trial: 15 days
- Pro: $49.50/month (For Xero)
2. MyWorks: Real-time syncing tool
MyWorks focuses on real-time, two-way syncing between WooCommerce (and Shopify) and Xero. It's built for businesses that need granular control and seamless data flow across product, order, and inventory levels.
Pros:
- Custom field mapping for complete control over data synchronization
- Real-time sync of customers, orders, inventory, and transaction fees
- Advanced payment support with compatibility for all WooCommerce payment gateways
Cons:
- Primarily focused on WooCommerce and Shopify platforms only
- Requires mapping setup to avoid duplicates or error
Pricing:
- Free trial: 14-days
- Rise: $19/mo (up to 60 orders per month)
- Grow: $45/mo (up to 300 orders per month)
- Scale: $69/mo (up to 1,000 orders per month)
- Soar: $139/month (unlimited orders)
3. Bookkeep: Daily sales summary automation
Bookkeep automates daily accrual-based posting of sales data (Shopify, Square, Amazon, etc.) into Xero. The platform provides daily sales summaries and automated reconciliation for complex multichannel businesses.
Pros:
- Historical data syncing capabilities to backfill past transactions
- Sales tax automation service ensuring compliance across all jurisdictions
- Daily sales reconciliation matching sales with bank deposits, net of fees and expenses
Cons:
- Summary-based entries may lack granularity for some use cases
- Limited customization compared to more comprehensive solutions
Pricing
- Free trial: 14-days
- Lite: $19/mo
- Starter: $49/mo
- Growth: $99/mo
- Pro: $199/month
4. Dext Commerce: Accounting workflow automation
Dext Commerce is a powerful automation tool that connects ecommerce platforms like Amazon, Shopify, and eBay directly to Xero, automating sales and expense data syncing. It saves time and ensures accuracy by eliminating manual entry and supporting advanced accounting workflows.
Pros:
- Automate reconciliation of itemized sales and expense transactions from ecommerce platforms directly to Xero
- You can choose to manually publish your data to Xero or configure auto-exports to publish your transactions on a recurring schedule
- Manage paid, partially paid, and unpaid invoices - suitable for businesses with complex accrual requirements
Cons:
- Some users report delays in data uploads and synchronization
- Its UI has a steep learning curve for non-accountants
Pricing
- Free trial
- Starter: $19/month
- Growth: $59/month
- Premium: Contact sales
5. Amaka
Amaka specializes in automated accounting integrations, especially between point-of-sale (POS) systems, ecommerce, and accounting platforms. It's widely used for connecting systems like Square, Shopify, Revel, and others directly with Xero.
Pros
- Provides summary or detailed breakdowns per sales channel
- Automatically group and categorise transactions across multiple locations
- Uses a clearing account to temporarily show sales numbers until Shopify payouts are deposited, speeding up reconciliation
Cons
- Limited to Shopify
- While it handles delayed payouts well, some users may prefer more direct, real-time integrations
Pricing
- Premium: $18/mo
- Premium: $49/mo
How to set up Xero automation for your ecommerce store
Here's a step-by-step guide to get started:
Step 1- Choose your ecommerce platform integration
Xero integrates with major ecommerce platforms, including Shopify, WooCommerce, Amazon, eBay, Walmart, and Etsy. Decide which platform you want to choose.
Step 2- Select an integration method
There are two main ways to connect your ecommerce store to Xero:
- Ecommerce accounting automation apps: Use automation solutions like Webgility to connect your online sales channels and automatically sync orders, fees, and inventory with your accounting software - ensuring your books are always accurate and up to date
- Data syncing apps: Use apps available in the Xero App Store or your ecommerce platform's marketplace to sync data across all channels - eliminating manual data entry and simplifying reconciliation
Step 3- Set up the integration
1. Using an automation app (e.g., Webgility for Shopify)
- Sign up for the app: Create an account with the automation app (like Webgility) and start a free trial if available
- Connect to Xero: Select Xero and authorize the connection in the app dashboard. You'll be redirected to your Xero account to grant permissions
- Connect to your ecommerce store: Select your store (e.g., Shopify), enter your store name, and authorize the app to access your store data
- Map accounts and taxes: Configure which Xero accounts and tax rates should be used for different transaction types. Most apps offer guided setup or custom mapping options
- Test and review: After setup, test the integration to ensure data is syncing correctly. Compare the data in Xero with your ecommerce platform's financial summary
2. Using a data-syncing app
- Choose an app: Select a data-syncing app from the Xero App Store or your ecommerce platform's marketplace
- Connect your platforms: Connect both your ecommerce store and Xero to the app
- Configure syncing actions: Set up what data (orders, payments, refunds) should be transferred and how often
- Test the integration: Run a test sync and review the results in Xero to ensure accuracy
Step 4- Automate key processes
Once integrated, you can automate several accounting processes:
- Order and payment syncing: Orders and payments are recorded in Xero automatically, often in real-time
- Inventory management: Inventory levels are updated as sales occur, reducing manual tracking
- Invoice creation: Invoices are generated automatically for new orders
- Refund and fee handling: Refunds, fees, and shipping costs are automatically recorded and categorized
- Multichannel and multi-currency support: Manage multiple storefronts and currencies from a single dashboard
Step 5- Monitor and optimize
- Review reports: Use Xero's reporting features to analyze sales, profit margins, and cash flow
- Adjust as needed: Fine-tune your automation settings to match your business needs and ensure compliance
Pro Tip: Perform a test sync with a few orders before going live
How Webgility maximizes the impact of Xero automation
Here are some of Webgility's prominent features that enhance Xero's efficiency by automating ecommerce accounting across sales channels:
1. Seamless integration with DTC platforms, marketplaces, wholesale and retail
Webgility connects Xero to a wide range of ecommerce platforms, including marketplaces like Amazon and eBay, direct-to-consumer (DTC) platforms such as Shopify and WooCommerce, and third-party logistics (3PL) providers. This integration unifies data from all your sales and fulfillment channels so you can manage everything from a single dashboard.
2. Real-time sync of orders, fees, taxes, COGS, and inventory to Xero
Rather than providing daily batch uploads, which most integrations provide, Webgility pushes transaction data to Xero as sales occur. This means your financial position is always current, which is crucial for inventory management and complete cash flow visibility.
3. Automation of reconciliation for high-volume sellers
For businesses handling large volumes of transactions, Webgility automates the reconciliation process. It matches sales, deposits, fees, and payouts automatically, reducing errors and saving significant time.
This is especially valuable for high-volume sellers who would otherwise spend hours reconciling accounts manually.
4. Handles multi-currency, partial payments, and multichannel complexities
Webgility supports multi-currency operations and can manage partial payments, making it suitable for global ecommerce businesses. It also handles the complexities of running multiple sales channels (e.g., Shopify, Amazon, eBay, Walmart), ensuring that all transactions, regardless of origin, are accurately recorded and reconciled in Xero.
5. Faster month-end close and financial reporting
Webgility provides real-time financial dashboards showing profit margins by channel, product performance, and cash flow positions. Month-end becomes a review process rather than a data compilation exercise. Financial reports are essentially ready in real-time allowing for faster decision-making and more frequent financial analysis.
Use cases of Xero automation in ecommerce
Here are three detailed examples of use cases for Xero automation in ecommerce, specifically using Webgility:
1. Marketplace-only seller automating fees and reconciliation
Profile:
A merchant selling exclusively on Amazon and Walmart, fulfilling via FBA and relying heavily on high-volume, low-margin operations.
Challenges:
- Complex fee structures (e.g., commission, shipping, storage)
- Manual reconciliation of payouts with orders and refund
- Difficulty separating COGS, fees, taxes, and deposits across different marketplaces
Webgility + Xero solution:
- Automatically pulls in all marketplace transactions, including fees, refunds, promotions, and chargebacks
- Syncs summarized journal entries daily or per payout into Xero
- Maps each fee and revenue stream to the correct chart of accounts
- Enables granular payout reconciliation, allowing accounting teams to tie every deposit back to orders, refunds, and fees
Outcome:
- Books stay clean and audit-ready
- Monthly reconciliation time is cut by 50%
- Merchant scales from one to three marketplaces with the existing headcount
2. Shopify merchant syncing inventory and invoices
Profile:
A DTC ecommerce brand operating on Shopify with multiple SKUs and channels (including wholesale), managing both prepaid and invoiced orders.
Challenges:
- Inventory stockouts and overselling due to disconnected systems
- Manual creation of invoices and credit memos for wholesale clients
- Difficulty managing partial payments and term
Webgility + Xero solution:
- Real-time sync of orders from Shopify to Xero as invoices or sales receipts
- Two-way sync for inventory updates between Shopify and Xero, ensuring accurate stock levels across sales channels
- Automated creation of accounts receivable entries for B2B orders, with support for partial payments and terms
- Posts refunds and adjustments automatically to Xero, linked to original transactions
Outcome:
- Inventory accuracy improves significantly
- Time spent on invoice creation and reconciliation reduced by 50%
- Better visibility into receivables to improve cash flow planning
3. Ecommerce accounting firm automating books for multiple clients
Profile:
A bookkeeping firm with 40 ecommerce clients across platforms like Amazon, Shopify, BigCommerce, and Etsy, all using Xero.
Challenges:
- Manual data entry and cleanup for each client's sales, refunds, fees, and deposits
- Inconsistent formats and data sources leading to inefficiencies
- Difficulty closing books on time across clients during peak months
Webgility + Xero solution:
- Centralized dashboard to manage automation settings for all clients
- Automatically pulls ecommerce data from multiple platforms and maps it to each client's Xero instance with consistent rules
- Posts daily or per-payout journal summaries, splitting revenue, COGS, taxes, and fees
- Provides audit trail and transaction logs for review
Outcome:
- 50–70% reduction in time spent on ecommerce bookkeeping
- Month-end closing becomes standardized and scalable
- Enables the firm to take on more clients without adding staff
The missing piece to scalable ecommerce accounting
As your sales grow (and with ecommerce hitting $8 trillion by 2028, that growth is inevitable), your accounting complexity grows right alongside it. What worked when you had 50 orders a month becomes unsustainable at 500, and nearly impossible at 5,000.
That's where Xero automation changes everything by centralizing financial management and simplifying tax compliance.
However, when you pair Xero with Webgility, it streamlines your ecommerce accounting in a way that neither tool can achieve alone.
Turn Xero into a real-time ecommerce engine
Here's what Webgility adds to Xero and makes this combination powerful:
- Webgility supports real-time inventory tracking and acts as the missing link between your sales channels and Xero
- Automatically syncs data from Amazon, Shopify, eBay, Walmart, Etsy, and more
- Updates happen as sales occur, not in daily batches
- Automatically separates marketplace fees, revenue, shipping, refunds, COGS, and tax liabilities across all channels
- Matches marketplace payouts to individual orders automatically
- Tracks fulfillment costs from Amazon FBA, UPS, etc
Think of it this way: Xero is like having a great car engine, but Webgility provides the specialized transmission that makes it perfect for ecommerce terrain.
With accurate, real-time data syncing into Xero, you can close the books faster, generate reliable P&L reports to know your actual margins and make better financial decisions.
Ready to transform your ecommerce accounting with Xero automation? Contact Webgility experts today for a free consultation and see how our comprehensive automation solution can eliminate manual work and accelerate ecommerce growth.
FAQs
Can Xero handle ecommerce automation without Webgility?
While Xero offers powerful native features like bank feeds and recurring invoices, it doesn't natively support the complex needs of high-volume or multichannel ecommerce. Without Webgility, you'd have to rely on manual imports or basic app connectors.
How does Xero handle inventory management and COGS tracking for ecommerce?
With integrations like Webgility, Xero can automatically calculate COGS by automatically syncing and tracking inventory and sales data across your ecommerce platforms.
Can Xero automation help with compliance and tax calculations for ecommerce?
Yes, Xero automation includes automated tax calculations and payroll processing features, helping maintain ecommerce businesses' regulatory compliance.
What are rules-based transaction categorizations in Xero, and why are they useful?
You can set rules in Xero to automatically assign categories, tax rates, and tracking codes to transactions based on details like description or amount, which is especially useful for auto-categorizing fees, shipping, and payouts from ecommerce platforms.