Remember when you first started selling on Amazon and didn’t know the difference between a balance sheet and a P&L statement? Or when you finally mastered Excel and did your own bookkeeping? Then you found yourself putting too much time into bookkeeping and not enough into managing your business? So, you brought in an accountant—at a big cost.
With more time available, you added three new sales channels, increased the number of products on Amazon FBA and built your own ecommerce website. But you found that your day-to-day processes were often riddled with errors (human), bottlenecks and roadblocks that caused chaos in your back office and missed orders. This meant making the choice between an increase in your accountant’s hours or you spending time trying to figure out the anomalies. Now that your business has grown, spending time on accounting was not an option.
First of all, congratulations to you for getting there. You hit that pivotable point where the choice was grow—or go. And growing meant recognizing the need for an Amazon FBA accounting software to automate your systems to integrate with inventory, order processing, FBA fees management and tax liability reconciliation—to eliminate the never-ending back office errors and bottlenecks. Adding Amazon accounting software meant reducing your accountant’s hours by as much as 80%, while your new accounting automation software did all the heavy lifting. No more manual entry, human error eliminated, accurate inventory for every sales channel and fees and taxes seamlessly reconciled.
The top five issues that led you to “go or grow”
1. Returns. With Amazon’s liberal return policy, you received returns in any condition, right?
Amazon FBA accounting for returns caused problems, such as having to decide when to write off the damaged inventory and then ensuring the inventory wasn’t expensed twice. Being so busy, it was easy to neglect doing anything with your growing pile of returns and that hurt cash flow and inventory accuracy.
2. Not managing inventory properly. You had multiple sales channels. You had inventory on its way from China. Or stuck somewhere with a 3PL. And a pile of returns that contained a variety of damaged, resale and reduced sale inventory.
It got even more complicated as you increased the number of SKUs, marketplaces and transactions. Seriously, you could have had $100k tied up in inventory that you didn’t even know where some of it was—or what condition it was in. You learned that without good inventory management, cash flow problems surfaced.
With Amazon FBA accounting software and automated inventory, you knew exactly what you had and where. Plus, it provided an instant snapshot of your financial health, which was critical for making any forward financial decisions.
3. Transaction and data surge. As your business grew, so did the volume of transactions. And transactIons come with a bucket-load of data. And the tons of data began slowing down your system.
Amazon, on the other hand, doesn’t allow you to capture customer data, but it made up for it, data-wise, with the volume of different fees it charges that had to be categorized.
I think you know where I’m going with this. Tons of data. Increased transactions. Even top accounting software like QuickBooks Online couldn’t handle 10,000 detailed transactions each month. This meant it was time to get Amazon sellers accounting software than could handle a growing volume of transactions and data. Plus, the peace of mind that your QBO wasn’t going to explode from data overload and that your financial health snapshot was available at any given time, was priceless.
4. Endless Amazon fees. Keeping track of these was a nightmare for your accountant, right? And the accuracy?
Most common Amazon fees:
· Monthly subscription fees
· Per-item fee
· Referral fees
· Closing fees
· High-Volume listing fee
· Refund administration fee
Multichannel FBA fees:
· Uses different multichannel fee schedule
· Fulfillment fees per unit
· Pick, pack, shipping, and handling
· Monthly inventory storage fees
· Based on daily average volume (cubic feet)
· Long-term storage fees (6+ mos)
· Labeling fee
· Package and prep fee
· Unplanned prep fee
· Repackaging fee (in case of returns)
· Stock removal fee
With so many fees to track, how in the world did you ensure you were staying within your desired profit margin?
Talk about data growth. When you added more SKUs, Amazon fees really taxed your data load.
5. Speaking of taxes. The new sales tax liabilities stopped most Amazon sellers in their tracks because of the complexities that were introduced. How were you going to ensure you got it right? How many states, cities and jurisdictions did you have a sales tax nexus in? You feared that with so many new laws and rules, you might overlook a sales tax liability somewhere you didn’t even know about.
When you realized the time spent tracking and managing sales tax, a non-revenue generating task, you decided it was best handled by using a top-rated Amazon sellers accounting software.
Moral of the Story
Regardless of where you are in the accounting process, automation is the backbone of your future success.
Before you added automation, you were in the reactive mode most of the time—putting out fires, trying to locate that one error or hoping to save a sale that somehow fell through the cracks. Can you relate?
With automation, you morphed into a proactive role, which, as you discovered, was the secret to your growth and success.
Is it time for you to explore Amazon sellers accounting software for your automation?