Whether or not you’re willing to view ‘everything as e-commerce’, there is no denying that the number and type of businesses engaging in some kind of e-commerce solution in order to
drive sales is growing larger. Exponentially.
What does this mean for our industry? It means we need to double down on our ability to produce a product that serves as the ‘one place’ for the complete financial picture. We’ve been doing this for years actually, but often in a way that more than prioritizes the monthly and even annual view of things.
There is a choice to be made for each of us.
Accurate daily and/or weekly sales and liabilities pictures are fast becoming obsolete for businesses that are involved in eCommerce. There simply is not one place where they can go to view all of their sales. And like it or not, it is often these very businesses for whom having access to complete and relevant daily and weekly views of their business means the difference between success and failure. To be blunt, we are their last chance for a traditional Z tape or POS look at things. Will we embrace this challenge?
If we choose to continue along as we have:
Our processes will need to become more and more diversified and most likely more and more dependent on manual reviews and adjustments. Because… with every sales channel and payment platform will come a new way of booking in and checking over the sales, fees, returns, discounts, taxes, liabilities and credits reported. And these sales channels and payment platforms are not created with accountants in mind. They are created to be ‘easy’ for the user (your client) to sign up for, get going, and interpret as ‘lucrative’.
Reconciliations and relevant monthly and annual closes will become more and more difficult to achieve in a timely and/or cost effective manner. Truly reconciling all of these platforms to what ultimately finds its way to your client’s actual bank will be an exercise in mapping rabbit holes. Not to mention, accounting for the funds that are held in trust by the platforms themselves! Many of these platforms have automations available. But automation ceases to be helpful when there are as many ways of automatically entering and interpreting things as there are platforms available to “automate”.
Effective advisory for sales diverse clients will become ineffective, irrelevant, or incredibly expensive to be cost effective for the practice. When the kind of data views clients need is inaccessible in their systems, and not aggregated in our systems, it becomes essentially inaccessible. This greatly limits our practice’s ability to speak intelligently to clients about the pitfalls, opportunities, and trajectories of their day to day business. We will be limited to ever widening monthly, quarterly, and then probably only annualized insights. Insights that are at the same time ever shrinking in their relevance to this increasingly fast paced commercial landscape.
The old adage that things cannot be Quick, Cheap, and Accurate all at once will become even more acutely felt in the costs, workflows, and energy spent inside our practice itself. Hard decisions will have to be made - either on purpose in advance, or case by case and on the fly.
If we choose to embrace this role:
Transforming the GL into the one place for the daily through yearly financial picture is a task. But it all starts with the idea of aggregating sales in a way that turns the GL picture into a series of Z tapes: What happened. Today. For this business. If you remember, these tapes didn’t reflect every single sale. Nor did they report on the totals sold for every single item. They didn’t list every single financial transaction, but they also didn’t combine all payments into one total. That was their beauty: sales by category important to the owner, with payment totals for the day broken down in a way that facilitated reconciliation by the accountant.
We have to lean into our position as one of financial translators.
Our goal should be to make the diverse data from each platform recognizable to ourselves and the business owner. This goes for the individual entry and what appears in aggregate on the profit & loss and balance sheet.
We have to lean into our internal goal as one of workflow standardizers.
This approach isn’t sustainable unless we find a way to systemize it. We are part of this equation, meaning our ability to work and train others to execute our approaches is essential to the way forward. It has to make sense for our businesses, too! Some firms are solving this problem by becoming ever more narrow in the platforms they will service for clients. But with the ease of sign-up and new platforms appearing all the time, this approach may ultimately have to sacrifice either client base, comprehensiveness of the books, or efficiency of workflow. It’s simply not a long-term solution.
Bookkeep is committed to a better solution. They recognize and elevate the value of recreating and memorializing a newer, better, “Z outlook” for our clients. Their magic: booking daily gross sales and payment categories, and still capturing totals for processing fees charged, sales tax collected, returns, liabilities, loan payments, funds held in escrow, etc. And it does it automatically. For each platform you integrate.
Bookkeep translates each channel's individual quirks into a standardized booking and use of accounts in the GL. And it does it in a way that creates individual balance accounts ready to reconcile both with the platforms and what is expected to arrive in the bank.
Bookkeep is with us on this! They have current connections with the most popular eCommerce platforms and are building their way toward more integrations all the time.
Even with the assistance of a solution like Bookkeep, embracing this role will require a change in perspective. And that might be difficult for more established and larger firms. That said, change can either happen with you or all around you.
Ultimately, the choice is not if you will spend the time to meet these challenges, but rather which challenges would you prefer to meet?
Want to hear more?
Join our webinar — "Everything is Ecommerce. Now What?" — Feb. 23, 2 p.m. (EST), featuring Bookkeep CEO Jason Richelson and Totally Booked founder Kelly Gonsalves. You will learn more about accounting automation, as well as get a peek into what Bookkeep is working on in 2022. Register Here