E-Commerce Bookkeeping

Bookkeeping, simply put, is the act of recording the money that enters and exits the firm/business. Regarding bookkeeping and accounting, owning an e-commerce firm is similar to operating a traditional retail store. Accounting for an online retail firm entails concentrating on inventory and cash flow while relying on retail accounting software to fill in the gaps.

Bookkeeping is a necessary part of running an e-commerce firm. The company’s items will be available to a wide range of customers at all times. The store can reach a big audience and fulfill drop-ship orders while maintaining a modest physical footprint by using the internet.

While creating a website and a store are essential first steps, the store will fail to acquire momentum without financial preparation. To ensure the success of the e-commerce firm, the following are the bookkeeping areas that must be carefully managed.

Bookkeeping Management Focus Areas 

For business owners, e-commerce bookkeeping may be complicated, but the managers can choose the best solution for the organization after understanding how these difficulties might affect e-commerce bookkeeping.

Managing Alternate Payment Options

While most clients will pay using credit cards, the e-store may choose to accept alternative forms of payment. If this way has opted, the e-commerce platform should be able to track these sales. Checks, cash, and gift cards may be accepted in addition to credit cards. Taking other payment types may make bookkeeping more complex, yet it may make purchasing more straightforward for the clients. Payments made by cheque or cash, for example, will not appear in the records until the funds are deposited. It is crucial to maintain and manage these alternate payment lines.

Managing Fees

The e-business almost certainly has to pay merchant fees if they pick an e-commerce platform to host the online business. Using one of these platforms for the e-commerce firm may provide a variety of advantages, ranging from a speedy launch to easy search optimization. However, the platform will take a percentage of each sale in return for these benefits.

Deposits in the bank account are net sales rather than gross sales, making bookkeeping more difficult. To manage this, the business manager needs to note the gross sale in the e-commerce bookkeeping, then capture the difference between the gross and the net to document the merchant fees.

Tracking Inventory

Another issue with e-commerce bookkeeping is keeping track of inventories across platforms. Many e-commerce platforms include inventory monitoring built-in, making it easier to keep track of and manage the online stock. However, if the store sells the goods on numerous platforms, these sites will not track inventory changes from outside transactions. As a result, having a single location to keep track of inventories is critical. An outsourced bookkeeper may use the information to create an accurate record of sales, restocks, and returns in the store’s books.

Managing Third-Party Payments

The e-commerce store may employ third-party payment processing systems, making bookkeeping more difficult, especially when it comes to exchanges and refunds. Did the third-party e-commerce platform, for example, keep track of product returns? Or did the refund get recorded in the company’s accounting system?

Furthermore, even if a buyer returns an item, reclaiming the merchant charge the company paid is unlikely. As a result, the merchant charge becomes a loss, which must be accounted for in the company’s books.

Bottom Line

An e-commerce business, like any other business, needs proper financial and non-financial management to run smoothly and prosper exponentially. Bookkeeping, if broken down to more straightforward tasks of recording, compiling, segregating, and presenting, can lead to easy and value-adding financial books. These records then add towards better management and future growth of the e-commerce business.

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