Best Accounting Software for ECommerce

With the fast rise of innovation and technology, many changes have been observed in the different fields of society, especially in the business world. These changes drastically affect how we perform specific processes and procedures to cope with these advancements and maintain the operations of businesses.

 

Before the internet and computers, accounting for business transactions was done manually using ledgers, books, and journals. But nowadays, accounting software has become a trend and necessary to enable businesses to achieve more favourable results, more importantly, the small businesses who want to venture into a bigger market.

 

Frequent web-based transactions also paves the way for online businesses or e-commerce to be one of the most common ways of conducting a business. Due to the online operations of these e-commerce businesses, accounting software is of great importance for its continued existence in the market.

 

What is an Accounting Software

 

Accounting software is proof of businesses' adaptation to changes as they recognize the need to automate certain procedures to meet the demand required by their operations with less effort and cost. This software helps accountants, bookkeepers, and business owners perform accounting functions and post financial transactions. This software enables accountants and business owners to trace financial transactions efficiently and comprehensively. Also, accounting software can provide immediate and timely required financial reports for decision-making, reporting, and compliance.

 

Accounting software accomplishes its tasks by storing its financial information and processing the data as the user intended. Accounting software can perform functions like recording transactions, formulating financial reports and analysis, managing customer information, billing and invoicing, paying obligations, payroll, assisting in computing sales or business taxes, and many more.

 

Why is Accounting Software Important to E-Commerce

 

E-commerce transactions can occur between business to customers, business to business, business to government, or vice versa. Amazon and Lazada are some examples of those entities considered e-commerce platforms that transact with their customers online. Suppose accounting software is essential to regular enterprises. In that case, it entails a higher degree of significance to e-commerce businesses that utilize the online platform in conducting their sales transactions, marketing, and day-to-day operations.

 

The importance and benefits of accounting software development for e-commerce businesses vary from one entity to another. Some of them are listed below:

 

1. Reduction of labour cost and supplies expense

 

Automating certain procedures in e-commerce businesses gives them cost savings from labour, supplies, and rent. For example, traditional accounting uses ledgers and journals to record journal entries and sheets of paper to print financial reports. Imagine how much entities spend on these books in a year, and the introduction of accounting software eliminated these expenses for a lower cost and longer useful life. If they continue to apply traditional accounting, they must invest in good storage for these books, or their records will be misplaced or damaged.

 

Using accounting software also removed the need for physical storage, thus saving rent and overhead costs. In addition, with the utilization of accounting software, e-commerce businesses save labour costs, too, due to the fact they don't have to hire additional employees to record and consolidate entries, check and secure information, and generate financial reports because the software can perform all of these controlled by a single person. In fact, businesses that use cloud-based accounting software can earn 15% more in revenue.

 

2. Increases Data Accuracy

 

The financial information of these businesses will be stored in a cloud or drive. Then, these will be processed and analyzed by these programs. With the use of accounting software, human intervention can be minimized. Before automation, the output of clerks or employees was subject to their judgment and effort. As a result, their reports are susceptible to errors and discrepancies. These errors are caused by fatigue, stress, misunderstanding or misinterpreting instructions, and many more.

 

Since a business can have a voluminous amount of entries daily, committing errors should be expected. Using accounting software will prevent these mistakes, such as notifying the user immediately once a journal entry is entered incorrectly, thus, avoiding the pervasiveness of the error and improving the correctness and accuracy of reports and information.

 

3. Automation saves time

 

E-commerce businesses, with their continuously growing market, receive a lot of financial transactions. As a result, their books will be flooded with entries, most of which are repetitive. Some of these repetitive transactions, also called routinary transactions, are sales transactions, collection of receivables, and payment of obligations. If the bookkeeper accounts for these manually, it will take some time because of the number of transactions the business is incurring. Although they will be accounting for transactions of a similar nature, which is relatively simple, doing it with the help of accounting software will be much easier and faster. It will only take a few clicks to generate entries, post these to ledgers, and then transfer them to reports.

 

Aside from this, automation also makes tasks easier to accomplish. For example, if a task includes consolidating entries, posting, and generating financial reports, accounting software is helpful to get the job done in a few taps. Automation reduces the time spent on a specific process and gives employees more time to do other valuable tasks.

 

4. Accessible accounting information

 

If a business uses traditional accounting, it will be a struggle for someone searching for a specific document regarding a transaction that happened last year. Piles of paper and a bunch of journals will be in the storage area, and going through all of these will consume a significant amount of time and energy. This is where accounting software promotes the accessibility of information. If e-commerce businesses employ accounting software, users can easily navigate and search for necessary documents or transactions. Instead of physically searching in the storage, the clerk can check the program, and the results will be available after a few seconds. This is possible because accounting software stores the information in a cloud or drive.

 

5. Provide owners financial control and improve the decision-making of owners and managers

 

As mentioned, we can easily access financial information using accounting software because they are stored in a cloud. The user can locate what he needs just by using a smartphone or laptop. By this, the owners are aware of their current position and performance. Planning, budgeting, and forecasting are essential to achieving financial control and decision-making.

 

According to factual evidence, we must decide to choose the most appropriate alternative and achieve desirable results. In corporate settings, time will always be of the essence. Relevant data should be present whenever needed because they may become irrelevant if not gathered on time, making the decision inappropriate. For example, one feature of the implemented accounting software is a real-time inventory count. Whenever the owner notices running out of stocks, he can easily purchase additional goods. He made a relevant decision because it was on time and beneficial. He was also able to achieve financial control because he was sure that he bought the necessary inventory, meaning the cost of purchased merchandise would not go to waste.

 

6. Ensures data privacy and security

 

Financial and non-financial information concerning a business, whether e-commerce or not, are considered private and confidential. Some examples are recipes, patents, customers' information, vendors' details, financial reports and documents, software and applications used, and many more.

 

Accounting software provides additional security to information through features like passwords, requiring authentication for certain actions, verifying the user's identity, and an activity log book. However, unlike when using the manual method of recording transactions in ledgers and books, they are susceptible to theft or can be misplaced. These unfortunate circumstances will result in data leaks, which can adversely affect the reputation and performance of the business. Accounting software also contributes to data privacy by limiting the person who can access the software itself: the fewer people who can access information, the lower the chances of leaking the data.

 

Best Accounting Software for Ecommerce 2023

 

The demand trend for these programs also grew because of accounting software's usefulness and benefits. A lot of manufacturers released their versions to the market. So, here is a list of the best accounting software for e-commerce businesses in 2023:

 

1. Xero

 

Xero is known for linking establishments to their trusted consultants, which is a great help for those businesses who constantly ask for advice from these professionals. One competitive edge of Xero among its competitors is that it utilizes a web-based platform. This enables the users to view their financial position immediately. Using a device with an active internet connection, the users can navigate their cash flows, transactions, and reports anytime and anywhere. Xero also can connect to most of the major banks. This integration feature results in the automatic importation of bank transactions, which is beneficial for tracking the spending activities of the business. Some of Xero's notable features are the following:

 

• Bank connections and bank reconciliation
• Payroll accounting
• Invoicing, accepting payments, and payment of bills
• Inventory management and project tracking
• Availability of mobile apps
• Management of contacts

 

 

2. QuickBooks

 

Quickbooks, tagged as the leading accounting software for small and medium e-commerce businesses, offers the most comprehensive solutions for entities' accounting problems. This is because Quickbooks provides cloud-based versions with a wide range of features suitable for remote and instant access to information. Some of them are the following:

 

• Payment compatibility to major platforms such as Paypal
• Tracking of expenses, bills, due dates, and inventory
• Can generate purchase orders
• Regular syncing and integration of data from e-commerce platforms and banks
• Unlimited online customer support

 

3. FreshBooks

 

FreshBooks had its humble beginnings as an invoicing and time tracking software. However due to the support of its users, it progressed to offering most accounting features. This accounting software is more suitable for service-based e-commerce businesses like online mentoring. FreshBooks is known for the following features:

 

• Project management features
• Platform integration to banks and payment systems
• Availability of mobile application
• Professional invoicing, which is also customizable
• Dashboards and reports for real-time financial control

 

 

4. Wave Accounting

 

Wave, another cloud-based platform, is entirely compatible with small businesses. Wave banners its bookkeeping feature, which is free of charge. It also has other components, but standard payment processing fees will apply. Although Wave offers limited options, it is still helpful to micro entities with simple operations. This small businesses' accounting software provides the following services:

 

• Integration to other platforms, such as banks
• Bank reconciliation
• Generates financial reports
• Payroll and finance management
• Billing, invoicing, and payment tracking

 

5. Zoho Books

 

Zoho Books is another web-based accounting software that can help e-commerce businesses to handle their finances and automate business processes. This also helps their departments to collaborate, making their workflow smooth and productive. Zoho Books can provide the following:

 

• Client Portal
• Sales orders, purchase orders, and invoicing
• Inventory management
• Online payment and banking

 

6. Sage 50cloud

 

Sage is an e-commerce accounting software that utilizes a web-based system. It can also perform invoice management functions for small businesses. Sage simultaneously offers core, expense, project, and compliance management. In addition, it can also oversee documentation and processes necessary for business payments, such as budgets, estimates, and invoices.

 

• Platform integration
• Bank reconciliation
• Inventory management
• Forecasting
• Billing and invoicing

 

Tips on Choosing the Right Accounting Software for your E-Commerce Business

 

With the fast technological development that transformed how we do things, including business processes, it is not surprising for e-commerce accounting software to be widely available in the market. Making a choice is hard, especially if you have several good options. Studies reveal that 67% of companies desire to shift their accounting procedures into the cloud. However, buying software should not be rushed because there is an outflow of resources. Here are some tips to help you select the right accounting software for your business

 

• Perform cost-benefit analysis

 

This should be the first thing to be done regarding acquisitions. The benefits expected from buying the software should always outweigh or at least equal its cost. This is to ensure the profitability of the entity.

 

• Consider the skills of the user

 

The users' skills should be considered so that the user can easily navigate the software when implemented. This is also important for the management to conduct training or orientation regarding the software requirements and the user's level of skill.

 

• Consider the specifications that your business needs

 

Accounting software suffices the needs of the business. Companies of different kinds have varying needs, so choosing the most appropriate software is critical. For example, a service-based entity should implement accounting software with project management and invoicing features, while a business that sells goods should prioritize a system with inventory management. Also, cloud-based software is preferred because of its accessibility and real-time reports specifications. Data privacy and security measures should also be present to keep sensitive information private and confidential.

 

• Platform integration

 

This means that the program can collaborate or interact with other systems. An example is software that can connect to payment platforms like banks. Another example of integration is a program being able to link to the portal of government agencies such as the Internal Revenue Office.

 

• Ask for professional advice

 

If the acquirer wants to make sure, they can consult professionals who are experts and knowledgeable in accounting software. For example, accountants, auditors, and programmers can provide professional opinions.

 

Conclusion

 

As we can observe, almost anything can be done on the internet. These are at our fingertips, from marketing your products to the actual sale. Accounting software and other e-commerce tools greatly help because they make their operations faster by automating processes and reducing costs and expenses.

 

In the e-commerce industry, having a nice and cool website or page is great. However, some images and elements are needed to create these materials to be aesthetically pleasing to the eyes of potential customers. Some owners find this challenging or costly, but Background remover can help to get the job done. Take note that a holistic approach to management should be adopted to ensure the sustainability and profitability of a business, whether e-commerce or not.