Ecommerce has revolutionized the way that retailers and consumers do business. With only a few clicks, shoppers from around the globe are able to engage with online businesses and make purchases, providing online retailers with significant opportunity for abundant sales. However, the daily operations of maintaining an ecommerce business can be tedious and time-consuming, taking away valuable hours that can be better spent on growing the business. How can online retailers streamline daily operations, creating more time for business expansion?
There are many avenues that online businesses can take to help simplify the running of their company. Utilizing the right online inventory management software, order fulfillment, and considering dropshipping as a sales strategy are just a few ways online sellers can save time and money. These are fairly obvious methods that more and more retailers are employing. But there is one significant area of operations that is often overlooked: accounting.
Ecommerce businesses are subject to the same types of accounting needs as businesses that are run traditionally. Tracking, storing, analyzing, and reporting financial records is essential to the operations of every business.
One way to make it easier for ecommerce business owners to manage, is by using an enterprise resource planning (ERP) system for their accounting needs.
What is an ERP?
Enterprise resource planning systems are integrated platforms of software applications that help companies manage their businesses effectively. ERP systems cover a range of different functions that streamline business’ processes. For the purposes of this post, we will concentrate on ERP systems that are used for accounting and financial processes. ERPs are centrally managed and automated, and can greatly benefit ecommerce business’ accounting operations.
Benefits of Using an ERP System for Accounting
Typically, ecommerce retailers utilize a fairly comprehensive ecommerce platform for most of their daily operations, but they often perform bookkeeping and accounting on a separate system, or with an accountant or bookkeeper who are completely separated from daily operations. When you use an ERP system for accounting that is integrated with your ecommerce storefront, essential data is transmitted automatically, providing you with multiple benefits, five of which are listed below:
No Duplicate Data Entry – When using two separate systems for sales operations and accounting, you have to manually transfer data from one platform to the other. When you use an integrated ERP for accounting, the data is transmitted automatically, eliminating the need for manual data entry. An ERP makes it fast and consistent, allowing you to focus on growing your business instead of entering data.
Fewer Mistakes – There is always room for human error when are entering data manually – losing focus and transposing numbers or missing key entries can wreak havoc on your accounting. When your accounting data isn’t entered correctly, your analysis and reporting will be inaccurate. These inaccuracies can cost you financially; not to mention the tax implications you may suffer as a result. Using an ERP for accounting and eliminating manual data entry will result in fewer errors, giving you a much more accurate picture of your financial situation.
Comprehensive Financial Reports – While you are able to generate some financial reports with an ecommerce software solution, an ERP will provide access to many additional types of reporting that can benefit your business. This additional reporting gives you the transparency needed to make important business and financial decisions across your company.
Increased Automation – What is an ecommerce business without automation? With an ERP, many of your accounting and financial tasks are completely automated. It will simplify accounts receivable and accounts payable, reduce your overhead, and improve cash management and cash flow issues. You can easily track specific financial transactions – it is like having automated audit information available to you at all times.
Additionally, you are able to easily see the who, what, when, and where of every financial transaction, further enhancing the big picture analysis of your financial status.
Better Control of your Business – Overall, implementing an ERP system for your ecommerce accounting processes will provide you with more control of your business. It gives retailers better visibility into each process and the data to show what needs improvement. As an ecommerce retailer, you know that maintaining control over all aspects of the business is key to achieving success and staying competitive in the ecommerce industry.
Final Thoughts about Using an ERP System for Accounting
When utilizing an integrated ERP system for an ecommerce business, you will experience many benefits that streamline and automate most important financial and accounting processes. The customization capabilities will help you in the accounting areas needed – whether you are a one-person business, or you have a full accounting department. Having a real-time accounting system allows you to review financial history, plan for the financial future, and have the competitive edge in the ecommerce world.