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Why do you need accounting software to be linked to your e-commerce website ?
31 May

Why do you need accounting software to be linked to your e-commerce website ?

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Crunching numbers may not be your forte, but every online business needs a strong eCommerce accounting plan. You’ll thank yourself later for enlisting some help to record and analyze your revenue, expenses, debts, and deductibles.

Tracking your financial matters helps you understand the health of your business and ultimately allows you to make decisions based on real numbers, not just feelings.

Ecommerce businesses face their own unique set of challenges such as retaining customers, understanding the cost of goods sold. to name a few. 

If you have record sales, but your customer acquisition costs and operating expenses are more than total sales volume, you are still on a fast track to business failure.

 

Why bookkeeping & accounting are important for eCommerce

Whether you’re selling products through Woocommerce or opencart you are going to need a good system in place to manage your finances. Here are some of the main benefits of building out solid bookkeeping processes from the get-go.  

Bookkeeping will help you build a financially stable and reliable business model.

Bookkeeping is the foundation of a strong, viable business. If you have a system for recording all transactions and expenses, you can get clear insights into how your business is operating at any time. You can get in front of any unpleasant surprises at the end of the month when it is time to pay your employees and contractors or the tax bill. 

Bookkeeping will help you forecast your business. 

Once you know your numbers, you can then create projections that predict your business’s future activity. This will enable you to plan better and work smarter. 

A good bookkeeping system will ensure the preparation of your tax returns.

Solid bookkeeping processes will save you a lot of time and headaches when it comes to filing your taxes each year. By maintaining your financial records, you will be able to act in accordance with federal and state tax laws and comply with all relevant sales tax regulations.

In addition, planning ahead also allows you to work with your accountant to help you save money on your taxes.If you wait until the last minute, you might not have time to do all of the tax planning to ensure you maximize your deductions. 

Solid bookkeeping will help you sell the business

Having a clean Profit & Loss Statement is critical if your goal is to eventually sell your eCommerce business.

 

5 reasons to use eCommerce accounting software

There are however several other reasons why you should use eCommerce accounting software.

1. Business finances overview

By using eCommerce accounting software that’s integrated with all your other systems, you’ll have a complete overview of your business’s finances in one place. This makes it easier for you to see whether your business is on track and to manage your finances without switching applications.

2. Cash flow management

Through its ability to make managing your business’s finances easier, eCommerce accounting software can simplify the process of cash flow management. This is simply because it shows you what you’re earning, what expenses you have, and how profitable your business is.

And when you properly manage your cash flow, you’ll be able to buy stock when you need to, invest in other tools to further simplify your processes and always have cash on hand for emergencies. In turn, this helps you to grow your business.

3. Analytics

Another reason to use eCommerce accounting software is that it gives you the ability to analyse your business’s data. And when you analyse this data, you’ll get deeper insights into your business processes, its performance, and where you’ll be able to improve.

For example, when you analyse your sales data, you’ll be able to see what products are selling well and what products or not. In this way, you’ll then be able to focus on those products that sell, and you’ll end up saving money because you won’t stock products that don’t sell well.

Moreover, by analysing your data, you’ll be able to keep track of key performance metrics like your total sales, customer profitability, cash flow, and others. This allows you to see how your business is growing and track your improvement over time which also allows you to implement measures and strategies to ensure further improvement.

4. Pricing

Simply put, in a competitive market, it’s vital that your pricing is competitive. In other words, your products should be priced to not only attract new customers but also retain existing ones.

The problem is that, as a business, you still have expenses. This means you can’t price your products too low, and you’ll have to develop a pricing strategy where you’re still competitive while still being able to make a profit.

eCommerce accounting software gives you this ability. It lets you see exactly how much you’re spending to buy stock and how much profit you make from every sale. According to these, you’ll then be able to determine the best price point to maximise profit while still offering value to your customers.

It goes further than this, though. When using eCommerce accounting software, you’ll also be able to determine where you can implement savings in your supply chain to maximise profit even further.

5. Data sharing

When you use an accountant for your eCommerce business, and you should, you’ll typically need to share data with them every month. This will enable them to do your business’s accounting effectively. The thing is, getting all your financial information together every month can be a cumbersome and time-consuming process.

Fortunately, eCommerce accounting software streamlines this process because it allows you to share all your financial data with your accountant effortlessly. It’s as simple as exporting your business’s financial data on-demand. This, in turn, saves you a lot of time which you could rather spend on growing your business.

 

 

WooCommerce is a popular open-source eCommerce platform, allowing you to turn your WordPress site into a full online store.  

WooCommerce’s flexibility makes it popular with smaller eCommerce merchants.  

However, it doesn’t automatically manage your business’s accounting needs. By linking WooCommerce with Xero will allow you to streamline your accounting and ensure you are up-to-date on your reports, inventory tracking, billing, and more.  

 

Xero is beautiful software that handles all of your business accounting functions from bank reconciliation and financial reporting to inventory tracking and payroll.

Xero for WooCommerce gives you the ability to set up automatic creation of invoices in Xero for ecommerce sales. After the module is installed and configured, each order placed in your WooCommerce store is securely sent to your Xero account to keep records up to date.

All product, shipping, discount, and tax data is sent to Xero. When payments are made, they are applied to the appropriate invoice to keep everything in balance.

   

Team Oasis recommends to integrate your e-commerce with an accounting software to scale your businesses.

Oasis Web Asia is able to provide XERO with Productivity Solutions Grant PSG package that defray up to 80% of your cost and our consultant will be able to help you to set up or migrate your ledger and journal over easily to the cloud.

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Oasis Web Asia is a Singapore-based web design and web development company.

We provide website design, website development, e-commerce solution, content management system (CMS) solution and hosting services for all businesses.