Why digital commerce should matter to accountants

Why digital commerce should matter to accountants

As the e-Commerce sector continues to witness success, it will be important for accountants to invest in their tech stacks to ensure they can not only promote client growth, but also practice growth.

Why digital commerce should matter to accountants

When shopping online, consumers are unforgiving. They expect to be able to self-serve everything – both physical and digital – for personal as well as business use.

If at any point the buying process becomes laboured or frustrating, customers typically abandon their purchase and move on to another sales channel or provider.

E-commerce is arguably now a cultural movement. Globally, 30% of retail sales are online – this is likely to continue to grow as more businesses launch digital sales channels. For example, in the UK alone, the e-commerce market grew from £693 billion in 2019 to just shy of £2.09 trillion as of February 2022.

The market is focused on ways to captivate potential and existing customers and satisfy their increasingly high expectations. The success of an e-commerce merchant, therefore, hinges on a different set of business metrics – and a different type of accounting.

Because every business now transacts virtually, automating digital commerce accounting practices is now essential. By embracing the right kind of tech stack, accountants and bookkeepers can accelerate their clients’ growth by providing better business insights.

Not only will this ensure their clients’ accounts remain profitable but also help to strengthen their relationship as a trusted business partner.

Digital commerce trends impacting accountants

The way businesses have adapted to the growing e-commerce landscape can help inform how the accountancy sector could react to the changing environment.

During the pandemic, business-to-business buying behaviour shifted. Whilst this might not directly impact accounting practices, knowing the space in which clients operate will help determine the type of financial insight needed to accelerate growth.

“E-commerce clients are harder than probably any other industry we work with,” says Stuart Hurst, director at Accounts and Legal. Founded in 2014, Accounts and Legal is a firm specialised in supporting small businesses across the UK.

“It might start as a very small business doing 10 sales a day, but that soon becomes thousands. So, the biggest pain point for us was to deal with sheer volumes of data and controlling this data to ensure accuracy”, says Hurst.

The payment channels used by businesses have expanded beyond the traditional credit/debit cards to provide customers with more choices. The difficulty will be ensuring all these options are unified.

Client sales channels might include: live streaming (playing an order via a virtual event); social selling directly through social media platforms; mCommerce, including peer-to-peer payment platforms; and gaming, including VR commerce where brands launch virtual lines.

Where a client uses a combination of e-commerce platforms and third-party payment processing tools, recording refunds and exchanges can get complicated. Moreover, e-commerce platforms often have inventory tracking within the software.

If a client sells in multiple places online, their inventory is likely to be tracked in different ways by different pieces of software. Implementing the capability to track inventory in one central place is vital and should be used to create an accurate record of sales, returns, and restocks.

Similarly, when a client offers a range of payment types in addition to credit, the solution needs to handle these sales.

Finding the right provider

As well as being more complicated than traditional sales accounting, digital commerce accounting is typically much faster-paced. So much so that keeping up to date with transactions in real-time is impossible without automated processing.

Following queries from clients, Accounts and Legal turned to Dext to find a solution. After rigorous testing, the firm presented Dext Commerce to its clients.

“Once they saw things come together, all the data came through, they loved it. We have had next to no pushback as a result of implementing Dext Commerce from either side, it’s been quite a nice process,” says Hurst.

The team at Accounts and Legal previously experimented with a variety of e-commerce plugins and platforms such as A2X, but Dext Commerce proved to be the best option for them.

The platform automatically fetches clients’ sales data from multiple e-commerce and point-of-sale platforms. It splits out transactions, fees, refunds, and reimbursements, and allocates the right taxes.

“A lot of these e-commerce apps are a bit flaky,” Hurst explains. “Dext Commerce was much clearer than other platforms we had tried and became this one-stop-shop for everything we need – but still allows us to be very granular in the data that’s pulled from all those sources. That’s very powerful.”

Accounts and Legal also noted the platform provided numerous opportunities for growth within its own practice. Dext Commerce saves the firms’ team hours every week, allowing them to take on more clients without increasing prices – something that is vital for small businesses.

As the digital commerce industry has been constantly growing for years with no signs of slowing down, that represents a significant opportunity for accountants. But having the right technology is key to keeping up with the volume of work it demands.

The future for accountants

Businesses that have not embraced digital commerce accounting best practices and are still relying on manual data entry, are at risk of mistakes creeping in.

Accountants will need to help automate accounting practices to ensure no transaction gets stuck, fails, or gets attributed to the wrong account – however complicated it is to process.

Dext Commerce is designed to make it simple for bookkeepers, accountants, and businesses to effectively manage all types of digital commerce data – helping clients keep track of their sales in real-time.

To find out more about Dext Commerce, and why the e-Commerce industry is gaining importance for the accountancy sector, click here.

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