Let’s say you’re going to launch Ecommerce Business, or you already have one on Amazon, Shopify, Squarespace, BigCommerce, WooCommerce or other similar platform. You must be focused on the production, orders, sales management, transportation, site traffic, branding, and on and on. However, you should’t forget about finances and accounting.
Some people think that E-commerce accounting is the same as for any other business. That’s not true.If you do your online store finances like any other business models, that probably gives you a completely wrong picture of your business, which will definitely mislead you into making important decisions.
Icommers's accounting has several nuances, you should pay attention to:
Transaction Data creation
Transactions in E-commerce accounting are probably the most specific aspect. For shops outside of ecommerce it’s much easier to identify transactions - you will find revenue in a bank account statement, check waybills, invoices and count cash to set daily income. However, in the case of ecommerce,the same can’t be done. For example, when an accountants see an enrollment in a bank account from BigCommerce, they may assume that it’s a total incomefor a certain date, but actually there are some shipping amount, bank fee paid by the customer, and so on. For ecommerce transaction process analysis, one must dig deeper.
Inventory and Prime costs
Anther important part of the online shopping is inventory and setting the exact product prime cost. Even if you don’t produce goods yourself, the import or transportation costs must be counted in the product price.
Finance and Accounting
Every business has its own accounting model. For some restaurants, utensils can be a consumable goods - because they are often broken, damaged and written off, while for other business it’s an office stock - PP&E. It is therefore important to choose the appropriate accounting method and a proper accounting program, that will allow you to take into account all the nuances.
What should an online store accounting software look like?
You should pay attention to some key features:
API - application programming interface
The accounting program should be easy to integrate with your Ecommerce platform. However, it should have integration with online banking, Excel andsome project management platforms.
With these integrations, the program should automatically update sales data from shop, payments, taxes, and on and on.
Flexible reportsing system
In general, accounting programs offer standard reports. However, if you are in ecommercebusiness and panning to grow up, then you will need more – reporting system that will give you specific sales analytics, accurate inventory, production reports and, at the same time, will be flexible enough fo you to rearrange or create your own reportwithin program dashboard, without exporting to Excel.
Daily management reports differ from financial statements required by the tax Office. Yoursoftware should be set in accordance with IFRS standards and comply with national legislation as well.
Sinceyour store is open all day and nigh, it’s crutialfor you to have 24 hours online support. Before choosing a program, check what ratings the provider company has in terms of support and generally what people say about them.
In online sales, inventory management is especially important. Due to the sales dynamics, the amount of balance in the warehouse should be controlled and purchases should be planned accordingly. in order not to adjust the balances in the warehouse manually, the accounting software must offeranintegrated POSand warehouse module.
Trading withself-manufactured products
Stocks may consist of products made by you. At the same time, you may use different packaging for different products. To define the ideal margin and set profitable prices, you need a software that takes into account all the components of the product and all other overhead expensesand accumulates it in the product final prime cost.
So, if you’re just starting ecommerce business think twice before choosing the right accounting program. And if already running your online shop, you’ve got perfect checklist to go through and make marks.