What Systems Can I Use To Simplify My E-Commerce’s Business Processes As I Grow?admin
We have recently been given the opportunity to work with some growing E-Commerce businesses which has been a very interesting experience. Whilst Xero and QBO and some surrounding apps have done a great job of integrating various systems used in this sector, processes can still remain very complicated given all the various moving pieces and platforms in use. As the business grows, it can often find it difficult to cope with increasing volumes of data and associated workflows, keeping the accounting function efficient, and maximising the accuracy and insights to be gained from a business performance reporting perspective. As such, to have the opportunity to get into this area and solve these issues by tailoring our product and service offering was fantastic.
Whilst many accountants will differ in their opinion, the market leaders in the SME space for finance software are generally considered to be Xero and QBO. However, these also see the performance of their products suffer from a reporting perspective once certain transactional volumes are put through their systems (effectively creating a ‘transactional limit’ of sorts). Therefore, if a business is using Amazon Marketplace/EBAY/Etsy/their website/other sales platforms in addition to various payment providers such as Stripe, Paypal, Braintree, Apple Pay or Google Play, this can then create quite a few different sets of data and a huge number of transactions if these are delivered 1 by 1 into your accounting system whenever you make a sale.
These systems are all very established and therefore connect to each other quite well but you can also use connector’s such as Quaderno, A2X or Silver Siphon to send this data into your accounting system if integrations are not available between your selected products. If you are in the E-Commerce Space and using these platforms, you may be familiar with this but if you are not, I would heavily encourage you to look at these solutions if you are currently posting your transactions manually. If nothing else I would certainly look at Quaderno if you are making international sales as this has great functionality for ensuring your sales are treated correctly to be fully compliant with Tax regulations over a wide range of jurisdictions.
Whilst these systems are great and can ease some of the pain points noted above, they don’t actually solve the volume of data issue, which seems to be a problem for quite a number of growing E-Commerce businesses we speak with. It also does not tackle the reconciliation of the proposed sales to what is then paid to the business by the various payment providers minus any charges or the operational performance/product sales reporting that would be extremely useful to the Management team. As the bulk of the operational data is not relevant to an accounting system a huge amount of data can be lost when this data is transferred into the accounts software, which means businesses often end up piecing this together in Excel later for analysis, which is not very timely or efficient.
All of this and the fact that these businesses can grow extremely quickly means that you can quite easily find yourself in a tight spot – unpicking everything can be very challenging, especially whilst the wheels continue to spin, and you then find you are already behind on your workflow.
As such, we usually come in to provide a more efficient and workable solution which can scale up with the business going forward. In this instance, the clients were using a combination of systems including Shopify, Paypal, Stripe and then merging this data into Quaderno. Therefore, we built an integration from Quaderno to pull all the sales data and payment provider information into a system called Ezora on a real-time basis.
Ezora is a system that handles 2 specific functions, which are analytics/reporting and accounting automation. Therefore, once we were able to integrate Quaderno into Ezora we were able to aggregate the sales into daily totals and post these into Xero automatically each day. This reduced the transactional count significantly in Xero and extended the life of the preferred accounts package, potentially indefinitely. At the same time, we were also collecting information from Paypal and Stripe which are also integrated into Quaderno to identify which payment provider was used on each sale so we had an anticipated receipt balance which we could then reconcile to the receipts that arrived in Xero from these providers. That way we could track and resolve any anomalies immediately on a daily basis as part of a three-way reconciliation, split by each system.
As the data is also being pulled from Quaderno and Xero (which is also integrated into Ezora) at the most granular level, we could also prepare a whole range of detailed reports for the business. This includes all financial statements plus product sales performance by demographic and region so the business can truly see how it is performing in real-time. As a small part, we also received reports from the stock provider by email which we were able to pull in and automatically post the stock adjustment as these arrive periodically.
All of this meant we were able to save the finance team a huge amount of time which they originally spent preparing data to now looking so they could focus instead on analysing and fixing any issues. Large amounts of the accounts are now working autonomously, and the business owner has all the information he needs to understand how the business is performing in real-time. Previously they had no insight into this and accounts were being delivered weeks after a period end date. Various spreadsheets used in the business to monitor operational performance and also monitor product fulfilment requirements have also been replaced as all the reporting needs are contained within Ezora.
We are really happy with the solution we created and really hope we can help some other E-Commerce businesses with this issue so they can continue on their path of growth whilst the finances just keep ticking over and the finance team can focus on analysing the financial data rather than fighting against a tangled web of data and reconciliations.
If you would like to know more about this solution please do not hesitate to get in contact with me or any of the team at www.4pointzero.co.uk