ecommerce & accounting - amazon web services€¦ · ecommerce business types •types •brand...
TRANSCRIPT
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Ecommerce & Accounting
Scott Scharf
@catchingclouds
We Speak Ecommerce
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Agenda
•Ecommerce Businesses
•Ecommerce Overview
•Ecommerce Accounting
•Ecommerce Technology
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Ecommerce Businesses Lots of variety
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Ecommerce Business Types
•Types • Brand
• Wholesale
• Retail arbitrage
•Channels • Single vs. multiple channels
• Marketplace or shopping carts
• B2C, B2B, or both
• Retail, popup stores
•Fulfillment • Self-fulfilled
• 3PL warehouse
• Amazon FBA
• Drop shipping
• US only
• US expanding internationally
• International expanding into the US
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Ecommerce Overview The wild world of ecommerce
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Marketplaces
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Shopping Carts
And many more…
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Merchant Basics How ecommerce businesses collect money
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Ecommerce Merchant Basics
• Amazon provides the merchant services for sellers (pro) • All payments managed by Amazon (with lots and lots of fees)
• Main payment methods • Direct merchant relationship (usually Authorize.net) • PayPal • Shopify Payments (powered by Stripe) • Stripe • Square • Amazon Payments
• Deposits are batched daily • Mastercard, Visa, Discover in a deposit • American Express in another deposit
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Ecommerce Accounting What is ecommerce accounting…..
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Ecommerce Accounting Tasks
• Accounting Basics
• Recording Income
• Recording Inventory and COGS
• Reporting
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Recording Income • Recommendation – Summarize as much data as possible
• Daily deposits per channel per payment type • DO NOT try to push in every transaction and apply each payment
• B2B/B2C/Direct ecommerce invoices
• Sales, Shipping income, Returns, Discounts, Sales Tax
• Full details in the accounting system, apply payments
• Managing clearing accounts & channel / merchant fees
• Recording sales for each channel by Tracking Category/Class
• Managing integrations and data pushed into accounting platform
• Watch out for too much data, wrong data, random manual journals
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Inventory Value
• Inventory Count, Value for each warehouse • Amazon FBA
• In transit inventory • Track returns, demos, samples, disposals • Automated vs. manual calculation
• NOTE – Check the inventory on the last day of the month at “midnight”, most systems don’t store a historical amount
• NOTE – Make sure there is a cost for every item
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Cost of Goods Sold • COGS
• Get access to every order
• Have a cost for every item
• Watch out for returns, voided orders, etc.
• Dates & statuses – Ship date (is it up to date?) • Have clients update all order statuses at the end of the month
• Recommendation • Don’t try to do COGS per order posting to the accounting system. If there are
any missing costs then COGS is wrong, if there are any issues, then COGS is wrong.
• Complete weekly or monthly
• Do trust the cloud inventory solutions (sorry)
• None of the cloud inventory solutions have a month end summary / reconciliation process for COGS. Yes, you can get month end moves/adds/changes for some systems.
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Reporting
• Financials – • Profit & Loss Statement, Balance Sheet, by channel • Expenses overview • Gross/Net Margin per channel
• Cash Flow Projection
• Ecommerce analytics – cloud inventory • Profitability by SKU
• Sales velocity
• Meet and review financials with client regularly
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Ecommerce Accounting Workflow
• Daily • Manage bills, PO • Address client questions • Accounting basics
• Weekly • Record Income • Projects – reconciling accounts, clearing accounts
• Monthly • Recording Inventory, COGS • Sales Tax • Month End Close Process
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Ecommerce Accounting – Tips
• Do not record every transaction in the accounting platform
• Build processes for daily, weekly, monthly, quarterly tasks • Use a password vault – LastPass, etc
• DO NOT – use the clients own Amazon Admin account
• Setup 2-Factor authentication
• Make time to manage all of the data • Watch out for duplicate data
• Every order in the cloud inventory and sales tax management system
• Automate where possible but don’t trust the integrations until the provide value and efficiency
• Break the integrations and build a manual process when the integrations screw up the accounting.
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Ecommerce Technology Impossible without the right cloud technology
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Ecommerce Cloud Accounting Example
Cloud Inventory
Sales Tax
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Sales Tax A reality and cost of doing business
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Sales Tax Management
• Critical for ALL ecommerce businesses • Amazon FBA generates sales tax nexus in 20+ states
• Services • Analysis / Nexus Study (attend Diane Yetter’s session) • License registration (outsource) • Configuring sales tax collection process • Filing and remitting • Voluntary Disclosure Agreement (VDA) • Exemption certificate management • Audit support • Technology
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Sales Tax Recommendation
• Every Order Imported and verified in the sales tax solution
• Track total sales tax liability on the Balance Sheet (not per state)
• Reconcile, adjust sales tax liability monthly (always an adjustment)
• Partner with a sales tax (SALT) expert for Nexus Studies and Audit Support
• Decide how to process sales tax returns
• Understand nexus
• It is better to collect too much sales tax than too little
• Note: it is almost impossible to set the sales tax collection to work properly even using a sales tax solution (Taxify, TaxJar, Avalara/Trustfile, Vertex SMB) and not all shopping carts support 3rd party connections.
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Cloud Inventory
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Back Office Technology – Cloud Inventory • Inventory is critical
• Managing ecommerce business
• Providing accurate financials
• Primary data flow to the accounting platform
• Requirements • Cloud based inventory
• Purchase Order functionality
• Integration into marketplace / shopping cart
• Accounting integration (or clean export)*
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Cloud Inventory Options
Amazon / Multi-
channel
Manufacturing /
ERP
B2B / Wholesale Warehouse
management /
Shipping
Product
listing
International Additional
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Best Practices
• Get access to all platforms, unique logins
• Use a password vault, www.lastpass.com
• Focus on a few technical solutions • Provide feedback to the vendors, push for new features
• Be consistent on the backend tools to support a range of clients.
• Clearly define the roles and responsibilities with clients • Clients manage inventory, purchase orders, enter costs, shopping cart
• Accountants manage the finances, record payments, manage GL, AP
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Resources Ecommerce Accounting • https://www.xero.com/us/training/1293-accountants-bookkeepers/1494-firm-owners/3511-
xero-for-your-ecommerce-clients/ • http://www.catchingclouds.net/blog/2015/10/20/tradegecko-webinar-ecommerce-accounting-
basics Cloud Inventory • https://www.xero.com/blog/2015/05/selecting-a-cloud-inventory-solution-for-an-ecommerce-
business/ • http://www.catchingclouds.net/blog/2015/11/1/tradegecko-choosing-a-cloud-inventory-
management-solution Blogs • www.catchingclouds.net/blog/ • www.shopify.com/blog/ • www.bigcommerce.com/blog/ • www.practicalecommerce.com/blog/
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Q&A Any questions……