E-commerce Reconciliation: Payments, COD, Returns and Stock

Most online sellers discover reconciliation the same way. A month looks strong on the dashboard, the bank balance disagrees, and nobody can say why. Somewhere between an order being placed and money arriving there are commissions, shipping charges, penalties, refunds, reserve balances, COD remittances still in transit and, in a small but real number of cases, an amount that simply never came.

E-commerce reconciliation is the monthly process of tracing each order through the platform, gateway or courier that collected the money, into the bank and the books, so that every deduction is identified and every unreceived amount is either recoverable or written off deliberately.

This article covers the money side. Matching your GST returns to what an operator reported is a separate exercise with its own method, and we have written it up in marketplace GST reconciliation: matching GSTR-1, GSTR-8 and your settlement. Do both. They fail in different ways. For the wider framework, start with the complete guide to e-commerce accounting in India.

Why it cannot be done from the bank statement

A bank statement shows net amounts arriving from a small number of counterparties. It cannot tell you whether a payout was short, whether a fee was charged twice, whether a refund you already gave was also deducted by the platform, or whether a courier deducted a weight discrepancy charge on a parcel that weighed what you said it did.

Reconciliation therefore runs forward, from the order, and the bank statement is where it ends rather than where it starts.

The five reconciliations

Think of it as five separate matches, each with its own source data and its own failure mode. Run them in order, because each one clears noise for the next.

One: sales reconciliation

Start with the order report for the period and reduce it to what should be in your books.

Total orders placed, less cancellations before dispatch, less anything scheduled but not dispatched, gives you dispatched orders. Compare that to invoiced sales in your ledger.

The differences here are almost always cut-off differences. An order placed on the 31st and dispatched on the 1st belongs in the following month. A platform reporting on its own cycle will not use your cut-off. Decide your policy once, write it down, and apply it consistently, because the same cut-off has to drive your GST return.

Two: settlement reconciliation

Take the dispatched order value and work down to what the platform should pay you.

Figures are illustrative. The point is the last line. A difference of ₹8,430 on ₹11.8 lakh is under one per cent and is exactly the kind of number that gets waved through. Annualised across a growing business it is not small, and in our experience roughly half of it is recoverable if it is raised inside the platform’s dispute window.

Where does it usually come from? Fees charged on a category rate you were not expecting. Shipping charged on a weight slab above the actual weight. Penalties for late dispatch or cancellation. Promotional or deal participation fees. Fee reversals on returns that were never processed. And occasionally a straightforward duplicate.

Three: collection reconciliation

Now match what the platform, gateway or courier said it was sending against what the bank actually received.

For gateways, match the settlement batch identifier to the bank credit. Amounts should agree exactly. If they do not, the usual causes are a chargeback settled inside the batch or a fee adjusted after the advice was generated. The gateway and COD side is covered in more depth in Shopify and D2C accounting in India.

For COD, this is where most cash sits waiting. Delivered COD orders create a receivable that clears only when the courier remits, usually on a weekly cycle, net of shipping and COD handling charges and adjusted for weight discrepancies. Track it as an ageing schedule, not a single number. Anything older than the courier’s stated remittance cycle needs to be raised while the claim window is open.

The output of this step is a control account per channel. Opening balance, sales added, deductions applied, cash received, closing balance. If the closing balance is a number you can explain, the channel is under control. If it is not, stop and find out why before closing the month. The marketplace version of the same control account is set out in Amazon and Flipkart seller accounting.

Four: returns reconciliation

Returns break in a specific and expensive way: the refund happens on one system, the goods move on another, and the fee reversal happens on a third.

For every return, three things should be confirmed. The customer refund was processed, and reversed in your books with a credit note where GST applies. The platform reversed the commission it was due to reverse. And the goods physically came back, and were graded as saleable or damaged.

RTO is a different animal. The customer never received the goods, so no supply took place and there is nothing to reverse. What exists is a distribution cost, and it should be measured as a rate, per channel and per payment method.

Five: inventory reconciliation

The stock equation is unforgiving: opening stock, plus purchases, less cost of goods sold, less returns to supplier, plus customer returns received, equals closing stock. Compare that to what is physically there, including stock held at fulfilment centres and third-party warehouses.

Differences come from a short list. Goods in transit at the cut-off. Customer returns refunded but never received. Stock lost or damaged at a warehouse, which is usually claimable if raised in time. Sample and influencer despatches that were never recorded as anything. Free items inside bundles. And, for multi-state sellers, stock moved between your own registrations without an invoice, which breaks both the stock ledger and the GST position at the same time.

Physical verification once a year at year end is the minimum. Quarterly cycle counts on your top-moving SKUs is better and takes less time than it sounds.

Where GST reconciliation fits, and why timing changed

The money reconciliation above is not the same as the tax reconciliation, and one recent change made the sequence matter.

Since the July 2025 tax period, the outward liability auto-populated into GSTR-3B from GSTR-1 has been hard-locked and cannot be edited on the portal. If the sales figure is wrong, it has to be corrected in GSTR-1A before GSTR-3B is filed, or amended in a later period. Reconciliation that used to happen after filing, as a clean-up, now has to happen before it.

Two more constraints in the same direction. Input tax credit depends on invoices appearing in GSTR-2B and on the action you take in the Invoice Management System, where doing nothing counts as acceptance. And returns more than three years past their due date are barred on the portal, a restriction enforced from October 2025, so old periods do not stay fixable.

The practical answer is a fixed monthly order of work: reconcile, then file. The tax-side method is set out in marketplace GST reconciliation.

How often to run each check

Six errors that cause most of the trouble

• Reconciling to the bank instead of to orders. The bank shows the residue. Start from the order.
• No control account per channel. Without one, an unexplained difference has nowhere to sit and gets absorbed into sales.
• Netting deductions into revenue. Fees you cannot see are fees you cannot dispute.
• Ignoring reserve and rolling balances. They are receivables. Treating them as shortfalls corrupts the whole exercise.
• Treating RTO as a return. It reduces sales that never existed and hides a real distribution cost.
• Leaving it until the year end. Platform dispute windows and courier claim windows have already closed by then, and so, increasingly, has the GST correction route.

When to automate, and when not to

Below a few hundred orders a month, a disciplined spreadsheet with a control account per channel works. The discipline matters more than the tool.

Beyond that, two things start to break: the volume of settlement line items exceeds what anyone will read, and the number of channels multiplies the number of matches. That is the point to move the mapping into your accounting software properly, whether that is Zoho Books or Tally, with settlement files imported and matched rather than summarised.

Automation does not remove the judgement. Something still has to decide whether an unexplained ₹8,430 is a dispute, a timing difference or a genuine cost. That decision is the job.

If your books are already several months behind, the sensible first step is an accounting health check to establish what is actually wrong and what it costs to fix, before anyone starts fixing it.

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