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E-commerce: the next focus for your accounting firm

18th Nov 2022
Brought to you by
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Aurelia are the automation and software experts for accountants and finance leads. We want to to...
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E-commerce is booming. This growth, combined with the recent requirements of MTD for VAT presents a great opportunity for accountants. With the right tech stack and ability to automate some of the manual processes accountants could easily provide tailored services to e-commerce businesses, despite their complexities.

Aurelia: E-commerce growth is an opportunity for accountants
Nataliya Vaitkevich Pexels

Retail is moving from brick and mortar to online. It’s a fact that both customers and businesses need to embrace. The key forces driving this change in the past decade were, beyond easier internet access from any device at any time, the Covid-19 pandemic, Brexit and more recently, the looming recession.

The pandemic has obviously accelerated the spread of online shopping while Brexit and recession meant that a lot of businesses were looking to get rid of the physical stores to either continue selling abroad or simply to cut costs of the overheads. 

In a nutshell, more and more people are buying online and more and more businesses are selling online. And this growth trend is very likely to continue. At the moment, the annual online retail sales around the world amount to $4.2 trillion and it is forecasted to grow to $8.1 by 2026

E-commerce accounting though is inherently complicated given the huge amount of transactions, refunds, multiple points of sale, purchasing, keeping inventory up to date and gets even more complicated with cross-border trading and VAT. The complexity paired with the need to focus on the business operations (what are the business's margins? which products are our best selling ones? which ones should we stop ordering from suppliers?) rather than accounting pushes a lot of e-commerce stores to look for accounting support and advice which creates an incredible opportunity for accountants. 

Business owners are really bad at accounting

An owner of a growing or new e-commerce business will likely try to deal with accounting on their own, despite the complexities. What it means is that the more the business grows, the more time needs to be spent on dealing with sales bookkeeping, expenses and VAT and there’s less time to actually plan the next step. Multiple systems used to deal with e-commerce accounting give little visibility of the actual health of the business which impairs making informed business decisions. Usually it also means the sales data needs to be manually pushed from one place to another which will inevitably cause mistakes. And the more mistakes the more time, money and reputation you lose. Finally too, if the business decides to trade internationally, they need to consider VAT and fee differences and all the headaches that come with dealing in multiple currencies. 

In the end, an owner of an e-commerce business is likely to turn to an accountant for support and advice. This trend has now accelerated with the introduction of MTD for VAT which obliges VAT-registered companies to file their returns quarterly and digitally. 

E-commerce is a huge opportunity for accountants

Opening your services to e-commerce clients can be a fantastic opportunity to grow your practice and revenue. 

E-commerce is, as we already mentioned, a fast growing sector. Establishing yourself in the space, gaining expertise in the area and familiarity with the tools will help you attract more clients with time. Not only is e-commerce growing, it’s also one of the most innovative sectors. Retail is fast to adopt new technologies and solutions and being able to keep up with the news in the industry will make your practice look future-oriented. 

As your clients’ businesses grow they will be more likely to rely on your expertise for advice, reporting and forecasting so you can expand your offering to include more than just bookkeeping - you can become a real partner to your clients. In the long run this will help not only with revenue but also client satisfaction and retention. A perfect example of such a scenario is when a client decides to trade internationally. Without a proper tech and accounting infrastructure in place, this endeavour may actually turn into a nightmare for the business owner. Accountants are already aware of a lot of pitfalls in this area and could offer support and advice to clients wishing to start trading internationally. 

The problem is that while incredibly profitable and interesting sector, e-commerce can get overwhelming and messy between high volume of transactions, VAT, frequent changes to services and fees for merchants like Amazon and Shopify, complex invoicing requirements among others and frankly, little help from both the business owners who are too busy to provide necessary documentation and from the industry in general. 

That’s why smaller accounting firms or sole practitioners often decide not to open their offering to e-commerce clients unless they specialise. At Aurelia, we believe that with the right tech stack, specifically accounting automation software, any accountant can provide services to online sellers.

Automate e-commerce accounting with the right tools

E-commerce can be made less intimidating, and as a result, more accessible to accounting firms, if some of the processes could be automated. Excel gives you a static overview of the data, it shows the things that have already happened rather than the real-time insights and that’s why using an excel spreadsheet won’t cut it for e-commerce. This sector is highly technical and innovative looking for the next thing to make their lives easier and their work more efficient. So if you are not doing it already, definitely consider automating some of the processes to efficiently process a large number of transactions and, as a result, serve more clients. Awareness of available integrations and software would make your practice even more attractive choice for an e-commerce business. 

For e-commerce, the pipe dream would be to have an end-to-end solution encompassing online merchants, inventory, accounting tools and revenue accounts all in one place. The data could flow seamlessly and automatically between those systems, minimising the manual work and risk of errors. With that, should come a faster turnaround time and increased trust in your services - less mistakes, more robust reporting and real-time insights into data mean clients will be less likely to churn and more receptive to new services you may offer. 

There is some software available on the market that promises to solve the above problems for e-commerce accounting. The sad truth is that unfortunately the automation software for e-commerce is often solving just one part of the problem (for example, dealing with sales and bank transactions but leaving the inventory out), has limited integrations which equals with switching systems, still requires a significant manual input and is too difficult and time-consuming to set up. The right automation tool for e-commerce should be able to at least apply the correct VAT rate depending on the country, map the data to the correct invoice format, provide line by line breakdown and reconcile transactions in real-time to support a growing e-commerce business. Aurelia’s automated workflows do all that while connecting with thousands of European Banks, major online merchants and accounting software as well as providing robust reporting, real-time cash flow insights and soon, inventory management. 

The bottom line

When it comes to e-commerce, don’t shy away from automation. Having the right tech stack will allow you to truly tap into that niche and take advantage of its growth without needing to specialise.