April 6, 2020
Transactional Accounting for Ecommerce Masterclass

Transactional Accounting for Ecommerce Masterclass

Hi, thanks for joining us today. My name is Lauren and I work on the marketing team here at webgility and we are going to walk through transactional accounting for e-commerce with some of our experts So to kick things off. We’re going to talk about some housekeeping Agenda items we’re gonna record today’s webinar and we are going to make that available to you within 24 hours Broadcast and we’ll send you slides the full recording the whole shebang So keep an eye on your inbox because we’ll be sending them up soon if you have a question and want to get our attention On social use hashtag unify and we’ll be checking those out throughout the broadcast and answering your your inquiries Um, and we want to hear from you so you’ll be cover up. Okay? Are we talking about topics that are relevant to you as an e-commerce seller accountant? we definitely want to know so if you have some ideas for Content or would really like to see us tackle a certain topic in our next webinar You can just drop us a line at marketing requested web Dilla decom or again. Just get our attention on social So today’s expert are two of our favorites um
We have Susan Hawkins who’s a CPA and actually was recognized as one of the top 100 advanced QuickBooks Pro advisors. So Susan is really active on her blog and we feature her on webinars all the time So she’s one of our favorites Uh : case is also joining us who’s a product manager at web jollity and is seasoned ecommerce veteran He’s been with web bility for a number of years and again is really active on our blog So Susan if you want to kick things off on our topic of choice starts with epi Sure thing. Thanks, Lauren Moving on to the next slide, you know, our topic is journal entry accounting versus trends actual accounting. Um, you may not recognize The terms use but I think you’ll recognize the actions Journal entries, you know where they fall short on the next slide most accounting platforms are designed not to need journal entries Journal entries can be used kind of at the end of the year or maybe for some cleanup But it’s not really an efficient way to run your business and they also give you the level of detail that you need So Colin, so you see a lot of this when you’re working with the clients as well, don’t you? That’s true Yeah, we see a lot of e-commerce sellers that you know The the burden is on just getting things recorded somehow they’re not too worried about necessarily how they’re recording it and so sometimes when setting things up to begin with they skip some of the you know Introductory steps that really set you up for transactional accounting and being able to see some of those more actionable insights from that Right and you mentioned as far as Bank feeds? Bank feeds are a very common option that people go with because they know the information is very accurate but the problem is they’re just they’re a little bit too high level and just like You know manually doing journal entries they lack a lot of that depth that leads you to better Profitability reporting and that kind of thing exactly Yeah, and you know, the bank feeds are I think a really good topic just to kind of chat about for a second You know especially with QBO they do such a good job of pulling in the banking and the credit card data and I think sometimes that can be a disservice to your end user or you know Maybe your bookkeeper working on the file because like you said you don’t get that detail You might just see, you know, a thousand dollars from your credit card sales that’s going to be a net of fees And you’re just going to record some people just record that as sales and kind of miss all that detail that You know and all that insight that goes with it. Yeah, which so You know, for example that I’ve Nets a good segue to the transactional accounting really what that is That’s you know, sort of based at the item level. You know, we’ve got Your items or products and services. If you’re in the QuickBooks world, you can use that to create the transactional documents themselves So a set of sales receipt and invoice and then see you on the back end You may not realize that that’s that’s all posting directly to your financial statements and your sales reports So without really any extra effort you’re gonna get great visibility when you get down at the detail level Mm-hmm. Yeah, we talked about we’re talking about the benefits here a little bit I always when people are a little bit more unfamiliar with transactional accounting I always sort of warn them at the you know, the burden of transactional counting is all front-loaded It’s all getting erased right to begin with And you know your daily operations your daily entry of those transactions ends up becoming much easier in the long run and of course, you know You’re provided with all the the subsequent benefits of those mapped accounts and you know cost of goods sold and expenses in that Mm-hmm, right, right. So I’m so the next slide I think we have a nice picture that kind of shows that for people that are unfamiliar You know when you’re talking about a sales receipt or invoice or earlier in the sales order, you know You can start with that transactional document which you need to place your items or you know products on The body of that document and what a lot of people don’t realize in doing that Assuming their item is set up properly When you record that transaction, you’re also recording the revenue and you can choose multiple accounts for that You know the shipping income you’re reducing your inventory Asset value and recording it to the cost of goods sold all with that simple document So it’s not really additional effort to record the transaction and you know, we can streamline it and even you know getting this set up Colin don’t you would have some good ways to streamline that for people Yeah, and I would say, you know One of the things that’s interesting here, like when you you know, when you see this diagram the way that it’s laid out showing that you know You’re creating a some sort of transaction like a sales receipt or an invoice that you’re applying these These items or objects to that you already created and it’s making those multiple entries for you you know, what’s interesting I think is you see a lot of times when people are Not doing this and not you know recording transactionally that instead what they end up skipping to is basically those three Boxes near the bottom there where maybe you’re making like a direct revenue entry and because of that again It leads down sort of a very awkward way to try and handle that where you end up recording revenue For different like sales channels or things like that maybe in two different accounts because you’re trying to separate that out When that’s not really the way that it’s intended to be done, you know all the products and services are using the they should be using those accounts you already set up and not really deviating on a transaction-by-transaction basis no So just you know starting from this top-down view it I guess, you know It aligns a business. Not only with what should be easier operational workflows day-to-day, but also you know fits within the bounds of what the accounting system is expecting you to do right and you know, I’m always surprised at the large volume of businesses that I come across That are doing it this way that are missing the point on the products and the items and like you said They might just record like aggregate sales numbers from you know Amazon sales or Magento sales as a as a revenue category and they have no idea what they sold there and they don’t even realize that they could get that detail and also If they do really want to see the channel that’s you know That’s when I bring up classes to them, which a lot of times is a new concept, but people love that You know you just enable Classes in QuickBooks, and then now that that makes a column for you So now you can see your particular items and then what channels you know They’re selling upon which can really lead to some good decision making as well. Yeah Very easy to do Um, alright, so Khan you want to touch upon this one Justin? Yeah Yes, so again sort of following up on that that last slide there You know if we’re just looking at how transactional accounting happens, I you know Whether you’re doing it manually or automated it’s sort of the step by step process where you’re entering whatever Order that you’re looking at as some sort of posting transaction like a sales receipt or an invoice You know different different strokes for different businesses Like that when you’re looking to add those items to that order. It’s going to do those journal entries for you If you are tracking quantities, you know inventory items those quantities will be adjusted Excuse me, if you’re still if you’re tracking Non-inventory parts, then you’ll still be recording, you know, the number of parts that you sold and the revenue and everything You’re just not removing anything from inventory asset, right? and then finally when you you know Once you’ve finished making those changes to the transaction and you save that that receipt or invoice That your reports like we’re talking about it’s sort of your end goal there of doing this is that those reports are immediately updated and you can see any type of you know changes that happen to Different accounts there to your inventory levels that kind of thing So it’s a very, you know, it’s an instantaneous process that when you fill out that single transaction You can immediately see the results of it right behind the scenes Right and that immediacy is so critical because it again always surprised When I’m working with a client and I see that what they have been doing Where they’ve got somebody at the end of the month, maybe you’re keeping King and aggregate sales numbers So they’ve already got that delay in seeing how they’re doing Yeah You know in the minute you hit save that informations in there and you can run your reports and see where you stand And that’s a good point. You just brought up there that you know, depending on how a business may need to do things When you actually enter these transactions, maybe you know, you may be doing it every day You may be doing it once a week or even like once a month doing transactional accounting or sort of moving over to this system Doesn’t necessarily restrict you from doing that You can absolutely, you know batch your sales together on a single sales receipt for like a day or a week if you need to And you still get the same sort of reporting and actionable insights that are coming from those those item receipts there Mm-hmm So so moving on to the next slide where we talk We you know, he’d mentioning journal entries were kind of trying to get people away from that, but then we’re throwing out in conversation so just so everybody’s clear doing your transactional accounting is Creating journal entries behind the scenes but as long as you’re set up you don’t have to worry about it And it’s all done for you. Everything is going where it should with a lot less effort So for businesses that aren’t doing that, you know, what do they need to do to transition So the callin want to take this one, yeah, so I You know when you’re when you’re living transition to transactional accounting The first you know, really Keystone there is setting up all of your items or products We’re calling them items and products there because depending on what accounting system you’re in they are actually sort of called different things But they are the same as far as what you’re trying to set up When you create those items You know if you already are selling online, of course you’ve probably created those items on your online store and you likely have some kind of unique identifier there like a skew You know, that’s the type of thing that you’re gonna want to use Across your different channels and in your accounting system to identify those products or items So you want to start by setting those up? In your accounting system with those names and then as you do that, of course You’ll be asked to map them to things like revenue accounts cogs accounts and asset accounts if you’re tracking inventory And you just do that within the accounting software as you’re setting up each item If I can jump it on this one calling the nice thing about this is the mapping is You can vary that so you can sort of have me everything go to sales revenue. You can have it, you know go to accessories clothing shoes like your different product mix If you’re right off the bat you get a you get a lot more visibility. I’m a fan of you know, less is more I wouldn’t go crazy and I’ve seen users that they have like two pages on their P&L on revenue account here I’d say like five to seven ideal but you don’t need to just have one. This is where you can customize it. Yeah Yeah, it’s a good point and I I should also mention in here that web. Jilla T is It would really can definitely help facilitate this process for you I like I mentioned if you have you know, an online store where you have items already set up our unify software is able to take those items and you can sort of selectively Transfer them into your accounting system and map these accounts as you’re doing that so, you know, yeah and with mapping those accounts and creating those I I You know what? Julie can actually help a lot with that especially if you’re a multi-channel seller If you have your items listed across those multiple sort of online stores If you you know, you usually have those different items up there and they may be shared across multiple stores you may sell different catalogs on different stores, but With UniFi, you can connect to those stores view those item lists you can sort of compare them to what’s already in your accounting system and then Very easily you can do things like map those revenue and cogs accounts and just transfer those items over To get you you know ahead of the game basically not having to create those manually right because you’ve got those items set up somewhere if you’re selling online, which is a question and getting into tiers your Accounting system certainly is the data yeah, I mean and then the great part it’s sorry Susan I and then the great part about that is that Once those items are in your accounting system, you know Whether you put them in there manually or if you use something like unify to transfer those over Unify can also, you know when you are recording your transactions on a daily basis from those sales channels It’s locking into all of that hard work that you sort of put it up front there and that it’s doing all the heavy lifting for you in the background just automating those transactions into the accounting system that already You know accepts those accounts that everything are tied to and and just kind of makes those decisions automatically for you. That’s right So once you get it set up it all flows and you know, the hard work is done So let’s go ahead and excite and see what kind of the outcome is from this. So when you do have your items And/or your products you can actually see data at the product level and make decisions on that and so if we could go to the next slide I have um, you know It’s not I’m gonna count so it’s not real pretty creativity’s not my thing But here’s just an example of a sales by item summary You can get sales by product summary in qbo their default reports that exist, but this is a great example Where now? I’ve got my individual items or products On the left and I can actually see it’s I’m just looking at you know total chocolate revenue I can actually see my product mix what I’m selling how much I’m selling each one for to get my average price and my cogs and micros margin and Just from this, you know that the basic steps that we talked about. I have the reports that I need to make actionable decisions you know as quickly as I need to so if we jump back Calling you want to throw out some some other suggestions here Yeah, and you know here we were talking about class tracking a little bit earlier as well But this is really where class tracking starts to shine If you set it up that when those those transactions start coming through on a daily basis Channel by channel and they’re being classed out, you know, maybe like an Amazon store maybe your your personal website sales that are coming through you can not only track things like overall, you know sales revenue and And that kind of thing that’s coming through each channel But as you drill down to the item level with all those accounts and and individual products that you set up classes apply to those as well So you can even see things like profitability per item or you know Purse queue that you’re selling across different channels kind of showing you where things are performing Well and where maybe you need to make some adjustments and you know, either replace products on other channels or remove them, right, right So let’s just you know Colin, so we probably won’t everybody with this, you know Rushing to get started and make that transition What what are some next steps here? What can they do? Yeah, so definitely I mean any content like this if you’re interested in any kind of e-commerce General news and information like that. We post things all the time on our blog about transactional accounting and e-commerce and also if you’re you know If you’re think you’re ready that you might want to actually start trying this out you can visit our website and just go to that web Julie decom slash demo to either get set up and talk to someone or Or start your own free trial there. Oh, yeah, that’s some great advice Colin. We have a ton of content On our website that is super helpful to you know someone getting started and selling an e-commerce or like a seasoned professional who’s just looking to become more agile and More efficient at the seller. So yeah, definitely check out her blog Thank you so much to Susan and call in for leading the discussion today Hope you took away some tips and tricks and we will catch you on the next webinar Bye. Bye

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