E-commerce has experienced a tremendous boost during the pandemic, as physical stores were forced to remain closed. However, this also poses a challenge for e-commerce businesses, as critical back-office functions, such as accounting, may not be able to keep up with the immense increase in business volume.
E-commerce is widely known for high daily transaction volume, especially in this situation. Therefore, it is challenging for them to keep track of accounting data, which is typically stored on the selling channel rather than in the bank account.
Read more:Scaling Your Business With Sunsystems Cloud
More importantly, e-commerce businesses like yours also face many expensive foreign transactions. If you do not act quickly, it could lead to an unexpected loss in profit.
That is the reason you need the practices below to take the lead in this fast-growing industry, to overcome some accounting challenges you might have during this time.
What are the best practices for e-commerce accounting?
1. Integrate your accounting software with your online store
One of the most important things all e-commerce companies need to have is an accounting software that syncs with their online store. This will help you save a lot of time by eliminating the need to manually log all your transactions, which can be exhausting. More than that, it also helps you prevent missing any transactions during the update process and ensures the data is correct with your bank account later.
You also need to categorise your transactions into income and expenses. It is critical to closely check when the money comes in or leaves your account. Separating them into income and expenses would save you a lot of time to know how much money you have left.
Read more: 4 Must-Have Features for E-Commerce Accounting Software
2. Reconcile your account regularly
During the process of buying, selling, and shipping the products or services, there could be multiple instances where you have some transaction errors, or you are charged twice by the bank. Make sure your bank account matches your records on your accounting software or your book, which could reveal any problems you have, or just to know that every credit and debit has been processed properly.
Do it regularly (monthly) so you can find out the reasons for imbalance and act on them quickly and appropriately. Accounting software enables you to automatically run the reconciliation report at the end of each month.
3. Manage your inventory and COGS (Cost of Goods Sold)
Sometimes, it is hard to keep track of your inventory if you are selling your products through multiple channels. You need to make sure the right merchandise is stocked. So, store only the inventory you want and never let your stock exceed this level.
Moreover, you also need to count the cost of the package needed to deliver these products safely as well. Similarly, make sure to have enough of them in your inventory.
COGS (Cost of Goods Sold) data is important for calculating gross profit and producing correct accounting and financial reports. Therefore, it is critical that you understand how much you are making on each of your products before you add in all your expenses.
4. Manage your returns and chargebacks
If you are selling your products on some platforms that allow return such as Amazon, you need to categorise these products into Sellable, Damaged, Customer Damaged, Carrier Damaged or Defective. This not only helps you track your product process and customer satisfaction, but also makes sure your inventory is not expensed twice.
A chargeback happens when a credit card company asks you to return funds you charged to a customer’s credit card for some reason. You also need to keep track of it as an expense or fee.
5. Keep track of all other expenses
Purchasing raw materials or packaging for delivery is not your only expense. There are many places you need to distribute your money. Make sure you count them towards your ledger since they affect your profit and cash flow significantly. Understanding them can help you minimise these expenses and increase your profit.
There are some common fixed expenses you might have:
- Rent
- Utilities
- Insurance
- Property Tax
- Interest on loan payments
- Salaries
Read more:A Practical Guide to Late Payments and How Businesses Can Avoid Them
6. Have a cloud accounting software
One of the best advantages of cloud accounting software is that all your data will be safely and centrally stored in the cloud. Therefore, it saves a lot of time as well as assures data security.
Besides, you and your staff can easily access the data at any time and from anywhere. Thus, you can act on it quickly to reduce the info silos.
Read more: Why Everything You Know About SaaS Software Might Be Wrong
Cloud-based software efficiently aids your accounting tasks since it allows you and all your employees to access the same information anytime and anywhere. You do not have to store all information on any individual computer and worry about the memory capacity.
We would like to introduce Infor SunSystems Cloud, one of the most comprehensive cloud financial management tools. This tool serves as a user-friendly and productive companion, providing a collaborative platform as well as other computerised workflows and reports for your company.
To be more specific, Infor SunSystems Cloud can help you optimise your accounting process with many integrations with convenient apps from third parties, such as cloud-based CRM. And all the regular updates are run automatically within the software.
Besides these key features, there are more interesting things you can explore, such as security measures or built-in BI tools to help you stay on top of this game.
To learn more about Infor SunSystems Cloud and its robust capabilities, download our brochure today!
