Accounting Tips for Ecommerce Businesses
Accounting is an important component of any successful business. However, when it comes to accounting, eCommerce businesses don't use the same terms and procedures as traditional retail businesses.
eCommerce Sales Process
eCommerce businesses follow a standard procedure for acquiring, selling, and distributing goods. The steps in this procedure are as follows:
Purchase of Wholesale Goods - Most eCommerce businesses begin their sales process by purchasing goods from various suppliers on a regular basis. Typically, you will pay for these goods when they are purchased upon delivery or shortly after delivery. However, in some cases, you may pay for your goods after receiving an invoice from the supplier.
Customers Place Orders - Customers can place orders for the various products you offer online. In most cases, orders are made using a shopping cart application. This application is connected to your inventory so that a customer can be sure that products are in stock when they place an order.
Customers Check Out - Once a customer finalizes their order, they fill out an online form to confirm their information. In some cases, you may even receive payment at this time.
Orders Are Fulfilled - After an order is complete, the fulfillment process begins. The customer's order is packaged and prepared for shipment. At this time, you may use SMS text marketing to inform your customer that their order is ready to ship.
Orders Are Shipped - Once an order is packaged, it will be shipped to the consumer. If you haven't already collected funds from the consumer, you will process their payment before authorizing shipment. You will also pay the shipping company at this time.
During each of these steps, you will perform specific accounting procedures to keep track of your expenses, income, and tax liabilities. To execute these procedures properly, you will also need to understand a variety of accounting terms. Some of the terms used most frequently include:
Shopping Cart - A software program that keeps track of consumers' intended purchases and interacts with inventory.
Invoice - A record of a sale or transaction.
B2C - Transactions occurring between a business and a consumer.
B2B - Transactions occurring between two businesses.
Purchase Orders - Orders placed with a supplier for materials or inventory.
Sales Orders - Orders placed by consumers with your business.
The Cost Of Goods Sold - The expense your company incurs to produce a product or provide a service. It may include the cost of materials, manufacturing, distribution, or any other related expense.
Payment Gateway - A program that acts as an intermediary between the customer and the business for the purpose of collecting payment.
All of the steps and terms involved in the accounting process can be complicated and confusing, especially if you are new to eCommerce. In addition, if accounting is not completed properly, you may face financial issues and tax problems. As a result, many people choose to outsource their accounting needs to an experienced business.
Symmetry 50 makes bookkeeping for eCommerce companies an easy process. Everything is handled in the cloud so you can run your business from anywhere.
Ken Rhie is the CEO of Trumpia, a complete SMS software with SMS messaging, smart targeting and automation.