What Do Bad E-commerce Bookkeeping And Accounting Look Like?
Are you tired of being hit with the bill for bad e-commerce bookkeeping and accounting? Or, perhaps, you run your own e-commerce business and have noticed that your actual invoices seem lower than what you are displaying on your website. Don’t worry; you’re not alone. Plenty of other small businesses struggle to keep tabs on their finances from month to month. Bad e-commerce bookkeeping and accounting are both a blessing and a curse.
On the one hand, it means that you probably aren’t spending as much money on your e-commerce business as you should. On the other hand, it can mean that you’re not keeping accurate records about how much money has been spent and what expenses have been covered. Fortunately, there are several things you can do to ensure that your bookkeeping is up to par so that no one but you knows how much money is coming in and how much money is going out. If you’re ready to learn more about lousy e-commerce bookkeeping, keep reading!
What is bad e-commerce bookkeeping?
As the name suggests, bad e-commerce bookkeeping is when you don’t keep track of everything that happens within your e-commerce business. You might not know exactly how much each expense is or how much money you have in your bank account. This could be due to many things, but the main ones are:
Inventory management: You might not know exactly how much merchandise you have in stock or if it’s running low. It would help if you recorded the inventory as you received it and kept track of how much is left over.
Expenses: Some expenses shouldn’t be recorded, like shipping and handling, but most of them should. If you’re receiving free shipping, or if a customer is covering the cost of an item, it’s probably worth noting on your e-commerce invoice.
Payments: You should always keep track of the payments that are made to your suppliers. If a customer pays for an item, and you start receiving payments for that item, you should also record the payment on your invoices.
Why does bad e-commerce bookkeeping happen?
As mentioned above, bad e-commerce bookkeeping and accounting can happen for several reasons. One of them is carelessness on the part of the owner or operator. Another one is simply a by-product of running a successful business. If your business is successful, it means that people are buying from you. Therefore, you have lots of customers. There’s no way around it – you’re going to need to record their payments, as well as your own, on your e-commerce invoices.
What to do when your e-commerce business’ accounting isn’t doing it for you
If you choose to ignore the accounting rules and just go with the flow, bad e-commerce accounting and bookkeeping can result in a financial problem for your business. You might not know exactly how much money you have in the bank or how much merchandise you have on hand. As soon as cash is coming in, however, you should be recording it on your books as revenue. Likewise, if cash is going out, you should be recording it as expenses. If you do this, however, you’re likely to end up with a cluttered mind.
Bottom line
E-commerce businesses aren’t just any other type of business. They’re unique. They’re often very profitable, and they have unique challenges that need to be considered. Suppose you want to make sure you’re doing everything in your power to keep your e-commerce business on the right track. In that case, it’s important to familiarize yourself with the terminology and concepts behind bad e-commerce accounting and bookkeeping. Doing so will allow you to spot problems early on and take corrective action before they turn into major issues.
Comments