MarginEdge collects the Point of Sale data on a daily basis. This allows us to translate that data into a balanced Journal Entry which we can post into your Accounting Software. Mapping your sales entries in MarginEdge is a great opportunity to not only automate this process in a controlled environment but allows for more timely and accurate sales recognition in your accounting system.
Here is a recap of the major types of data that appears on most every Sales Journal entry:
Sales and Discounts
The most important part of sales mapping, and one that is required even if you aren’t sending sales entries to your accounting system, is how you map your Sales and Discounts.
- Some clients want to report Net Sales (after discounts) so they would “Include” all Discounts in Sales Reporting and adjust the Category Type to match the Sales for each category.
- Another option would be to create a Category Type called Discounts and set the Category Types for discounts to that. This would display your discounts by total on the [me] P&L but keep COGS calculated on Gross Sales for each type.
- Other customers report their Discounts separately from sales (as an expense) so their COGS are calculated on Gross Sales. If this is the case, you should “Exclude” discounts from sales reporting.
When it comes to mapping to the accounting system the most important thing is that you stay consistent to start. Match the Sales and Discounts to their respective accounts on the COA and group them so that only one number posts to each account each day.
Credit Card Deposit
The keystone of the Sales Journal Entry is the Expected Deposits for money owed. The primary one is the credit card batch which typically gets deposited into the bank a business day or two after the day of business. The POS typically reports credit card tenders by type so these should all be grouped together so only one number posts to your bank.
Some POS systems that provide merchant service processing deduct their fees from each deposit. For some POS providers (Toast, Square, etc.) we can get the amount of fees included on the sales entry, deduct it from the expected credit card deposit, and record the expense to your P&L.
If the expected credit card deposit matches each actual deposit many clients post it directly to the bank account where it is matched when the money clears the bank. If we are unable to calculate fees, or your merchant service provider batches deposits, or adjusts them for chargebacks it is probably easier to post the expected deposit, and actual deposit, through a credit card clearing account. This will make it easier to reconcile at the end of the month.
Cash Deposit & Credit Card Tips
The total amount of cash receipts is reported by your Point of Sales System.
- Some restaurants pay out their credit card tips from cash each day. If this is the case, credit card tips should be grouped with cash receipts, so the Net Deposit is calculated.
- Other cash activities that are recorded in the POS (Paid In/Out, Over Short, etc.) can also be grouped here so the actual cash deposit for the day can be calculated. This amount can be posted to a Cash on Hand asset account in Accounting. Some people map it directly to their bank account but as with credit cards this is only advisable if the amounts that come in/out of the bank match exactly.
- If Credit Card Tips are paid out through payroll, or on pay cards, the Tip entry should be posted to a Tip Liability account. When they are paid out a journal entry in accounting (Payroll Journal Entry) would be made to reduce the liability.
Sales Tax
The total amount of sales tax collected are reported by POS and are usually recorded to a Sales Tax Liability Account. When Sales Tax is paid, that liability is debited to reduce the liability.
Delivery Services and other Tenders (Tock, Stripe, Tripleseat, ezCater, etc)
If Delivery Service or other third-party sales are rung up in the POS and closed to a specific tender, then MarginEdge can post that receivable amount to accounting.
It is advisable that you use a dedicated current asset account to post each to. When you receive payments from these third parties you would post them to the same current asset account and reconcile the difference there. The difference will be fees, refunds, promotions.
Gift Cards
If rung in through the POS [me] gets the amount of Gift Cards sold and redeemed each day. These two lines can be grouped together and mapped to your Gift Card Liability Account to adjust the outstanding balance each day. The revenue for Gift Card Sales gets recorded when the cards are redeemed, and food/drink is rung up. Gift Cards that are comped are usually mapped to whatever discounts go to or another expense account like (Advertising or Marketing).
Private Party Discounts and Preorders
If rung in through the POS ME gets the amount of Deposits created and applied each day. These two lines can be grouped together and mapped to your Deposit Liability Account to adjust the outstanding balance each day.
The cash from deposits should be recorded on the day they are paid and the revenue for deposits paid get recorded on the day of the event. The Liability balance will be increased on the day the deposit is paid and then decreased on the day the deposit is applied.
Some clients record all/some of this activity outside of the POS but if they use the POS that activity can be built into the sales entry.
Exporting to Accounting
Sending Sales Entries to accounting is manual by default but can be set to Automatic through your Accounting System Integrations Settings.
If a sales entry is sent and has incorrect mapping the client has two options:
1. Manually adjust the entry in Accounting, fix the mapping in ME, and it will be good moving forward.
2. Delete the entry in Accounting, fix the mapping in ME, and resend the updated sales entries.
If the sales entry is showing an Error, it is likely due to it being unbalanced.
If this is the case, please send our support team an email (help@marginedge.com) so one of our sales engineers can make sure all data from the POS is being included on the Sales Entry. (This can happen sometimes if you add new Sales Categories or Tenders or have transactions that do not occur regularly and were not factored into the original setup that onboarding does. Sometimes it is helpful if you include your POS Daily Sales Report with your help ticket so we can easily identify what is missing.)