Growing an eCommerce business isn’t easy. With a fierce and competitive business landscape, you need to ensure that all your moving parts are well-oiled and efficient. In other words, you need to ensure that all the processes are fast and efficient. This particularly applies to your accounting and finances since it manages the money that flows in and out. Handling bookkeeping processes manually leaves the process susceptible to inefficiencies and errors. Automating your business functions is the need of the hour.

In this article, we’ll discuss the various ways in which an automated eCommerce accounting software can help your business.

• Streamline End-of-Month Reconciliation

The tedious process of reconciling your books at the end of the month warrants the right financial practices and the right structure with the magic of automation. You can slash down all the manual work in reconciliations with automation by your side. All you have to do is get your books right and ensure that the bank balance matches the numbers on your accounting system. 

eCommerce accounting software ensures that you have all the data in and just have to make adjustments at the end of the month. An automated eCommerce software is connected to your channels properly. This ensures that all the data including revenue, sales taxes, expenses and fees, shipping and fulfillment costs, and purchasing is in tune.

• Monitor Profitability Closely

While profitability is somewhat related to cash flow, monitoring it separately is necessary to understand the performance of your eCommerce business better. Bottom line is, that your total income has to be ahead of your total expenses to build a sustainable business. Monitoring profitability constantly allows you to inform your business budget and make better decisions about expenses, discounts, price cuts, etc.

Since eCommerce sales channels don’t offer line-by-line details of purchasing transactions and spending, it’s hard for online retailers to have a grasp of their profitability. An automated eCommerce accounting software allows you to measure and analyze various profitability metrics and keeps you updated about the business’s profitability. You can also set up dashboards that will show those metrics using data visualization. 

• Simplified Inventory Management

With the constant flow of incoming vendor shipments and outgoing customer orders from multiple sales channels, managing your inventory can be a shot in the dark at times. Striking the balance between not having enough inventory and having so much that it sits stagnant in your warehouses is essential. Not to mention, you need to track fulfillment costs, i.e. picking and packing, shipping, and inevitable returns, at the same time.

Automating inventory management using eCommerce accounting software will allow you to make operations efficient and boost order fulfillment. This will hugely impact your revenue, cash flow, and profitability. Streamlined inventory management gives you better control and clarity over your eCommerce business, which has a lot of moving parts.

• Improved Cash Flow Visibility 

Understanding your cash flow as an eCommerce business owner is essential. It gives you a grasp on income and expenses. Understanding cash flow informs your budget about how much money you have to re-invest, hire additional staff, replenish stock, etc. 

Your bank statement is not enough to monitor cash flow. It still leaves out pending payouts, processing returns, and varying fees. You can attain this much-needed visibility with the help of automation and monitor incoming and outgoing money without any hassle.

• Automate Compliance and Sales Tax Liabilities

The sales tax landscape is growing more and more complex by the day. It warrants clear visibility of your revenue and the tax rates of each jurisdiction to be managed properly. This is where automation comes in. Your eCommerce accounting software connects your sale channels to your books and records all transactional data including tax rates. This will make tax time easier, faster, and much more efficient.

These were the five major ways in which an eCommerce accounting software helps your business. The power of automation bridges the gap between your channels and your books to give all the data you need at your fingertips. This gives you better visibility as well as control over your business.