As e-commerce experts, we know the success of growing a business is often accompanied by stress. It’s common for owners to feel overwhelmed as they take on more financial responsibilities and manage the businesses’ financial health. While a bookkeeper or accountant could take on some of those tasks, such as billing and payroll, you need an accounting expert with a background in e-commerce accounting. They can find your relevant financial data across multi-sales channels and omni-channels, as well as provide insight into e-commerce competitors in your industry.
With the help of an outsourced e-commerce accountant, your e-commerce business can scale and thrive, and you don’t have to spend a fortune on an entire e-commerce accounting department. Here, we’ll cover the pros and cons of outsourcing your e-commerce accounting needs.
Pros and Cons of Outsourcing E-Commerce Accounting
Outsourced E-Commerce Accounting PROS
E-Commerce Accounting Expertise
Outsourcing to an e-commerce accountant with specialized knowledge can significantly enhance your business’s financial health. These professionals excel in managing Shopify sales and bookkeeping, ensuring that your financial transactions are accurately recorded and efficiently handled. They understand the nuances of tax compliance, helping you navigate complex regulations and avoid costly penalties.
An e-commerce accountant will set up and manage your business bank account, ensuring that all transactions are tracked and reconciled properly. They employ cash accounting methods to provide a clear picture of your business’s cash flow. This approach aids in maintaining precise financial records, which are essential for informed decision-making and financial planning.
Additionally, these experts handle tax management meticulously, preparing your business for tax season with well-organized records. They produce detailed balance sheets that reflect your company’s financial position, highlighting assets, liabilities, and equity. This comprehensive financial overview allows you to understand your business’s strengths and areas for improvement.
Inventory purchases are another critical area where e-commerce accountants shine. They track and manage inventory, ensuring that purchases are recorded accurately and that stock levels are maintained to meet customer demand. This meticulous attention to detail prevents stockouts and overstock situations, optimizing your inventory management.
By outsourcing to an e-commerce accounting professional, you ensure that all aspects of your financial operations are handled with expertise. This not only frees up your time to focus on core business activities but also provides peace of mind knowing that your financials are in capable hands.
Focus on Your Core Business
To facilitate growth, you might need an extra headcount. As more and more niche business service companies offer specialized services such as e-commerce accounting, and fractional CFO services, many businesses are forced to look outside of their internal staff to scale operational efficiencies.
This allows them to focus on their core business activities that increase sales and generate more business. For instance, imagine that you hire a full-time bookkeeper instead. This won’t help you achieve your goals (as discussed above) and in fact, financial and other resources, including office space and equipment, will be tied to them.
Plus, you just can’t overlook the added costs of hiring full-time employees who require specialized tools. An accounting professional requires specialized tools to deliver their services, such as cloud-based accounting software, which can be expensive and sometimes lack functionality. We know, because we’ve built our own proprietary e-commerce accounting software, called Your Back Office, to solve missing functions in the other ones available on the market. Outsourcing the accounting function allows you to avoid these costs because outsourced companies will roll the cost of these tools into their own operating expenses.
When you outsource, the associated overhead costs of having an in-house accounting team are eliminated. You can then allocate more resources to activities and tools that directly add value to your core competency.
Reliable, Responsible Support
A business considers it a responsibility to provide its customers with a high-quality service that matches the industry standards. A professional accounting company is under a lot more pressure to offer the best accounting solutions to its clients while ensuring sales tax compliance.
Hence, when you outsource your business accounting function to an experienced and reliable company that is also an e-commerce expert, you get peace of mind knowing that your finances are being held by an entity that’s well aware of the legal knowledge of the frequently changing accounting standards and laws and ensures that your unique e-commerce needs are met.
Many accounting service providers have staff with experience in different industries. Hence, it’s important to make sure that you get a personal expert with thorough knowledge and experience working with multi-sales channels.
Many people wonder how outsourcing their e-commerce accounting function would help them save money when they’re supposed to pay the outsourced service provider, too. Well, as mentioned earlier, outsourcing allows you to avoid all the overhead costs associated with full-time hiring, including PTO, Workers’ Comp, health insurance, vacation, retirement, and sick leaves.
Moreover, relying on a company that hosts an entire team of accounting & e-commerce experts helps you avoid the risks and additional costs associated with unreliable financials and, of course, non-compliance.
Proactive Issue Resolution
Another benefit of outsourcing accounting is that when you have trained eyes overlooking your books all the time, you don’t need to worry about any accounting blunders.
The professionals will spot any red flags ahead of time and notify you about issues, such as those associated with cash flows and expenditures, which can be difficult to track without proper expertise.
On top of that, they offer you insights that give you peace of mind and help you make better and more informed business decisions.
Remember, you didn’t go into business to remain occupied with accounting books. To run your business efficiently and focus on the overall vision and growth, you’ll need to free yourself from the task. However, given the critical nature of the function, you’ll need to rely on a subject matter expert.
Outsourced E-Commerce Accounting Cons
Communication Limitations
Outsourcing a business function to an external entity inherently limits your ability to communicate effectively, which is why many business owners still prefer in-house staff. Even with outsourced accounting, you must monitor critical financial priorities and manage a list of priorities, depending on the availability of your outsourced provider. Establishing a regular communication schedule and clearly outlining responsibilities is crucial to maintaining a manageable relationship with the outsourced firm. When considering outsourcing, consult with vendors and teammates to determine the best communication styles.
Hidden Costs
Hiring an in-house team eliminates concerns about hidden costs, but outsourcing your accounting function can bring unexpected expenses. Some firms charge extra for specific tasks, and you might not initially be aware of costs related to additional tools and software. To avoid issues, take time to understand the onboarding process, settle service costs upfront, and set clear expectations to manage potential hidden costs effectively.
Lack of Control
Outsourcing your accounting function can make you feel like you’re losing oversight of business spending and activities, as financial reporting offers vital insights into improving business efficiency. To avoid losing control, ensure transparency through regular meetings with your outsourced accounting provider, aiming to relieve your team from manual data entry while maintaining critical insights. Scheduling regular meetings with dedicated e-commerce and accounting experts helps you stay informed and in control of your financials.
Unlock Your Potential With Outsourced E-Commerce Accounting
Now that you’re aware of what outsourcing your e-commerce accounting function looks like and have a clear idea about the associated benefits and drawbacks, think about what’s best for your business.
Seize your opportunity to strategize with one of our Award-Winning e-commerce Experts at Fully Accountable and see how we can transform your business today! Click here.
