Business digitalization is a fast-growing trend in the business environment. Gartner analytics show that 87% of senior business leaders say digitalization is a priority. Companies that use online means of communication with their customers, such as websites, social media, and e-commerce platforms, are capable of achieving more successful financial results. However, cash flow management for online businesses is much more complicated than for offline. You have to take into account multiple sales channels, different payment processors, and multicurrency transactions in your accounting.
Here are 7 tips that will help you organize the accounting of your e-commerce business:
7 cash flow management tips for e-commerce businesses
Tip 1 – Proper bookkeeping is a must
Accurate bookkeeping guarantees precise financial reports. Categorized payment data (product, customer, location, fee, tax, etc.) will facilitate the preparation of financial reports. As a result, you will get a good picture of the most high-demand products, profitable locations, and loyal customers. However, synchronizing all transactions in your accounting platforms such as QuickBooks and Xero can be time-consuming and nervous work.
Usually, business owners choose either to seek the assistance of a bookkeeper or do it by themselves manually. Another solution is to use bookkeeping automation software that will synchronize all the transactions from different sales channels automatically. This will provide you with impeccable bookkeeping, detailed data, and extra time to focus on business development.
Tip 2 – Integrate all your payment processors in one accounting platform
If you want to use many e-commerce platforms for your business, the first thing you need to think about is how to systemize the revenue in your accounting. The problem is that all payment processors apply different fee amounts. Imagine, you sell your products on Amazon and Etsy, and also accept payments in Stripe and PayPal. Each platform has its own sample of a receipt and charges a different percentage for transferring the payment. It will take a great deal of your time to enter this data into books. By automating this process you will minimize the risk of errors and save your time. Connect all your payment processors with your accounting platform to collect all the payment data in one place. Smart software such as Synder allows users to connect up to 14 payment processors – such as PayPal, Stripe, Square, GoCardless, IntegraPay, Etsy, Authorize.Net, eBay, Amazon, and many more. With Synder, you can get error-free payment synchronizations from all these platforms without any manual work.
Tip 3 – Automate regular payments from clients
Do your best to minimize your involvement in the payment process. If it is a standard purchase without any discounts or special offers etc., they should be made autonomously and independently. Otherwise, you as a business owner will not be able to pay enough attention to more important issues such as business growth. There are a number of ways to receive payments from clients automatically:
- Use platforms to create invoices;
- Apply recurring invoices for regular payments;
- Incorporate payment links into your website and social media.
Automatic receipts will be reflected in your online bookkeeping, which will take the accounting load off your shoulders. As well as with incoming payments, the next step for you should be the automation of expenses.
Tip 4 – Use software to organize multicurrency transactions
To get more clients, businesses need to enhance the purchasing process. Profitable e-commerce businesses work with multiple payment platforms, communicate with their clients through different channels, and offer multicurrency transactions. All of this makes it easier for customers to buy your product. However, accepting multicurrency payments brings about a lot of accounting difficulties. You have to track currency rates and count taxes and fees. Many companies who use unreliable online apps for these purposes, get an incorrect currency exchange rate for transactions. However, accounting software such as Synder applies official exchange rates provided by banks, applies taxes in accordance with currency exchange rates, and automatically checks if multicurrency transactions were recorded in the QuickBooks or Xero account correctly.
Tip 5 – Make sure clients pay on time
The key to successful cash flow management is to keep track of deadlines. If you don’t have delays in receiving payments and covering expenses, your business will be financially stable. However, if your clients regularly miss the deadlines for payments and you are on credit terms with your suppliers, your business will hardly stay afloat. In addition to payment automation such as invoices and payment links, you can set up payment reminders. For these purposes, Synder provides an indispensable feature – Smart Rules. With it, you can create a rule to send your clients reminders to pay or a “thank you” email after you receive payment. You can literally create a full scenario for every customer to navigate them throughout the purchasing process. Such emails and friendly reminders will increase customer loyalty and leave a positive impression after the purchase.
Tip 6 – Prepare financial reports regularly
Financial reports are a must for constant business development. By analyzing your profit and expenses you will be able to optimize your finances and make the right decision in the future. Accounting software, such as Synder, tracks your sales and expenses and helps you prepare all the data for analysis. Synder automatically categorizes transactions by product, location, customer, fee, tax, discount, and more. For example, if you made a special discount on a certain product, Synder will collect all those payments to provide a report about the discount profitability. Same with location, Synder will help you highlight locations with the highest demand for your products or services. This feature is especially useful for companies who are testing new points of sales.
Tip 7 – Schedule your business expenses
Don’t struggle in trying to figure out how to cover expenses because you still didn’t get any revenue from sales. Schedule your outcoming payments in accordance with incoming payments. If you usually get paid at the end of the month, you can move some expenses to this period too. For example, you can make a deal with your suppliers to make payments within 60 days or ask for the deferment of payment. Line up your biggest expenses to be parallel with your highest inflow.
Many businesses are determined to work online because it is the biggest customer resource. But not all of them are ready to cope with the peculiarity of e-commerce accounting. If you want to make your way into online sales easier, it is time to think about smart accounting software. It will help you manage cash flow and prepare necessary financial reports. Book a free Synder demo right now to keep your business innovative.