Have you ever wondered why it is so time-consuming to do your bookkeeping every month? If you’re like most business owners, you are still doing many bookkeeping related tasks manually.
It may seem easier to “just do things by hand” than to learn a new app. And who can blame you?
There is an overwhelming number of apps for running an ecommerce business. From ecommerce platforms to payment processors and shipping tools, the number of apps to keep your ecommerce store running keeps increasing.
While learning a new app may feel overwhelming, hand-entering data to keep track of sales and your inventory is not a sustainable solution, especially with the rise in ecommerce over the next few years.
Drawbacks of manual data entry
Besides being time-consuming (or expensive if you hired someone to do it for you), it is also error-prone. When you hand-enter your orders into QuickBooks or your ecommerce site, you risk entering the wrong information, and customers may get the wrong item, or get their shipments late. This leads to refunds, bad reviews, and low seller ratings, all of which adversely affect your business.
Hand-entering data into QuickBooks becomes especially risky for your business if you sell high-demand items or have low-inventory. As a good portion of your capital is tied up in your inventory, your finances will be heavily affected by how well you manage your inventory.
You want to prevent both over-stocking (which ties up your capital) and over-selling (which leads to refunds and unsatisfied customers). Ecommerce is 24/7 and data is typically entered during business hours. Therefore, unless you have someone manually entering data and updating your inventory for you around the clock, it will be impossible for you to keep up with getting sales into your books.
It is impossible to keep your books up-to-date if you are waiting for someone (or yourself) to enter your sales data into QuickBooks. How can you make financially informed decisions without the right data?
If your staff feels overwhelmed, how will you be able to decide whether you have the budget to hire someone? Or, if you want to start a marketing campaign, how will you know what budget to set aside if you don’t know how much money you are making?
It’s impossible to run a profitable, growing business without having financial data at your fingertips when you need it.
Staff Workload & Expansion
When someone from your staff is responsible for hand-entering data into QuickBooks, their workload will vary significantly based on your sales or the seasonality of your business. This will make it difficult for you and your staff to plan their short-term and long-term goals.
As a consequence, creating new business initiatives will be a challenge. For example, it will be challenging to expand your business through partnerships, marketing, and sales if you cannot predict your staff’s workload.
Sales Tax Compliance
Relying on hand-entering sales data compromises your business’ integrity, especially when it comes to sales tax. Without a system, it’s impossible to calculate and collect the right sales tax and have it documented in QuickBooks. As a consequence, you risk being audited and jeopardizing your whole business.
In summary, hand-entering sales data into QuickBooks can compromise your business in the following ways:
- Costly (time and money)
- Error-prone, leading to customer dissatisfaction and low seller ratings
- Delays in bookkeeping hinder you from making informed business decisions
- Unpredictability in your staff’s workload
- Difficulty planning new marketing and partnership initiatives
- Problems with sales tax compliance
Solutions to Automate Your Ecommerce Accounting
It is clear that hand-entering data is no longer a sustainable way to run an ecommerce business. Fortunately, there are automated tools to help you streamline your business operations and serve more customers.
If You Have Automated Solutions Do You Still Need a Bookkeeper?
An automated solution does not replace a bookkeeper. Rather, an automated solution simplifies your workflow and helps your bookkeeper do his or her job better. As many of the repetitive tasks will be eliminated, an automated solution also reduces the fees you need to pay to your bookkeeper.
For example, if your books are in disorder because you were relying heavily on hand-entering data, you will need to pay your bookkeeper to reorganize your books. On the other hand, if your books are in order year-round because most tasks are automated, then your bookkeeper and accountant will be able to do their jobs quickly and reduce the number of hours they bill you.
Managing and shipping orders can quickly become a logistical nightmare if you try to do it all manually. A tool like ShipStation can help automate many of the tasks related to shipping such as printing labels, calculating postage, fulfilling orders, and tracking shipments. ShipStation also integrates with the most common carriers such as FedEx, UPS, USPS, and DHL.
Managing inventory for your ecommerce store is complicated and ties up a significant portion of your capital. If you have too much inventory on-hand, your costs of managing and storing your inventory increase (and if there is a shelf-life, some of your inventory may spoil). If you have low-inventory, you risk over-selling which leads to refunds and customer dissatisfaction. A tool such as Ordoro helps you keep your inventory updated, and integrate it with sales channels and shipping solutions, to save you the time and costs of manually managing inventory for your growing business.
Sales Tax Compliance
Sales tax is levied differently in different states within the US. In some states, it is levied by city, county, and state. If you sell internationally, you have to comply with each country’s tax laws. With so much complexity, it’s impossible to correctly collect and map sales tax manually. A tool such as Avalara can help your business comply with sales taxes. Avalara integrates with most ecommerce platforms as well as QuickBooks and reduces your risk of being audited.
If you use QuickBooks Desktop, there are limitations to just having it installed on a local machine. There are a number of providers that will host QuickBooks for you on the cloud so that you can access QuickBooks remotely and automate accounting tasks through tools that integrate with QuickBooks Desktop. A provider that is both secure and authorized by Intuit is AceCloud Hosting.
Data Entry into QuickBooks
Many ecommerce business owners estimate that hand-entering sales data into QuickBooks takes 5-10 hours a week. When you look for an automated solution to enter data into QuickBooks, be sure that the provider 1) integrates with the ecommerce platforms you use, and 2) automates the tasks that are important for you.
Specifically, depending upon which version of QuickBooks you use (Online or Desktop), check out whether your provider supports your version. Do they also integrate with the platforms that you use, specifically your shipping solution, payment processor, and ecommerce platform where you sell your goods?
It can feel overwhelming to change your workflow and install automation to replace manual labor. However, the more automation you incorporate your business workflow, the easier it will be to serve more customers, scale your business, and generate new revenue streams.
Guest post By Dora Farkas
Dora Farkas, Ph.D., is Marketing Manager for Sync with Connex. Sync with Connex, founded in 2010, automatically syncs sales, inventory, customers, sales tax, and fees from eCommerce platforms with QuickBooks Online and QuickBooks Desktop.
With over 30 integrations and 100% US-based support, Sync with Connex has helped thousands of small business owners automate data entry into QuickBooks, grow their online sales, and expand to multi-channel sales.