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The Importance of Bookkeeping for E-commerce Owners


Do you find bookkeeping time consuming and tedious?

You are not alone; many small e-commerce business owners feel the same.

Should you keep ignoring bookkeeping just because it is boring?

You might already be doing well, but one thing that could easily accelerate your growth and help you make the best-informed decisions is simply bookkeeping.

Bookkeeping helps you keep tabs on your business performance, it ensures that you ‘re not repeating the same mistakes, and it provides you with authentic insights for improvements.

In this article, we will talk about bookkeeping and why it is so essential for small businesses.

So, let’s dive in.


What is Bookkeeping?

Do you record and organise your financial data daily (okay, if not daily, then weekly)? Think of the orders received, returns initiated, and items dispatched. This is the nitty gritty of bookkeeping.

The main objective is to ensure that your financial information is up to date, accessible, and comprehensive.

While bookkeeping includes a range of activities, some of these include:

  • Creating accurate financial reports

  • Recording sales and following up invoices

  • Clearing supplier invoices

  • Verifying invoices from suppliers

  • Tracking depreciation

  • Inventory management

Put simply, bookkeeping is a process of tracking the money coming in and then going out of your business.

That said, effective bookkeeping is an essential part for your successful e-commerce business. Let’s see why…


Accuracy of Data & Correctly Accounting Amazon Fees

Every Amazon seller knows that when you are selling with Amazon, the customers belong to Amazon, not you. That makes things easy, as at the end of every fortnight, Amazon deposits money into your nominated account. It eliminates many of the logistical problems that go hand in hand with scaling e-commerce stores. Sweet!

Have you thought about what this money actually is? Revenue from sales? Well yes, but really, it is sales, minus all expenses incurred at Amazon. ‘Amazon expenses’ are many and varied:

  • Sales commission: This varies from 6% to 20%, depending on the category. Most categories attract at least 15% of the sales commission.

  • FBA Fulfilment Fees: product variable, determined by size and weight

  • FBA Storage Fees: size dependent and duration for which the inventory resides at Amazon’s warehouse

  • Advertising Cost: Sponsored products, banner advertisements, coupons etc.

  • Monthly subscription: for the privilege of utilising their selling platform.

The problem is, if you only report this fortnightly figure as your ‘sales’ you are grossly underreporting your actual sales figures, and your business expenditures.

This is where you will find a third-party software package like A2X very beneficial. It imports all your data into Xero and neatly divides it by sales / advertisements / subscriptions etc. It is worth noting that A2X only has the ability to pull historical data for 24 months, so if that 2-year mark is coming up for you, do not delay in contacting us!


Inventory Visibility

Do I have enough stock, and what is its worth?

These questions might sound simple but can be deceptively challenging to answer.

If you’re an Amazon 3rd party merchant and selling on multiple channels, it can be a daunting task to keep track of your stock.

Accounting software with the ability to track each individual SKU makes your analysis so much easier. Knowing your exact stock on hand for each individual product is imperative for the day to day running of your business and essential when it comes to positioning your business for sale.


Time is Money

Undoubtedly, things get complicated as you scale up, and one simple mistake can be costly, both in terms of money and time. You need to go through the entire book again, track all the changes, find out the error, and incur the additional costs.

What’s more, if within this period, you ended up making a decision based on incorrect data, it could have an everlasting detrimental impact on your business.


Better Reporting for Better Decision Making

Data is gold and it should be used to fully achieve your objectives. Having easy access to up to date relevant data helps you derive informed conclusions, strategise, and make better decisions.

Efficient bookkeeping is essential and helps you out by relieving you of this tedious on-going burden, allowing you to concentrate on running your business.


Zonkeepers is here to help you!

It is highly likely that you didn’t start your e-commerce business to become a bookkeeper. Many small business owners that we talk to feel that they lack financial and accounting knowledge. The trouble is, clean ordered books are essential for the long-term success of your business, and absolutely imperative if you’re considering an exit. If you don’t like doing your books or are feeling overwhelmed, outsource it.


Talk to us to find out more about our range of bookkeeping services, and how we can help you to streamline your business operations.

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