Eighteen months of Shopify and payment-gateway chaos, reconciled in one cleanup engagement

Problem

A direct-to-consumer e-commerce business selling through Shopify, with Stripe and PayPal both live as payment options, came to us with a bank refinancing deadline nine weeks out and a set of books nobody trusted — including the owner. The prior bookkeeper had left nine months earlier; a stopgap arrangement afterward had kept transactions loosely categorized but had stopped reconciling bank accounts entirely around the same time.

The core problem was structural, not just a backlog of unclassified transactions: Shopify payouts, Stripe payouts, and PayPal payouts were each being booked as a single revenue line equal to the bank deposit, with no separate accounting for processing fees, refunds, or chargebacks netted out before the deposit hit. Eighteen months of revenue was overstated, cost of goods sold was disconnected from actual unit sales, and the balance sheet carried an “Undeposited Funds” balance that had grown to a five-figure number nobody could explain.

Approach

We ran our standard five-stage catch-up methodology (triage, bank reconciliation, AR/AP aging, equity and loan cleanup, re-close), adapted for the payment-gateway-heavy revenue structure:

• Triage established the last genuinely reconciled month (14 months back, not the 9 the client initially estimated — the stopgap bookkeeper had marked several months “reconciled” without matching every line to the bank feed) and sized the cleanup at roughly 3,400 transactions across three payment gateways and two bank accounts.
• Bank reconciliation was run gateway by gateway before touching the bank accounts: each Shopify, Stripe, and PayPal payout was decomposed into gross sales, processing fees, refunds, and chargebacks using each platform’s own settlement reports, rather than accepting the net bank deposit as the transaction of record. Only once each gateway’s activity was reconciled to its own settlement reports did we reconcile the resulting bank deposits.
• AR/AP aging was largely not applicable at the consumer sales level (no invoicing), but vendor bills for inventory and freight were rebuilt against supplier statements, surfacing around $38,000 in unrecorded inventory liabilities that had never been booked.
• Equity and loan cleanup untangled a business line of credit where 11 months of payments had been booked entirely to principal with no interest split, materially overstating the outstanding balance shown internally versus the lender’s own statement.
• Re-close produced 18 clean monthly trial balances with a variance memo bridging the new numbers to what the client had previously shown a lender informally — a step the client’s loan officer specifically asked for, since a restated financial history without an explanation of what changed is a red flag to an underwriter, not a reassurance.

Result

Eighteen months of financials were rebuilt and reconciled to the cent inside seven weeks, ahead of the nine-week refinancing deadline. The corrected trial balances showed revenue roughly 9% lower than the client’s prior informal figures once processing fees and refunds were properly backed out — a difference the client’s loan officer said was more credible, not less, precisely because it came with a documented bridge explaining the restatement. The refinancing closed on schedule. The client moved to a standing monthly close arrangement afterward specifically to avoid a repeat of the same drift.

Details altered to preserve client confidentiality; figures representative of the engagement.