Why eComm Companies Should Outsource Accounting

6 min read

E-commerce sales accounted for 18.9% of total retail sales in 2022, they've been on the rise in 2023, and e-commerce sales are estimated to reach 23% by 2027. As a result, e-commerce businesses are growing, too, and traditional brick-and-mortar companies are creating more and more online sales channels to meet the demand for online purchasing. Growing online sales can provide a major boost to the bottom line. Plus, e-commerce companies are poised for future success and growth, as the online retail market continues to expand.

However, selling online also creates a myriad of new challenges for SMBs such as cybersecurity and secure payment processing in addition to endless competition, visibility, user experience management, returns and refunds, shipping cost management, and order fulfillment. Additionally, e-commerce businesses face many new bookkeeping, accounting, and compliance challenges such as borderless sales tax management, invoicing, inventory tracking, data collection and analysis, financial management, sales channel timing, and a rapidly increasing volume of transactions.

With the increase in sales volume and so many new challenges piling up, e-commerce business owners often find themselves struggling to keep up with the nuts-and-bolts, daily management of their businesses. As a result, the bookkeeping, accounting, and finances usually fall behind, too.

Allowing the books to fall behind, however, can create a number of issues including compliance problems and the very immediate challenge of operating a business without actually knowing its concrete numbers (i.e. costs, revenue, and profit). As a result, it becomes increasingly difficult to make strategic leadership decisions to successfully run the business.

For small and medium-sized businesses entering the e-commerce landscape, seeking professional assistance with bookkeeping, accounting, and financial management is highly recommended, and outsourced accounting for e-commerce businesses is likely the most affordable and effective solution for all types of SMEs selling online.

7 Major Benefits of Outsourced E-commerce Accounting

1. Save Time and Money

Wrangling the records of a high-transaction-volume online business is a lot of work, to say the least. It's time-consuming, stressful, and challenging if you do not have the right data-collection systems in place. When c-commerce business owners attempt to manage these processes on their own, they can quickly become overwhelmed and wind up allowing the bookkeeping to get behind or lose focus on the core aspects of their companies.

Read More: Cost Analysis: Outsourcing vs. In-House Accounting for Your Business

Outsourced account management, outsourced invoicing, outsourced accounting system management, and more will ensure your records are kept complete, current, and compliant - no matter how high your transaction volume grows - while saving you time.

Additionally, outsourced accounting can save you money by providing high-ROI services at a fraction of the cost of hiring in-house bookkeeping and accounting professionals.

2. Streamline Software Integrations With Accounting Systems

Accounting software is a must for modern businesses - especially those with online operations and sales. Outsourced accounting professionals have the industry know-how and experience to help you establish a smoothly functioning accounting process and system.

For e-commerce companies, this requires the use of accounting software that easily and fully integrates with e-commerce platforms such as Shopify, Fishbowl, Square, Wix, Squarespace, BigCommerce, and others. Additionally, you'll want to take advantage of accounting software systems, such as Sage Intacct or QuickBooks, that provide additional integrations with business management applications designed to create comprehensive automation of data collection, reporting, and financial management.

3. Organize the Financial Chaos

Outsourced accounting services are designed to help e-commerce business owners organize the financial chaos that borderless, high-volume transactions can create. We use a variety of automation tools, combined with a highly experienced team to build secure, high-functioning systems that will keep your financial data organized and up to date.

With outsourced e-commerce accounting, your business will be able to keep good bookkeeping as a top priority through automation, sound and secure systems, routine account reconciliation, inventory tracking, cash flow monitoring, sales tax management, and more.

Read More: The Pros and Cons of Outsourced Accounting Services for Businesses

4. Avoid Compliance Stress

Compliance is a headache for businesses of all types. E-commerce businesses face additional compliance challenges as a result of selling in multiple states and/or countries, through various platforms, and with online sales. These compliance regulations occur in addition to those the business is already subject to as a result of conducting in-person transactions at brick-and-mortar locations or through traditional invoicing.

Outsourced accounting professionals are knowledgeable about e-commerce compliance and work with you to ensure that the necessary systems are in place for maintaining compliance with sales tax laws, reporting requirements, and any additional industry rules and regulations.

This ensures your e-commerce company is audit-ready at all times. Plus, in the event an audit does occur, you'll have experienced professionals available to help guide you through the audit process, eliminating stress and helping to prevent your business from losing money or suffering reputation damage as a result of unnecessary fees and compliance penalties.

4. Gain Business Insights

Good record-keeping and a consistent accounting system are essential to having a clear picture of your company's financial health and gaining invaluable business insights. With outsourced accounting, you'll always have a reliable and accurate understanding of your current cash balance, current expenses, true costs, revenue, and inventory. You can use these insights to evaluate profit margins, payment processing, pricing strategies, shipping processes, and your financial health to understand how well your business is performing.

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6. Improve Strategic Decision Making

With useful insights into your business's financial health, you can use your back office to evaluate and assess every aspect of your business and its operations. You'll be able to pinpoint problem areas, workflow bottlenecks, unnecessary expenses, and opportunities that can help you make strategic, data-driven decisions to improve your business and maximize profits. Plus, you'll have the necessary systems in place to track essential e-commerce metrics to assess the results of the changes you make, evaluate strategies, and make increasingly effective leadership decisions.

7. Attract Investors, Obtain Financing, and Grow Your Business

Thorough and accurate financial records are also necessary for growing your business through investors, bank financing, or other outside methods of cash infusion. With outsourced accounting, you'll have a complete, solid financial history and the necessary financial reports for communicating your business's success, health, and potential to investors and lenders.

How Outsourced Accounting Works for E-commerce Businesses

Working with an outsourced accounting service provider is simple for e-commerce businesses. Before beginning, it's a good idea to consider your current bookkeeping and accounting systems and the types or scope of services you require. For example, are looking to improve your bookkeeping and accounting system, establish a new system, improve your compliance, and have regular access to reliable financial reports? Would you also like assistance with reading and analyzing your reports in addition to developing financial strategies designed to support your overarching strategic vision for your company?

Once you understand the type of bookkeeping and accounting support you expect from your outsourced provider, we can better work with you to design a service package that will meet all of your needs while helping you manage and grow your e-commerce business.