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Fix the accounting problems that arise from inconsistent ecommerce transaction data

Fix the data blocks that clog e-commerce accounts


The commercial lifeline that helped so many businesses survive the pandemic created new problems for accountants now wrestling with inconsistent e-commerce transaction data.

16th Nov 2022
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The levels of interest in e-commerce surged massively during Covid lockdowns as businesses around the world pivoted to online sales models. The traffic and interest in the topic on AccountingWEB has continued to rise since then, with a sequence of e-commerce queries posted in Any Answers in recent months. 

While all this activity shows how the new revenue streams developed during 2020-21 have bedded in for good, the volume of sales being transacted online is causing headaches for accountants.

As AccountingWEB member bendybod pointed out in the most recent post on the biggest e-commerce pains for accountants, many platforms “don't play nicely with the bookkeeping software”, with eBay a particularly bad culprit when it comes to splitting out UK and non-UK sales for VAT purposes. 

For ireallyshouldknowthisbut, the biggest issue accountants face with e-commerce is the lack of understanding about the level of detail required in the bookkeeping records accounts: “There is often massive overkill in the interface between the shopping cart and the accounts software that introduces unnecessary levels of detail.”

From an accounts point of view, IRSKTB continued, “We just need to know (in aggregate) what sold, and potentially a stock adjustment depending on the type of sale, and to match the sale to the cash payment being received. 

“We don't need to see 20,000 lines of small sales in the accounts, and thousands of one-off customers with their details populated in the accounts system. Daily or even weekly totals is fine, so long as it's properly grossed up, the fees are split and the VAT is dealt with.”

In the absence of the platforms’ poor handling of post-Brexit VAT reporting requirements, UK accountants often have to turn to third-party apps such as A2X, LinkMyBooks and Dext E-commerce to extract the transactions and get them into shape for general ledger software. 

“Typically the biggest issues are dealing with VAT and transaction volumes,” confirmed Beever and Struthers tech strategy lead John Toon, who put forward the Dext e-commerce app as the most complete third-party solution currently available.

“If you have the right tech in place these problems are easily managed. Without it, you'll find yourself wasting tons of time on manual reconciliations, spreadsheets and workarounds,” he said.

Another issue raised in the thread by AdShawBPR was reconciling unpaid amounts from payment apps such as Stripe and Clearview at the end of each month. 

Tech Pulse webinar tackles the issues

Responding to what has become a pressing need, AccountingWEB technology editor Tom Herbert convened a dedicated Tech Pulse webinar this Wednesday (17 Nov) at 10am to focus on e-commerce accounting issues.

“Ironically e-commerce offers access to the best data of any accounting niche, but accountants often don’t know what they’re looking for,” said webinar panellist Ben Sztejka, founder of 2022 Accounting Excellence Award new firm finalist Your eCommerce Accountants.

As a trained accountant Sztejka first got his hands dirty with e-commerce data selling computer parts online. Having worked out how to link the transaction data via a spreadsheet to a ledger system and then export it for compliance reporting, he decided to specialise in the sector.

Joseph Cox at Ecommerce Accountants LLP tells a similar story, having progressed from the top seller of corkscrews and peelers on Amazon to a specialist e-commerce accountant with a team of 25.

“As a few of my friends had started e-commerce businesses I started to do their books and took on the e-commerce accounting seriously in 2016,” he said.

“At the time I started, software like LinkMyBooks and A2X didn’t really exist. I was worried about having control of the data and how you verify if the calculations are correct. I have to understand how things work, so I learned the intricacies of the data and built an Excel macro to manipulate it, then uploaded the data to the general ledger. Amazon’s VAT calculation report is straightforward IF you know how it works.”

With more than a decade of experience between them, Ben and Joseph will pool their talents to unravel the complexities of splitting out UK, EU and non-EU e-commerce transactions to compile accurate records for e-commerce accounting and reporting.

Get answers to your e-commerce questions in AccountingWEB’s interactive Tech Pulse webinar at 10am Wednesday 17 November on how software can help accounting firms plug into e-commerce. You can also speak to a range of tech providers with e-Commerce solutions at AccountingWEB Live Expo in Coventry on 30 November and 1 December.

Replies (1)

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By Latinaid
17th Nov 2022 09:48

The webinar can't be on Wednesday 17th November because this doesn't exist (not this year, anyway).

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