Why Your eCommerce Business Needs Accounting Software

Financial data becomes more complex as your business grows.

Managing eCommerce business accounts using spreadsheets becomes complex, time demanding, and prone to error. As a business expands, it necessitates the use of a scalable accounting system.

Therefore, companies must look beyond spreadsheet accounting to respond to complex financial data. Accounting software is the solution

Accounting software equips with a variety of functions designed to help you run your eCommerce business more efficiently.

Additionally, it assists with customer management, bank reconciliation, and the generation of informative financial reports that aid in your business’s smooth and continual growth.

Impact of accounting software on Ecommerce Business

Billing and invoicing

Invoicing and billing are critical business functions that are essential to the cashflows of your business. 

However, managing to invoice on paper is time-consuming, tedious, and prone to error.

When you have recurring orders, creating physical invoices each time a client purchases from you is impractical. 

Without automated tools, it’s also impossible to track invoices and remind customers about past-due payments.

Accounting software efficiently addresses these concerns and includes features that make invoicing simple. 

You can build recurring customer profiles and schedule bills to be delivered automatically each time an order place. 

Additionally, you can include payment terms and conditions on your invoices to inform your customers about payment.

Accounting software enables you to automate the reminders for payments. 

You can schedule reminders for invoice due dates or anticipated payment dates, and the program will automatically send them to your customers. 

With an accounting app, you can keep track of all unpaid invoices, remind customers to pay on time, and avoid accidental payment missed.

Online payments

After invoicing your clients, the following step is to collect payment. 

Collecting payments might be daunting if clients not provided with an appropriate method of payment.

You can combine your accounting system with various online payment channels that enable clients to pay you quickly and securely. 

Payment gateways keep track of the payments you receive and automatically update them in your accounting system under the related invoice.

Additionally, they accept various payment options, including credit and debit cards and online bank transfers.

With clients located worldwide, your firm must prepare to deal in a variety of currencies.

Online payment gateways integrated with your accounting program can support multiple currencies, allowing you to take payments in the currency of your clients while maintaining your accounting on your own. 

This eliminates inconsistencies and additional calculations associated with foreign transactions.

Bank reconciliation

Bank reconciliation is a critical accounting function for any organization, and accounting software automates the process. 

By instantly connecting your bank account to your accounting software, you can immediately import statements from bank feeds into your accounts.

In addition, custom criteria and bank rules can be configured in your accounting software to automatically categorize and match incoming bank transactions. 

Once your transactions compared, all required to reconcile your accounts is to validate and confirm them.

As a result, accounting software simplifies bank reconciliation, ensuring that your organization is audit-ready throughout the year.

Expense tracking

Keeping track of expenses is essential for ensuring control of your cash flow. 

Accounting software enables you to track and categorize your expenses, providing you with a clear picture of where your money is going.

Additionally, you can utilize accounting software to upload expense receipts, scan them, and automatically enter information from the scanned receipts. 

This eliminates the necessity to store paper receipts and the associated risk of loss.

Finally, accounting software streamlines the process of billing customers for expenses incurred on their behalf.

Project Management

Robust accounting software should have a timesheets module that enables you to bill customers for the time spent on a project. 

Timesheets assist you in managing your projects, from budgeting to time tracking and billing clients.

By tracking time spent on tasks with accounting software, you may avoid over-or under-billing your customers. 

You can even have your clients confirm your time entries before billing them to ensure that everyone is on the same page. 

After a project completed, timesheets enable you to compare the actual hours spent to the budgeted hours, allowing you to plan more precisely the following time.

Tax compliance

Innovative accounting software designed to comply with local tax requirements and to make tax preparation easier. 

When dealing with different tax rates, accounting software can help you calculate taxes more quickly and accurately. 

Additionally, it can help you comprehend your taxes by providing tax summary reports that will assist you in remaining organized and prepared for tax season.

Inventory management

Inventory management is essential to your business’s success. 

A well-managed inventory is necessary for maintaining adequate supply and providing superior customer service.

It entails entering data about items, tracking them, accounting for them, and providing reports. 

Accounting software aids in the entry of Stock Keeping Unit (SKU) codes, the addition of item images, the creation of bundles, and the tracking of serial or batch number-based item movement. 

When you receive a purchase order, you may use your accounting program to create a sales order, convert it to an invoice following approval, and attach the applicable taxes. 

You can monitor stock levels and reorder points for your products to receive automated emails and place timely purchases to avoid running out of stock.

 Additionally, you can generate inventory-specific reports to understand your inventory better and manage it more efficiently.

Report generation

As a business owner, you must monitor your company’s growth and make the necessary adjustments to ensure its continued health. 

Accounting reports assist you in analyzing financial trends and growth patterns in your business.

However, creating reports with spreadsheets is time-consuming, as you must aggregate data and manually insert formulas for each report. 

Accounting software automatically generates reports, saving you time and effort.

A business must be familiar with three critical financial statements: the cash flow statement, the profit and loss statement, and the balance sheet.

Accounting software includes tools for analyzing cash flow and assisting firms in staying on top of it.

For example, you can generate profit and loss statements and balance sheet reports to assist you in comprehending the critical financial aspects of your organization, drawing inferences, and making sound business decisions.

Apart from the three critical financial statements, an accounting system aggregates data on other critical areas of your organization, such as sales, purchases, taxes, inventory, and projects.

 All of this data enables you to generate immediate reports, make swift decisions, and ensure the health of your organization.

Conclusion

Maintaining accurate and up to date financial records is essential for business growth.

However, proper accounting requires a system that overcomes the disadvantages of standard spreadsheets. 

Your invoices and payments are among the most critical cogs in the wheel, and accounting software enables efficient management where spreadsheets fail. 

Managing spending receipts is a breeze with an accounting app, as it reduces paperwork and protects data from loss or damage due to missing or damaged documents. 

Additionally, spreadsheets fall short when charging for hours—they cannot efficiently track time spent on project work.

 Accounting software addresses this issue by maintaining timesheets that follow hours worked and converted approved time entries to bills—additionally, an accounting application aids in inventory management, bank reconciliation, and tax compliance. 

An accounting system enables you to create automated reports, draw conclusions from the data contained in the reports, and drive your organization forward. 

Accounting is a necessary component of your business at every stage, and competent accounting software assists you at each stage