Ecommerce Accounting can be dull and prove a significant pain for many business owners. It can become confusing and turn into a headache very quickly. However, if you want to run a successful eCommerce venture, you must ensure you have a good accounting process to manage your online sales. There are many options available to help you put a process in place.
Rest assured, even though eCommerce accounting can be a daunting task, the help of experienced accountants and the integration of some clever cloud-based software could be the answer. Not only will you be able to focus on running your business better, but you will have full visibility regarding your profit and loss, and this will help you make better decisions about the direction of your business.
Implement a scalable accounting solution
If you think you can pull it all together with your excel sheet and a calculator, think again! once you start hitting those large daily order numbers, you need a system in place to collect all your sales data in a way that will make your accounting processes more streamlined. For example, using a cloud-based accounting software solution like Xero will enable your accounts team to prepare your accounts more efficiently. Xero are market leaders in cloud accounting and aim to help businesses thrive worldwide. Xero offers many products and services, including online software that can handle payments, cash flow, payroll, and invoices.
Keep an eye on your cashflow
When running any business, one of the key elements of making swift decisions to enable positive outcomes is to keep track of your cash and investments. In case you do not have a separate business bank account, you should get one. It will allow you to keep track of all your business only related spending; that way. You will easily see if there is more money coming in than going out, and if not, you need to address the imbalance to make your business profitable. Knowing when your bills are paid via standing order and direct debits will ensure you can manage your monthly and quarterly spending patterns to ensure a nice clean cash flow in and out of your business without delay to suppliers and your employee.
Stock control and inventory management
If you sell services and not products online, you can skip this. For those who manage and sell physical products to your online buyers, managing stock will be a major aspect of running your business and ensuring you have enough stock to service orders and ensure you don’t hold too much stock that may tie up precious working capital. An inventory management solution can help you keep an eye on stock levels and even alert you when you hit a stock threshold that needs to be replenished. Most good eCommerce systems will have a stock control solution inbuilt. However, you should always ensure you have something in place, either a third-party service you integrate into your existing eCommerce store or an in-built solution that is pre-baked into your website Content Management System. CMS solutions like Magento, Shopify, and WooCommerce for WordPress have excellent stock management solutions available.
Calculate all the extra expenses
Stock and employee costs are not the only costs you need to keep an eye on when running a growing eCommerce business online. If you factor in the cost of storage, licenses for trade and licenses for software and hardware used to run your business, you can use this data to ensure the sale price of your goods covers the overall cost of your business. Most business owners would have this included in the financial forecasts and business plans before selling online. However, if you have not broken down all of your costs and aren’t making sure you understand how these costs change over time as you grow your operations, you need to do this soon to manage your cash flow and see how much working capital you have to continue your growth trajectory.
Ecommerce accounting can seem challenging, but you can handle it with ease if you have the right process and systems in place. Xero is the ideal accounting software for all business types. This coupled with good integration with your eCommerce platform, you will have everything you need to manage your online business more efficiently and give your accountants a helping hand to prepare your accounts more effectively.
If you are looking for a certified partner to implement Xero and your online eCommerce platform to help you sell your goods and services online, contact ACE Accounts. We are one of the UK’s leading eCommerce accounting services providers and will work closely with you to ensure your online business thrives!