Refunds are the fastest way to get confused in Magento profit reporting.
An order ships on Monday. The customer returns it; Magento issues a credit memo on Thursday. Which day “owns” the loss?
There is no single correct answer — there are two useful answers. Verid calls them cash and cohort.
Cash view
Cash attributes money movements to the day they happen in the store timezone.
- Monday: revenue and COGS for the order
- Thursday: refund amount, COGS clawback, shipping cost clawback
Cash is excellent for:
- Matching ad spend days to money movement
- Watching refund spikes after a bad batch / wrong SKU
- Operating the business week-to-week
Cash can make Monday look amazing and Thursday look broken — even though it is the same customer journey.
Cohort view
Cohort attaches later refunds back to the original order day.
Monday then shows:
- Revenue
- Later refunds for that order
- Net that reflects the order’s eventual outcome
Cohort is excellent for:
- Judging product and campaign quality
- Comparing “true” order-day profitability
- Not panicking at refund lag
Cohort is worse for matching bank cash timing.
A concrete timeline
| Day | Event | Cash P&L | Cohort P&L (order Monday) |
|---|---|---|---|
| Mon | Order €120, COGS €50 | +€70 contribution before ads | same, pending refunds |
| Thu | Refund €120, COGS clawback €50 | −€70 that day | Monday revised down |
If you only look at cash Thursday, you may cut a campaign that was fine and got unlucky returns. If you only look at cohort Monday before refunds land, you overstate winners.
How Magento credit memos complicate it
Credit memos may refund:
- Full item value or partial
- Shipping charged (not always your shipping cost)
- Tax lines you may or may not want in contribution
Proportional COGS clawback matters: refunding half a kit should not claw back zero cost or 100% cost incorrectly — especially with bundles.
What to use when
- Daily ops / ad pacing: cash
- Campaign and product decisions after 7–14 days: cohort
- Month-end narrative for yourself: both, side by side
How Verid exposes this
Verid computes daily net profit in both modes from the same Magento orders and credit memos, in the store timezone, with COGS and shipping clawbacks. Overview walkthrough: How to read Verid Overview.
Switching views should not feel like switching datasets — it should feel like switching the assignment rule for the same facts.
Operator habit
Every Monday, glance at:
- Last week cash net
- Cohort net for the same order dates after refund lag
- Refund % by payment method / shipping method if something spiked
That habit alone prevents most “we were profitable until refunds” surprises from becoming bad ad decisions. Docs: /docs/cash-vs-cohort.