During the lockdown, it was the only contact with the outside world for many, a relatively safe way to shop. In the post-Covid-19 world, however, eCommerce seems to be the preferred choice of a growing number of users as they realized the many benefits of shopping online.
In front of an economy crushed by the harmful consequences of the Coronavirus, the eCommerce space has been continuing to grow, with worldwide retail eCommerce sales up by 27.6%, giving small businesses the chance to land a sturdy footing in a competitive market.
No matter what your eCommerce business is, integrating accounting and bookkeeping principles in your operation will not only help maximize your profit but also ensure your sustained growth down the line.
Such old-school accounting principles translate well into the digital age and provide eCommerce business owners with powerful tools to manage their cash flow, have a more sustainable business model, and anticipate problems early on to deal with them before they materialize.
We’re just tipping the surface here, so let’s dive deeper into accounting and bookkeeping benefits for eCommerce businesses and give you a realistic model on how to integrate such tools into your current company culture.
Benefits of Bookkeeping and Accounting for eCommerce
First things first, what’s the difference between bookkeeping and accounting? Though the two principles are interconnected, there’s a clear distinction between them. Bookkeeping is all about collecting data, including your business’ transaction history, cash flow, inventory, and more.
Accounting then comes in place with its comprehensive analysis tools to make sense of such data. As a business owner, you get insights on how your business is performing and how to avoid cash or inventory shortages.
Since eCommerce is a fast-paced industry, monthly, quarterly, and yearly financial reports aren’t enough to ensure your business is on the right track. Instead, you need real-time data to stir your business in the right direction. For example, your data analysis will tell you which product lines you should expand on and what new markets you should expand to next.
That’s not all, as bookkeeping and accounting bring more benefits to your eCommerce business like:
- Providing you with better financial transparency of your business’ performance
- Setting clear pathways for growth
- Ensuring your business decisions are all based on accurate and reliable data
- Setting up inventory and cash flow forecasts
- Better cash flow management in times of economic turmoil and instability
- Saving time when preparing for your tax return filings
How to Choose an Accounting Solution for Your eCommerce Business
Cloud Features
The best accounting software is not confined to one device anymore. All your records are stored securely in the cloud, so you can log in from any device and manage your eCommerce business on the go.
Platform Integration
Your accounting solution won’t exist in its own bubble. In fact, it has to seamlessly integrate with the other software your eCommerce business uses for billing and marketing.
For example, an eCommerce accounting software ensures you’re up and running in no time, as it integrates with the biggest marketplace platforms like Shopify, BigCommerce, and WooCommerce. All your apps are now part of the same network, and you can see real-time updates across all of them.
Projections
Long gone are the days when business decisions were solely based on guts, as data and projections are now what governs modern eCommerce businesses. Ensure that your software of choice provides accurate forecasting for your cash flow and inventory.
Reporting
Powerful accounting and monthly bookkeeping services and tools provide real-time reporting, so you get to quickly identify business trends. You can also get your tax filing reports ready right from within the app itself, saving you tons of time when applying for your tax return.
Intuitive Dashboard
Part of what makes any accounting software stand out among the bunch is its algorithm that does all the data analysis and projections under the hood. The other part lies in how such data is presented, so you can make sense of it.
Make sure you opt for an accounting app that implements an intuitive dashboard design to give you all the data you need to know at a glance. Charts, graphs, and other forms of visual representations do a great job simplifying the different parameters that define your business’ performance.
Usability
The best accounting solutions manage to strike the right balance between ease of use in order not to overwhelm beginners and a full-featured set of tools that allow professionals to make the most out of the app.
So, the main takeaway here is that you don’t want to pick a complex app that presents a steep learning curve for you and your employees to climb. This way, you’ll save money and time, as you don’t have to invest in educational courses.
Customer Support
As your eCommerce business will be fully dependent on the accounting solution of your choice, you need to ensure that the service offers robust customer support, ready to address any issues you run into 24/7.
Reporting
Powerful accounting and bookkeeping tools provide real-time reporting, so you get to easily identify business trends. Furthermore, dashboards that provide you with all the key parameters of how your business’ performance are another welcome addition.
When to DIY and When to Hire Professional Bookkeepers and Accountants
You can probably manage your business’ finances on your own early on when you have a couple of staff members and a limited inventory to work with. As your business grows down the line, it’ll be a whole different story.
Having to juggle between your administrative and financial responsibilities can be a hassle and also increases the chances of mistakes. Here comes the role of a professional bookkeeper and accountant that takes such tasks off your mind to let you focus solely on how to expand your business based on the financial reports at your disposal.
In short, while you’re starting your company, it can be okay to take care of some of the bookkeeping and accounting tasks. However, as soon as you have the resources to hire someone, this is a strategic hire that will ensure you have more time to focus on sales or other essential metrics instead of matching invoices with expenses.
General Tips
How to Track Your Cash Flow
- Manage your accounts receivable in the form of a calendar
- Adopt a proactive plan to anticipate your business’ expenses and needs
- Use cash flow forecasts that account for the money yet to be received for an already fulfilled order and the planned expenditures for an inventory restock
How to Manage Your Inventory
- Keep track of low-turn stock, which you failed to move easily, and consider cutting down on such products for future restockings
- Accurate forecasting based on your past sales figures
- Implement tools that allow real-time tracking of your inventory
- Monitor the status of your inventory’s machinery and ensure they receive periodic maintenance, so your warehouses never come to an unexpected halt
