When e-commerce was a platform that helped brick-and-mortar vendors to expand, online retail was a simpler landscape. A solopreneur or retailer had an ‘extra’ option to expand their business through online sales.
Today, the reality is different. E-commerce is now a necessity rather than an option.
In the last year, the retail sales of e-commerce reached USD 3.53 trillion. A range of experts even predicted the further growth of this industry in the near future.
The ease of carrying out retail through e-commerce offers a range of options. The opportunities are limitless – you can sell and ship to different locations and practically work from a small warehouse. This is why e-commerce is an attractive retail option for many.
Using the right accounting software is the key to profitable flexible functioning. However, it is not uncommon for e-commerce retailers to face challenges related to poor inventory management, lack of analysis, and poor cash flow. Overcoming these challenges is possible with QuickBooks accounting software.
Let’s see how.
Why Should You Use QuickBooks for E-commerce Accounting?
QuickBooks provides features for various e-commerce accounting workflows. Here’s how these integrated solutions can streamline your financial planning.
1. Inventory Management
Before we discuss how QuickBooks help in inventory management, let’s see how inventory management of e-commerce retail work:
In any organization, inventory management includes two sections:
- Sell inventory
- Purchase inventory
Once an e-commerce organization purchases the inventory, this purchase is recorded in the asset account of inventory. This purchase stays in this account till the time this inventory is sold.
When the e-commerce retailer sells this inventory, it is reflected in the asset account as cost. This means that this transaction is recorded in the income statement.
Now, it is obvious that inventory includes two measuring factors: selling price and units of the purchased items. This is also the reason why the user should not add entries to the asset account directly. If you do so, the differences will permanently reflect in the account.
Although the task might seem easy, inventory management is crucial to the organization’s growth. For this reason, QuickBooks has innate capabilities of making inventory management easier and hassle-free.
QuickBooks helps in managing multi-facet sales of the organization. When you have to ensure efficient inventory count and mitigate risks (like the ones discussed above), QuickBooks is your tool.
Simply put, the QuickBooks software enables easy inventory management through seamless recording of sale and purchase transactions. You can create sales orders, sales receipts, invoices, and track these transactions end-to-end.
2. Product and Sales Analysis
When you are in online retail, you have to set up multiple sales channels. From the sales perspective, this step is given unparalleled importance. However, your accounting and reporting suffer.
This is until you decide to buy QuickBooks. It means that you need to collect data gathered from disoriented sales channels and push it to your QuickBooks software. This is true even when your distinct sales channels offer good reporting and analysis.
Using disoriented analysis and reports from different channels can become an incompetent strategy. Every channel is disconnected, hence, the reports are also not collective.
When generated through QuickBooks, you can receive a consolidated, advanced report of your product and sales. Here QuickBooks’ ability to hold large amounts of data and handle big lists proves to be a blessing in disguise.
Based on the above discussion, we can draw out two significant factors:
- Selling on more than one channel is unavoidable.
- Having one reporting and analysis software is also inevitable.
This means that both the factors are extremely valuable to analyze the performance across every sales touchpoint – something, which you can receive through QuickBooks.
3. Cash Flow Analytics
Cash flow analysis is a critical and requisite touchpoint of e-commerce retail. In fact, you need to always closely track cash flow to understand the inventory turnover, by product and in total.
Why is this important?
Simply because you need to have proper cash flow, always!
Think about this: a supplier has overstocked Item A, which you sell more. If this supplier decides to loosen the inventory at a considerable rate, wouldn’t you want to grab this opportunity?
But, how would you do it without proper cash flow?
For this reason, cash flow analytics offered by QuickBooks is valuable. You can even integrate third-party tools to enhance the reporting capability of your QuickBooks.
You can check any item’s individual turnover and evaluate financial reports to understand the cash flow of the organization.
4. Multiple Payment Methods
In offline retail, your basic payment methods might seem enough. For instance, if you allow your users to pay via cash, card, and bank account, you already have more than enough payment options.
However, the situation is not similar when talking about e-commerce retail. In online sales, multiple other payment options come into play. For example, Paypal, Stripe, etc. You have to have these payment options.
Fortunately, QuickBooks integrates with these payment options. Not only you can offer more than one payment choice to your users but it also allows them to pay in a different currency. QuickBooks supports both of the crucial factors, and fortunately, it implements both without any delays in accounting.
5. Anytime, Anywhere
If you host your QuickBooks Desktop software on cloud of a third-party provider, one of the major benefits is online access, or remote access. You can access your data from anywhere, at any time.
Why this holds significance here?
When an e-commerce retailer needs to manage global shipping and local inventory, the situation is complicated – extremely complicated.
However, with QuickBooks, users can update shipping status in real-time, which can be tracked by team members, regardless of their location. Additionally, QuickBooks has provision for user permissions that ensure data and information security of the users.
Considering the work pattern, critical impacting factors, and crucial functioning of the e-commerce sector, the implementation of accounting software is almost inevitable.
No e-commerce provider can survive without utilizing a robust tool. As discussed above, QuickBooks is an amazing tool for the accounting needs of an organization.
In all, the benefits, features, and user-friendly working offered by QuickBooks are incomparable.