Accounting Alternatives for E-commerce Sellers
Actionable alternatives and work advancements on onlinestore accounting
By operatinga online store, you have to juggle orders, inventory, payments, fees and taxes across numerous sales channels. Standard recording of transactions, for alot of sellers, seems removed from how digital commerce actually works. This post explains why your ecommerce business shouldconsider an alternative accounting method -- one that is order-level, automatically reconciles orders and inventory-aware.
Why traditionalaccounting often fails for e‑sellers
Traditional workflows for bookkeeping are built out around invoices and bank statements, singlepayments etcetc~. Ecom adds another layer of complexity thanks to split payments, marketplace fees, shipping refunds, multi-currency sales andhigh-volume SKUs. Ifyour accounting process is set up to book sales as one-line entries, you miss the margins, fees and cost of goods sold associations with each order. This rendersprofit analysis useless and monthly closes excruciating.
Key elements to consider in anecommerce accounting solution
To go beyond basic bookkeeping, focus on solutionsand processes that enable:
- Order level accounting: booking of revenue, discounts, shipping taxes and fees perorder for true profitability of every order.
- Automated bank and payment reconciliation: Batches and daily settlementscan be automatically matched to orders for less manual matching.
- Inventory management and COGS management: map the movement ofyour inventory to cost layers so that you can claim what correctly is COGS.
- Multi-channel collection: aggregate sales from marketplaces, social channelsand your site into single ledger.
- Salestax reporting & jurisdiction mapping: track the amount of collected tax by location to make filing easier.
- Expense & Fee Categorization: automatically categorize marketplace fees, shipping fees and Advertising from Gross Sales.
Building book keeping workflows for an e-commercesite
A LOE for your ecommerce bookkeeping process LOEs don’t have to be longand tedious documents. Instead, they can also be flow charts or even one-liners. Thebasic workflow for a month might consist of:
Day-to-day consumption: daily import of sales, settlement, refund andfee data for all channels.
Automatic matching– Automatically match settlements and deposit payments to sales batches with exceptions flagged.
Inventory updates: post COGS entries when a shipment takes place andadjust inventory for returns.
Fee allocation: separate marketplace and payment fees from grossrevenue to expense accounts.
Month-end checklist: Check bank balance, check for salestax liabilities, review inventory value and check held refunds.
Specific real examples of typical e-commerce issues andcorresponding resolutions
Split settlements: If you have a marketplace that pays out 1 deposit for multiple orders, match the deposit to thebatch and not to each order separately. Keep a mapping of orders to settlements to correctly recognizerevenue.
Shipping discounts and promotions: Apply shipping incentives or credits to an order so margins by SKU are alwaysaccurate. If a promo applies tosome quantity of SKUs then spread the value across total qty/order amount.
Refunds/Returns – Treat refunds asnegatives in the order events that chargeback revenue and replenish inventory. Keep track of restocking fees andreturned shipping expenses on a line by line basis.
Multicurrency sales: register the originaltransaction currency and the settlement currency. Clear the forex differences to a special account for FXgain/loss on close.
Selecting the right Features for your stage ofbusiness
Those early-stage sellers, I think, they might care more about simple setup and automated bank reconciliation to savethem time from manual work. As your sales volume increases, concentrate on inventory accuracy, batch reconciliation andmore in-depth profit reporting by SKU or type of product. The largest sellers benefit from scalable workflowsincluding multi-warehouse stock and advanced tax jurisdiction mapping.
Migration checklist: Moving from a basic bookkeepingto e-commerce aware process
Auditexisting data: understand the manner in which historical sales, fees, refunds and inventory movements were recorded.
Map old accounts to new structure: So we have nice, clean ledgers for gross sales, discounts, shipping income; marketplace fees and payment fees andcost-of-goods-sold.
Backfill as necessary: choose how many days back to import historical order level datafor precise YTD reporting.
Test reconciliation: Conceive a parallel of one month of reconciliation process to testmatching and adjustment.
Training your team: Document your routine processes, such as batching, refund handling andinventory adjustments so everyone has a repeatable approach.
Reporting that drives decisions
Don't just hand-wave about revenue and large expensecategories. Build reports that show:
- Order-level profitability: revenue minus discounts, shipping,fees and COGS per order or SKU.
- Saleschannel performance: margin by sales channels net of fees and returns.
- Inventory aging and stock-to-salesratios: discover slow-moving SKUs and stocking risks.
- Sales tax debt by jurisdiction: pre-filereport of taxes collected and owed.
- Practical ways to minimizebookkeeping friction
- Automate the data input process as much as possible so vehicles do nothave to be rekeyed orders.
- Streamline matching and reporting by utilizingconsistent naming and SKU conventions.
- Reconcile often, or daily/weekly in order to uproot the bigger issues before month end.
- Set up a standard list of journal entries for repeatingthings like monthly charges or subscription fees.
Conclusion
An ecommerce accounting solution isn’t so much a product as it’s a way of thinking: focus on order-level visibility, automate reconciliation and ensure inventory movement is in linewith financial transactions. With a system designed to accommodate the way online sales really work, sellers can speed up monthly closes, trusttheir profit numbers and confidently manage inventory and pricing. Begin by targeting your pain points and standardizing your order data, adding automated matching rules to provide you immediate enhancements toonline store bookkeeping and financial visibility.