Partner Article

Accounting for your online sales ? the benefits

Accounting is for Accountants???
Literally, every working day I spend at Tradebox I will speak to one or more online retailer who will use the phrase, “I’m not an accountant, I’m a business owner”, or, “accounting is for accountants“. In the 6 years Tradebox has been available in the UK market, I have personally spoken to thousands of online retailers and, I’m pretty sure, encountered most scenarios, objections, issues, requirements and concerns about taking up an accounts package. There are definitely some recurring themes! This phrase generally leads into a detailed discussion on the benefits of using an accounting package and keeping up to date accounts.

The purpose of this piece is to share the main recurring points raised in these discussions and (hopefully) provide some insight into the benefits that are available in using an accounting package and keeping up to date accounts. Our experience is with Sage but I’m pretty sure the advice would applicable regardless of the accounts package used.

Stephen
Tradebox

Up to Date Accounts
As a business owner one of the greatest advantages of having up to date accounts is the ability to have instant access to the health of your business; historically, currently and forecasting into the future. It provides a window through which you can view the profitability of your business at any given time. You could leave this function to your accountant who will be able to tell you how your business performed months after the fact. However, if you do take up an accounts package, and keep the entries current, you will have instant access to this information upon demand which will allow you to make ‘real time’ informed decisions. Other features will include possibly stock control, purchasing, debtors, creditors, bank reconciliation, VAT liability etc.

Adopting an accounts package isn’t just about accounting for your online sales. It becomes a programme central to your business where every penny that comes in and out of your bank(s) is identified, categorised, entered and reconciled in your accounts package. However, the absolute mainbenefit of running your own accounts is that it places you in control of your business and allows youimmediate access to crucial information upon which you can make informed decisions about yourcompany. Why remove this benefit by handing your accounting over to an accountant?
Don’t get me wrong a good accountant is worth their weight in gold, especially when it comes to your year end and providing good financial advice and guidance to benefit your business. However, if you are paying an accountant to be your bookkeeper and enter data then you are missing a trick.

Accounting is really hard work and I can’t get my head around it!!
Initially, yes it is. There is a whole level of jargon that initially seems alien. Many retailers I’ve spoken to are horrified at the thought of getting to grips with accounting. I had a similar reaction when I first started to learn to use an accounts package. It was almost as if something inside was putting up a strong resistance against getting to grips with accounting The thought of accounting almost has a Kryptonite effect on many business owners; it makes them go weak. Looking back I know this was an unwarranted concern and that the benefits of having access to detailed up to date management information, is invaluable to the business.

However, I still don’t enjoy doing the data entry. It’s monotonous, repetitive and open to mistakes which can take ages to track down and rectify. Online retailers have the added complexity of dealing with high volumes of sales, which if accounted for individually takes a lot of time and resource. If the data entry is not carried out regularly, then the task load builds and builds, quickly becoming a mountain. Many retailers simplify this task by doing summary entries. As simple and attractive as this is to do, I would definitely advise against it. Summary entries may be the path of least resistance but provide very little management information to the end user. They also remove the ability to have a transparent and detailed record of each individual sale. I have found that doing the data entry on a daily basis reduces the burden and provides a constant up to date position. If the volume of entries is prohibitive, then look at automation (I would definitely recommend Tradebox Finance Manager for this!!!J)

Logistics
From the many discussions we have had with our customers it’s clear that accounting comes towards the end of most retailers’ ‘pyramid of needs’. The logistics of listing, selling, managing orders, shipping and managing stock is usually the day to day main concern of most retailers. However, many of these logistical needs can be carried out by an accounts package.

My only area of expertise is with Sage Instant and Sage 50 Accounts, but I’m sure a lot of the features Sage has are also available in other packages. The added benefit of using an accounts package as part of your logistics is that every entry you make contributes to the financial picture of your business. Stock is a great example. In the majority of Sage Accounts packages you can create a product record and carry a stock level against it. Depending on the package you choose you can also record other data against the product record such as the supplier, tax code, location, bar code, sales price, cost price, image, re-order levels, free stock levels, stock on order level, as well as an array of reporting codes against which purchase and sales values can be reported.

This array of data is useful for logistics because it provides the ability to:

• See quantities available in stock
• Be alerted when stock is running low
• Order new stock and book it in when delivered
• Create packaged products from components of other products
• Create picking and packing lists
• Analyse product sales performance
• Analyse product profitability
• Create stock invoices
• Create purchase orders
• Create dispatch notes
• Discriminate between VAT and non VAT goods

Running stock in Sage provides the additional benefits of

• Automatically calculating the sales VAT every time you raise a product invoice
• Automatically calculating the purchase VAT every time you place an order
• Recording the cost price every time you book stock in
• Creating a permanent and transparent record for each sale
• Creating a permanent and transparent record for each purchase
• Having a list of customers and sales
• Having a list of suppliers and purchases
• Seeing who owes you money
• Seeing who you owe money to

Undoubtedly, there are better order and stock management systems designed specifically for online retailers and if these are used then there is still a compelling case to use an accounts package to create non stock invoices (service invoices) and achieve transparent financial records. However, if you embrace the argument that running your accounts in house is a benefit to your business then there are tools within an accounts package that can be utilised to also address your logistics, as well providing you with a financial picture of your business upon which informed decisions can be made.

Where does Tradebox fit in?

[Tradebox Finance Manager](http://tradebox.uk.com/products/finance-manager/? rel=? target=) was designed specifically for UK online retailers to rapidly import completed sales from online marketplaces and create individual stock or non stock invoices in Sage Accounts in the fraction of the time it takes to do manually. The software is a desktop application that provides retailers all of the benefits of creating the individual entries in Sage (as opposed to summary entries) without the headache of having to do this manually. In essence it’s an automated bookkeeper!!
Tradebox currently natively integrates with the following marketplaces and off the shelf ecommerce platforms:

• Amazon
• eBay
• Play
• Magento
• Linnworks
• ChannelAdvisor
• Big Commerce
• Zencart
• EKM Powershop
• Powa
• Shopify
• Romancart
• Shopcreator
• Liquidshop
• Aimco
• Any ecommerce platform capable of generating a compatible CSV file of sales data

Over the last 6 years the Tradebox team have consulted with thousands of UK online retailers, advising on their accounting needs. Tradebox is an accredited Sage Developer and Sage Business Partner. The Tradebox Finance Manager software is a Sage Certified Solution.

http://www.youtube.com/watch?v=y-16V8f63Kw&hd=1

This was posted in Bdaily's Members' News section by Stephen Bales .