No matter what your business is—whether you run an e-commerce or a brick and mortar store, you know how significant good accounting and bookkeeping is for continuity. If you lack diligent oversight and deep knowledge of your financial data, you can’t possibly progress as a business.
As it happens, the majority of business owners don’t understand the primary differences between accounting and bookkeeping, and how they relate to the world of e-commerce
So, if you are running an ecommerce business, what knowledge should you have about your finances?
In this article, we’ll look at the key differences between ecommerce accounting and bookkeeping. We’ll deep dive into the primary responsibilities of accountants and bookkeepers. We’ll also understand how accounting software helps companies scale their business to new heights without necessarily increasing overhead costs on new resources or existing employees.
Ecommerce Bookkeeping: An Overview
Bookkeeping operations are key to the success of day-to-day tasks of any business. It typically includes taking daily records of financial information, storing them in a secure manner, and ensuring immediate access when needed. The majority of bookkeeping tasks today are carried out with the help of advanced cloud-based bookkeeping software which makes it significantly easier for bookkeepers to monitor and store copious amounts of data. Bookkeeping operations have plenty to do with daily business transactions which involve sales, expenses, purchases, receipt management, inventory tracking, and so on.
An e-commerce bookkeeping software is specifically designed to cater to retail and commerce-specific accounting activities—and ecommerce bookkeepers are expected to leverage new-age technologies to perform these functions. It automated inventory tracking, managing receipts, generating balance sheets and other advanced financial reports.
Ecommerce Accounting: An Overview
Even though e-commerce accounting is often used synonymously with ecommerce bookkeeping, it should not be confused to be one and the same.
Ecommerce accounting involves collecting, organizing, analyzing, and reporting finances in a manner that helps e-commerce businesses make smart and effective decisions. This includes details of business transactions, tracking assets, having immediate access to up-to-date records to generate actionable insights and so on. Ecommerce accountants do not merely record, store, retrieve, and report financial information. Instead, they also analyze, organize, and classify data so you can leverage it to make data-driven decisions.
Accounting with respect to e-commerce businesses is not unlike traditional retail accounting—barring a few aspects.
In practice, e-commerce accounting takes bookkeeping operations to the next level—and responsible accounting is paramount to the progress of any company.
The ability to efficiently track and manage inventory levels and thus, ensure cash flow is a primary responsibility of e-commerce accountants.
Ecommerce accountants, oftentimes, also are responsible for providing counsel and advice to business owners and help them steer their companies in the direction of long-term success. While ecommerce accountants have the ability to manage bookkeeping tasks, ecommerce bookkeepers can’t necessarily perform an accountant’s duties.
Why do you need an eCommerce accounting software?
To chart the long-term growth and scalability of your ecommerce business, you need customized accounting services that cater to your specific needs and niche. This is especially true for online businesses whose work hours don’t typically fall in the traditional business hours.
It usually requires online businesses to work 24/7—due to which you need uninterrupted access to inventory, bookkeeping records, cash flow, etc to help you perform day-to-day activities successfully. If you don’t use an eCommerce accounting software, you would need additional resources to stay on track and absorb increasing responsibilities.
Not to mention, to be able to analyze business transactional data, you need access to all your selling channels—in ONE system rather than as separate bank statements or credit card passbooks. An eCommerce accounting software like Dext allows you to track the transactions, sales, purchases, inventory of multiple online platforms—without requiring you to pay additional fees.
With a strong hold of your supply chain and corresponding processes, you have valuable intelligence to ensure smooth functioning of your business. This means it’s easier to track orders, returns, refunds or have a firm grasp of shipping, inventory levels, etc. The best part is you do not need to be physically present to get a handle on your merchandise in the warehouse.
For businesses seeking to streamline operations even further, NetSuite ERP Optimization can be the key to integrating all essential processes from financials and CRM to supply chain management and inventory.
Conclusion
It goes without saying that both bookkeeping and accounting are key to the long-term success of a business. Regardless of your company size, effective bookkeeping and accounting helps you scale and grow your business to new heights. Despite shouldering a different set of responsibilities, both bookkeepers and accountants play integral roles in helping business owners stay updated on their financial transactions, inventory, cash flow, and so on.
If you are an e-commerce business looking for a top ecommerce accounting software to help you perform your day-by-day accounting tasks effectively and efficiently, Dext can be of massive help. It includes cutting-edge tools and technologies to automate your accounting operations and establish a stronghold in the competitive e-commerce marketplace.
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