In the recent decade, online businesses, mainly eCommerce businesses, have experienced enormous growth and change. More than that, the current COVID-19 pandemic has also pushed many traditional companies to online platforms. Whether you are selling through a website or social media platforms, you are part of the massive online business community. Unfortunately, while there is a significant emphasis on digital marketing, only a handful of people talk about financial management, which is the cornerstone of any business model. Since the flow of visitors and sales is enormous, it can be tedious to maintain accounts. However, you might not be able to evaluate and predict your business’ performance without assessing your accounts and cash flow.
If you are an online business owner struggling with your accounting, here are some of the best practices followed in the industry to keep you on the right track:
Connect Your Online Store with Your Accounting Software
First and foremost, this is probably the one practice that can revolutionize your business. You have hit gold if you have accounting software that can integrate with your online store. With this done, you will save time and effort and focus more on selling your products rather than manually entering them into another software or register. Such accounting software will record your data, such as the number of products sold, the price they were sold for, the cost of those products, and the overhead expenses, instantly giving you the ROI (return on investment). Again, it cannot be stressed enough how important it is for any online business, especially eCommerce, to connect its accounting software with its store.
Inventory Management with Overhead Expenses
Inventory management software is also crucial for your business’ success. Such tools only reduce your efforts and exhaustion, giving you time to focus more on the results. If you have inventory management software integrated within your accounting software connected with your online store, then that’s an online business owner’s dream come true. If not, that’s not an issue. You must get functional inventory management software that regularly updates your inventory and the cost of goods sold (COGS). You would also need to add the overhead expenses such as packaging, delivery, etc. With all this in one place, subtracting the cost from the revenue will be a piece of cake. Again, it will save you hours of manual work.
Account Reconciliation Management
One of the significant problems small to medium-sized businesses face is reconciling their accounts. Sure, it seems like a job for an expert accountant, but in reality, it is a manageable task for a business owner to take on as long as they stay on a schedule. When running an online business, you will face numerous decline transactions, doubling transactions, refunds, and chargebacks. Your software might record it as sales, but you would have to reconcile it manually if the transaction was refunded or declined. Do this regularly to get your analytics right. Without reconciling your cash at the bank vs. sales, you might overestimate your profit, which can have disastrous effects.
Jump on the Bandwagon – Go to Cloud Software!
Lastly, working with cloud software is one of the best ways to keep your data secure. Hackers are always on the hunt, and many businesses suffer data leakage, which leads to the loss of clients’ or clients’ financial information. With cloud software, your data is always secure on the cloud.
To conclude, if you are an online business, you have taken the first step towards joining the digital revolution. However, being ahead of your competition and adopting practices that will take your business to new heights is imperative. Managing your accounts seems boring. Most online business owners want to focus on sales and marketing. However, remember that the flow of money might be overwhelming if you don’t plan to deal with the accounting side of things.
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