Outsourced Accounting and Finance for Ecommerce and Retail Businesses
Running a successful ecommerce or retail business relies on high-quality financial management. From tracking multi-channel sales to inventory accounting, businesses in the retail space have some unique challenges and accounting standards to work with.
The right outsourced accounting and finance provider can help you streamline operations, ensure multi-state tax compliance, and gain more strategic insights that can help you grow your business.
Introduction
Introduction
For many businesses, the challenge of keeping up with the intricacies of financial management, from regulatory compliance to strategic financial planning, can divert valuable resources away from their core objectives. This is where the concept of outsourced accounting and finance comes into play, offering a solution that not only alleviates the burden of day-to-day financial tasks but also empowers businesses to focus on growth and innovation. Whether you’re exploring the benefits of partnering with external financial experts for the first time or considering a fractional approach to enhance your strategic capabilities, understanding the scope, benefits, and dynamics of outsourced accounting and finance is essential.
The competitive landscape for CPA firms is demanding. You need to offer a wider range of services, cater to complex client needs, and navigate staffing challenges. According to a survey by alliantTalent, 74% of CPA firms are introducing fully remote roles, and 79% are using technology for basic tasks.
What is outsourced accounting and finance for retail and ecommerce businesses?
Outsourced or fractional accounting and finance services allow retail and ecommerce businesses to delegate specific tasks or the whole accounting function to an external team of retail and ecommerce specialists. Services typically cover the entire scope of accounting and finance, from bookkeeping and inventory accounting to cash flow management and CFO-level strategic guidance.
What are the benefits of outsourcing accounting and finance for retail and ecommerce businesses?
- Reduced Overhead Costs: Businesses can save on the expense of hiring, training, and maintaining an in-house accounting team while still benefiting from expert support.
- Access to Retail Expertise: Outsourced providers give you access to accountants who specialize in retail and ecommerce operations including multi-channel sales, payment platforms and integrations, multi-state tax challenges, and inventory management.
- Scalability: With an outsourced team, you can adjust the level of support based on seasonal variations or expansion plans.
- Technology Integration: Outsourced accounting firms have access to the newest tools and technology. They also have experience integrating technology into your systems and ensuring seamless connectivity between ecommerce platforms, POS systems, and accounting software.
- Enhanced Data Security and Compliance: An outsourced accounting partner will be knowledgeable about data protection and the legal requirements around payment processing, helping your ecommerce or retail business stay compliant.
What does an outsourced accounting and finance department look like?
- Financial Accounting: Managing bookkeeping and daily transactions, automating reconciliations, maintaining accurate records, and preparing P&L statements, balance sheets, and cash flow reports.
- Inventory and Cost Accounting: Monitoring inventory levels across multiple locations, tracking COGS, and improving your purchasing and pricing strategies.
- Multi-Channel Management: Integrating sales data from multiple platforms (e.g., Shopify or Amazon and physical locations, reconciling payments from different gateways, facilitating revenue recognition in accordance with ASC 606 Revenue Recognition guidelines, and optimizing revenue recognition and expense tracking.
- Tax Compliance: Navigating sales tax, VAT, and international tax laws and drafting tax filings and compliance paperwork. For international businesses entering the US market, an outsourced accounting provider can handle administrative tasks, including obtaining permits, completing registrations, and filing necessary documents to streamline the transition.
- Cash Flow and Demand Planning: Forecasting sales trends, managing working capital, and preparing for seasonal variations in business.
- Financial Analysis: Offering insights into profitability, cost management, and financial strategy for more data-driven decision-making.
- CFO Services: Assisting with financial planning, forecasting, and decision-making to help your business align its operations with stated financial goals and growth plans.
How do Retail and ecommerce businesses choose the right outsourced services or fractional teams?
Not every outsourced accounting provider will have the in-depth retail or ecommerce experience you need. To assess potential partners, consider:
What are some best practices for onboarding an outsourced accounting, finance, and audit partner?
- Establish Clear Expectations: During your first meeting with your outsourced partners, make sure to define your expectations, including the scope of work, timelines, and how you want them to communicate. Let the outsourced team know the reporting requirements that are most important for your business, like daily sales summaries, inventory turnover rates, or marketplace fee reconciliations. Establish key performance indicators (KPIs) such as gross margin tracking, sales tax compliance rates, and order fulfillment accuracy to monitor the success of the outsourced team and the overall health of your accounting function. You can make sure the outsourced team continues to satisfy the firm's needs, whether that's optimizing cash flow, reducing cart abandonment rates, or improving inventory forecasting by keeping the feedback loop open.
- Share Information: Securely provide outsourced or fractional team members access to your accounting systems, including Shopify, QuickBooks, Xero, or any POS integrations. Don't forget to share historical data and any internal accounting processes, like your workflow for reconciling third-party marketplace fees (e.g., Amazon, eBay) or the approval process for vendor payments and refunds.
- Build Relationships: Introduce your internal team to the outsourced accountants. This helps everyone know who to contact for sales reporting, inventory discrepancies, or tax-related queries and builds rapport. Strong relationships can also speed up interactions during peak seasons like Black Friday or holiday sales.
- Set the Team up for Success: Establish a regular communication calendar with clear goals for each meeting. Outline clear workflows and procedures for tasks like daily sales reconciliation, processing customer refunds, and tracking multi-state sales tax compliance. This establishes a productive structure for talking about progress, answering inquiries, and maintaining alignment while also supporting consistent service delivery.
What are some best practices for working with outsourced accounting and finance teams?
Once you’ve found your team or professional, onboarding will go more smoothly if you keep these tips in mind:
Timeliness and Accuracy of Financial Reporting
- Do you receive reliable and timely financial reports that provide real-time insights into your sales, inventory, and cash flow?
- Have you noticed fewer discrepancies in revenue reconciliation across platforms (e.g., Shopify, Amazon, brick-and-mortar POS)?
- Do your reports provide a clear breakdown of profitability by product category, channel, or region to support business growth?
Cost Savings and Efficiency Gains
- When you compare it to recruiting and training internal staff, has contracting an outsourced team led to measurable cost savings?
- Are your financial processes (e.g., revenue recognition, accounts payable, tax filings) more streamlined and automated?
- Has the outsourced team offered suggestions for reducing costs further, such as ways to optimize payment processing fees, reduce inventory holding costs, or improve negotiations with suppliers?
Performance Against Key Metrics (KPIs)
- Are your critical KPIs, such as gross margin, cash flow, inventory turnover, or customer acquisition cost (CAC) improving?
- Have you seen a measurable return on investment (ROI) from outsourcing, such as increased profitability or reduced overhead?
- Is the outsourced team enabling better financial planning and operational scalability for your business?
Compliance and Risk Management
- Is your business consistently compliant with multi-state sales tax regulations, including economic nexus laws?
- Have you seen a reduction in audits, chargebacks, or tax penalties thanks to more accurate financial reporting and risk mitigation?
- Are financial risks (e.g., fraud detection, credit card chargebacks, cybersecurity for payment systems) proactively managed?
Strategic Financial Insights and Decision-Making
- Has the outsourced team provided financial analysis that has enabled you to improve pricing strategies, discount structures, or inventory purchasing decisions?
- Are you now receiving financial forecasts that help you plan for seasonal trends, manage cash flow more effectively, or enter new markets?
- Has the outsourced team provided guidance in support of your long-term goals, such as preparing for an acquisition, securing funding, or launching a new sales channel?
Client Satisfaction and Communication
- Is there clear and responsive communication between your in-house and outsourced teams?
- Does your outsourced team provide regular insights into financial health, potential risks, and growth opportunities?
- Has collaboration and cooperation between the outsourced team and internal staff improved your financial operations overall?
How Scrubbed Can Help
At Scrubbed, we have a deep understanding of the fast-paced nature of the retail industry. We also know outsourcing makes sense when business can change quickly. We pride ourselves on giving you up-to-the-minute visibility into all the financial, tax, and payment information you need to make smart business decisions.