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Mike P - Green background
Michael Pignatelli, CPA
CEO, Unloop

Category: Accounting

Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

So you’ve started a small online business. You are now among the millions who have braved the ecommerce world. Since ecommerce is so complex, and the sheer volume of transactions can be intimidating, your accounting may need help to keep up with your online store. This is where choosing the best accounting software can be worth it.

Accounting software programs can do more than track the inflow and outflow of cash. You’ll be amazed at how they can be a one-stop shop for many of your digital needs, making them worthy of every penny you invest.

So, what’s the best small business accounting software for you? Find out all the answers here in this guide. But first, let’s talk about everything you need to know about ecommerce accounting.

How Is Ecommerce Accounting Unique?

Ecommerce industry growth projection by 2026 - $9.4 trillion.

Ecommerce is a worldwide business. In fact, Statista already presented compelling data, showing its global reach and exponential growth. Just think of the transactions that make up this figure—massive. 

Given the wide reach, ecommerce accounting differs because there is so much more to account for. Take a look at some of them.

1. Processing Multiple Sales Tax

An online business can sell anywhere in the world through an ecommerce platform and exemplary shipping service. But to be able to sell legally, there must always be a sales tax attached to each sale.

Ecommerce accounting requires sales tax calculation for different tax policies. For example:

Amazon can handle your taxes through Amazon Tax Exemption Program (ATEP) for sales in the US.

But you'll still have to collect and remit your sales taxes in Canada.

On top of that, the US and Canadian sales tax rates are completely different, with tax returns filed each year. Tax management is daunting, requiring careful attention and consideration.

2. Large Inventory Management

Another thing that separates ecommerce from regular businesses is the vast inventory. Inventory tracking is no easy task for anybody, especially for small-scale startups. You need to have many products on-hand and ready to meet demand at a moment’s notice.

There will also be an inevitable addition to your accounting load, especially if you’re a business that ships to customers in different timezones. Add to that the sheer volume of items you’ll have to check on—where they are stored, how many are ready for shipping, how many are damaged or lost—and regularly reconcile in your records.

3. High Volume of Business Transactions

If you sell products or services worldwide, expect to see thousands of business transactions daily. That means various modes of payments, currencies, bank accounts, taxes, and so on.

Tracking each transaction will take copious amounts of time and energy. You might miss out on some financial data, which, for a global business, you cannot allow to happen.

8 Reasons Small Business Accounting Software Is Worth It

While it's possible to do your accounting manually, tracing every ecommerce transaction can make even the best accountants dizzy. Giving your accounting specialist some much-needed assistance, like online accounting software, is recommended.

In addition to maximizing your time and resources, here are eight reasons accounting software is worth it for your small ecommerce business. 

1. It Handles Bookkeeping

A bookkeeper can rely on accounting software to record transactions. Through it, they can take note of all business transactions involving money. They can ensure that income and expenses from different channels, like bank and credit cards or online payment gateways, are all accounted for.

Because of the high-tech tools available today, a bookkeeper’s task of typing data is slowly disappearing. Data from different sources can be connected to a central accounting system. There are also optical character recognition tools that minimize manual data entry.

2. It Helps You Schedule and Stay On Top of Invoices

Invoicing is an essential part of bookkeeping and accounts receivable management. Through software, you can conveniently send payment reminders to customers—all online. Simply schedule the sending date and time and let the software handle its transmission. If customers forget to pay, sending a nudge can also be done on the software.

Invoicing from an accounting tool also makes payment easier for customers as each invoice includes a “Pay Now” button. Customers can click on it for online payment. All money coming from this channel will automatically be recorded in the books. 

3. It Connects Bank Accounts and Reconciles Transactions

The money you collect from customers and use to pay suppliers and expenses are all recorded in your business bank account. Through accounting software’s bank connection feature, you can have visibility on these transactions, and they will also be categorized into income and expenses in the books.

Bank reconciliation becomes a seamless process, as you can easily compare the details recorded in your books with the transactions listed in your bank statement. With this, you’ll be able to correct any mistakes and raise red flags on fraudulent deals.

4. It Helps in Financial Planning and Forecasting

Business planning and forecasting are vital as they allow you to see how your business will go in a projected period. It may not be 100% accurate, but you can still get the closest possible financial situation your business will see in the future.

Many accounting software has a feature that allows you to develop a business financial forecast in just a few clicks. Acquiring past and present numbers won’t be a problem as they are all recorded in the books. 

Once you have the forecasted data, you can create plans based on numbers and even simulate results using the software. You can follow a strategy that gives you the best results from there.

5. It Generates Financial Reports

The younger your business is, the more often you should generate financial reports. You must regularly check its financial health to adjust your strategies. Good financial reporting contains the following:

Financial Reports
Balance SheetQuickly check your assets, liabilities, and equity using this report.
Income StatementAlso known as the Profit and Loss Statement or Statement of Revenue and Expenses. This report shows your business's profit and how income and expenses impact it.
Cash Flow StatementThis report illustrates how money flows in and out of your business, showing your earnings and expenditures.
Statement of Owner’s EquityFor sole proprietors, this report displays earnings or profit and retained earnings. For corporations, it is referred to as Shareholder’s Equity.

When you know these reports, you and your accountant can run and analyze them.

6. It Tracks Inventory 

As mentioned earlier, inventory is a part of your company assets. You don’t want your customers disappointed because products are out of stock. This is where accounting software comes into play.

Accounting software isn’t only for numbers; it’s for your items too. When you can monitor your inventory, you’ll know which items fly off the shelves and which don’t move. You can also use the information to create plans to duplicate your successes and sell slow products.

7. It Calculates and Tracks Sales Tax and Income Tax Returns

Taxes are inevitable, but you can make them manageable. On top of calculation and collection, the best accounting software can handle tax remittance. You can integrate the data from these tools into your accounting system for tracking purposes. 

Calculating your tax base and rate becomes easier regarding income tax returns, given the recorded income and expenses in the books. With the most comprehensive accounting software, tax season will be a breeze.

8. It Keeps Your Financial Data Safe

Ecommerce functions online. Data security and protection are indeed vital features you’ll look for in small business accounting programs. Luckily, online financial accounts are protected with cloud-based features. 

Traditional accounting using Excel sheets stores books on computers. Still, cloud-based software has more advanced security features and can store information in the cloud. The cloud encrypts data, ensuring hackers and unauthorized individuals cannot access your accounting data. Corruption of data is also less likely.

Most cloud-based software have multiple users and role-based access, meaning only individuals you authorize can access the books. 

More Accounting Software Features for Small Business Owners

Besides bookkeeping, inventory, cloud, and tax management, consider examining these features when selecting the most suitable accounting software solution for your business.

1. Accounts Receivable

Any small business owner should have an accounts receivable feature in their software, given that payments are often made remotely with various payment schemes. 

An accounts receivable lets you know how much money to expect and how much you can use to repurchase stock. It also tells you how much your business is shelling out weekly or monthly.

For example: If you're in the retail business, you may have scheduled shipments to replenish your inventory. Accounts payable notes this in advance for you to continue or change, depending on your decision.

2. Ecommerce Integration

Direct integration is also a crucial feature to look for in accounting software. It allows smooth alignment with the ecommerce platforms you've chosen for selling your products. The software can efficiently capture and organize all relevant accounting data by directly integrating with your online stores.

It also ensures that your accounting records are automatically updated in real time, reducing the risk of errors. With direct integration, you'll have an easier time keeping a thorough and accurate overview of your financial performance.

3. Mobile App

A mobile app functionality is a great feature to add to your accounting software. With everyone on the go nowadays, having a mobile app handy allows you and your staff to update your accounting whenever and wherever.

The Best Accounting Software for Small Businesses

Logos of the best accounting software for small businesses

Being a startup, you can always pick the small business accounting software that can currently satisfy your financial management needs. But you must also choose the one that can scale to more advanced features as you grow your venture. 

Here are popular accounting software ideal for ecommerce startups.

Software #1: QuickBooks

The most popular small business accounting software. It has all the features you need. When you sign up for a plan, it’ll backtrack all your financial transactions and do live bookkeeping moving forward. 

QuickBooks has:

  • Payroll Solutions
  • Invoicing
  • Various Payment Gateways
  • Integrations
  • Time Tracking and Project Management
  • Inventory Tracking
  • Software #2: Xero

    Xero is another accounting software that will surely ring a bell. Designed with businesses of all sizes in mind, Xero offers wide accounting features to streamline accounting processes and empower users with real-time financial insights.

    Xero has:

  • A User-Friendly Interface
  • An Intuitive Dashboard
  • Direct Integration
  • Inventory Management
  • Invoicing
  • Tax Filing
  • Multi-User Access
  • Accounts Payable and Receivable
  • Bank Reconciliation
  • Like QuickBooks, it also operates on the cloud. It can be accessed on mobile devices as long as there is an internet connection.

    Software #3: Sage

    For every small business owner, the ultimate goal is growth. If you envision managing a larger workforce and handling a growing client base, you can count on Sage.This tool has HR and CRM features that will be very helpful in managing your growing workforce. 

    These functionalities can effectively centralize and manage customer data, which is a big help for ecommerce sellers. This way, you can nurture stronger client relationships, track interactions, and identify opportunities for growth and upselling.

    Sage has:

  • Cash Flow Management
  • Job Costing
  • Analysis and Inventory Management Tools
  • Multi-Year Reporting
  • Payroll Management
  • Software #4: FreshBooks

    Many accounting software for small businesses pride themselves on being simple and user-friendly, and FreshBooks is one of them. The platform has been designed with the non-accountant in mind, offering intuitive features and a clean interface. Managing financial tasks is easy, making it accessible for entrepreneurs and small business owners. 

    FreshBooks has:

  • A Double-Entry Accounting System
  • Estimates Proposals
  • Time Tracking
  • Project Management
  • Seamless Online Payment
  • Google Contacts
  • Mobile Integration
  • Software #5: Wave Accounting

    Wave Accounting is another addition to the user-friendly list. Its tagline flaunts that the tool was not made for accountants but for business owners themselves. Hence, its features are perfect for individuals with little bookkeeping and accounting knowledge. If you don’t have much time to learn the ropes of financial management, Wave Accounting is an excellent start.

    Wave Accounting has:

  • Optical Character Recognition Technology
  • Invoicing
  • Faster Payments
  • Income and Expense Tracking
  • Payroll Management
  • Financial Advisors
  • Software #6: Zoho Books

    You won’t be disappointed with Zoho Books. This free accounting software has superb customer service to help you establish and maintain your accounting and bookkeeping system.

    Zoho Books has:

  • Automated Workflows
  • Bank Reconciliation
  • Custom Invoices
  • Expense Tracking
  • Projects and Timesheets
  • Recurring Transactions
  • Sales Approval
  • Unloop As Your Ecommerce Accounting Service

    Now that you have all the essential information about top-notch bookkeeping software, you can check out which satisfies your business needs most to get the best.

    If managing your startup's books proves daunting, Unloop is here to alleviate your burden. As one of the premier financial teams in North America, Unloop offers ecommerce services to go along with precise and detailed accounting. 

    Regardless of your sales channel—Amazon, Shopify, DTC, multichannel, or wholesale—we tailor our accounting services to your unique requirements. We can help you with the following:

    • Forecasting
    • Bookkeeping
    • Accounts Payable
    • Payroll
    • Tax Management

    Let’s discuss our offers further. Book a call now!

    The Best Accounting Software for Ecommerce Startups 
    Watch Now

    Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

    So you’ve started a small online business. You are now among the millions who have braved the ecommerce world. Since ecommerce is so complex, and the sheer volume of transactions can be intimidating, your accounting may need help to keep up with your online store. This is where choosing the best accounting software can be worth it.

    Accounting software programs can do more than track the inflow and outflow of cash. You’ll be amazed at how they can be a one-stop shop for many of your digital needs, making them worthy of every penny you invest.

    So, what’s the best small business accounting software for you? Find out all the answers here in this guide. But first, let’s talk about everything you need to know about ecommerce accounting.

    How Is Ecommerce Accounting Unique?

    Ecommerce industry growth projection by 2026 - $9.4 trillion.

    Ecommerce is a worldwide business. In fact, Statista already presented compelling data, showing its global reach and exponential growth. Just think of the transactions that make up this figure—massive. 

    Given the wide reach, ecommerce accounting differs because there is so much more to account for. Take a look at some of them.

    1. Processing Multiple Sales Tax

    An online business can sell anywhere in the world through an ecommerce platform and exemplary shipping service. But to be able to sell legally, there must always be a sales tax attached to each sale.

    Ecommerce accounting requires sales tax calculation for different tax policies. For example:

    Amazon can handle your taxes through Amazon Tax Exemption Program (ATEP) for sales in the US.

    But you'll still have to collect and remit your sales taxes in Canada.

    On top of that, the US and Canadian sales tax rates are completely different, with tax returns filed each year. Tax management is daunting, requiring careful attention and consideration.

    2. Large Inventory Management

    Another thing that separates ecommerce from regular businesses is the vast inventory. Inventory tracking is no easy task for anybody, especially for small-scale startups. You need to have many products on-hand and ready to meet demand at a moment’s notice.

    There will also be an inevitable addition to your accounting load, especially if you’re a business that ships to customers in different timezones. Add to that the sheer volume of items you’ll have to check on—where they are stored, how many are ready for shipping, how many are damaged or lost—and regularly reconcile in your records.

    3. High Volume of Business Transactions

    If you sell products or services worldwide, expect to see thousands of business transactions daily. That means various modes of payments, currencies, bank accounts, taxes, and so on.

    Tracking each transaction will take copious amounts of time and energy. You might miss out on some financial data, which, for a global business, you cannot allow to happen.

    8 Reasons Small Business Accounting Software Is Worth It

    While it's possible to do your accounting manually, tracing every ecommerce transaction can make even the best accountants dizzy. Giving your accounting specialist some much-needed assistance, like online accounting software, is recommended.

    In addition to maximizing your time and resources, here are eight reasons accounting software is worth it for your small ecommerce business. 

    1. It Handles Bookkeeping

    A bookkeeper can rely on accounting software to record transactions. Through it, they can take note of all business transactions involving money. They can ensure that income and expenses from different channels, like bank and credit cards or online payment gateways, are all accounted for.

    Because of the high-tech tools available today, a bookkeeper’s task of typing data is slowly disappearing. Data from different sources can be connected to a central accounting system. There are also optical character recognition tools that minimize manual data entry.

    2. It Helps You Schedule and Stay On Top of Invoices

    Invoicing is an essential part of bookkeeping and accounts receivable management. Through software, you can conveniently send payment reminders to customers—all online. Simply schedule the sending date and time and let the software handle its transmission. If customers forget to pay, sending a nudge can also be done on the software.

    Invoicing from an accounting tool also makes payment easier for customers as each invoice includes a “Pay Now” button. Customers can click on it for online payment. All money coming from this channel will automatically be recorded in the books. 

    3. It Connects Bank Accounts and Reconciles Transactions

    The money you collect from customers and use to pay suppliers and expenses are all recorded in your business bank account. Through accounting software’s bank connection feature, you can have visibility on these transactions, and they will also be categorized into income and expenses in the books.

    Bank reconciliation becomes a seamless process, as you can easily compare the details recorded in your books with the transactions listed in your bank statement. With this, you’ll be able to correct any mistakes and raise red flags on fraudulent deals.

    4. It Helps in Financial Planning and Forecasting

    Business planning and forecasting are vital as they allow you to see how your business will go in a projected period. It may not be 100% accurate, but you can still get the closest possible financial situation your business will see in the future.

    Many accounting software has a feature that allows you to develop a business financial forecast in just a few clicks. Acquiring past and present numbers won’t be a problem as they are all recorded in the books. 

    Once you have the forecasted data, you can create plans based on numbers and even simulate results using the software. You can follow a strategy that gives you the best results from there.

    5. It Generates Financial Reports

    The younger your business is, the more often you should generate financial reports. You must regularly check its financial health to adjust your strategies. Good financial reporting contains the following:

    Financial Reports
    Balance SheetQuickly check your assets, liabilities, and equity using this report.
    Income StatementAlso known as the Profit and Loss Statement or Statement of Revenue and Expenses. This report shows your business's profit and how income and expenses impact it.
    Cash Flow StatementThis report illustrates how money flows in and out of your business, showing your earnings and expenditures.
    Statement of Owner’s EquityFor sole proprietors, this report displays earnings or profit and retained earnings. For corporations, it is referred to as Shareholder’s Equity.

    When you know these reports, you and your accountant can run and analyze them.

    6. It Tracks Inventory 

    As mentioned earlier, inventory is a part of your company assets. You don’t want your customers disappointed because products are out of stock. This is where accounting software comes into play.

    Accounting software isn’t only for numbers; it’s for your items too. When you can monitor your inventory, you’ll know which items fly off the shelves and which don’t move. You can also use the information to create plans to duplicate your successes and sell slow products.

    7. It Calculates and Tracks Sales Tax and Income Tax Returns

    Taxes are inevitable, but you can make them manageable. On top of calculation and collection, the best accounting software can handle tax remittance. You can integrate the data from these tools into your accounting system for tracking purposes. 

    Calculating your tax base and rate becomes easier regarding income tax returns, given the recorded income and expenses in the books. With the most comprehensive accounting software, tax season will be a breeze.

    8. It Keeps Your Financial Data Safe

    Ecommerce functions online. Data security and protection are indeed vital features you’ll look for in small business accounting programs. Luckily, online financial accounts are protected with cloud-based features. 

    Traditional accounting using Excel sheets stores books on computers. Still, cloud-based software has more advanced security features and can store information in the cloud. The cloud encrypts data, ensuring hackers and unauthorized individuals cannot access your accounting data. Corruption of data is also less likely.

    Most cloud-based software have multiple users and role-based access, meaning only individuals you authorize can access the books. 

    More Accounting Software Features for Small Business Owners

    Besides bookkeeping, inventory, cloud, and tax management, consider examining these features when selecting the most suitable accounting software solution for your business.

    1. Accounts Receivable

    Any small business owner should have an accounts receivable feature in their software, given that payments are often made remotely with various payment schemes. 

    An accounts receivable lets you know how much money to expect and how much you can use to repurchase stock. It also tells you how much your business is shelling out weekly or monthly.

    For example: If you're in the retail business, you may have scheduled shipments to replenish your inventory. Accounts payable notes this in advance for you to continue or change, depending on your decision.

    2. Ecommerce Integration

    Direct integration is also a crucial feature to look for in accounting software. It allows smooth alignment with the ecommerce platforms you've chosen for selling your products. The software can efficiently capture and organize all relevant accounting data by directly integrating with your online stores.

    It also ensures that your accounting records are automatically updated in real time, reducing the risk of errors. With direct integration, you'll have an easier time keeping a thorough and accurate overview of your financial performance.

    3. Mobile App

    A mobile app functionality is a great feature to add to your accounting software. With everyone on the go nowadays, having a mobile app handy allows you and your staff to update your accounting whenever and wherever.

    The Best Accounting Software for Small Businesses

    Logos of the best accounting software for small businesses

    Being a startup, you can always pick the small business accounting software that can currently satisfy your financial management needs. But you must also choose the one that can scale to more advanced features as you grow your venture. 

    Here are popular accounting software ideal for ecommerce startups.

    Software #1: QuickBooks

    The most popular small business accounting software. It has all the features you need. When you sign up for a plan, it’ll backtrack all your financial transactions and do live bookkeeping moving forward. 

    QuickBooks has:

  • Payroll Solutions
  • Invoicing
  • Various Payment Gateways
  • Integrations
  • Time Tracking and Project Management
  • Inventory Tracking
  • Software #2: Xero

    Xero is another accounting software that will surely ring a bell. Designed with businesses of all sizes in mind, Xero offers wide accounting features to streamline accounting processes and empower users with real-time financial insights.

    Xero has:

  • A User-Friendly Interface
  • An Intuitive Dashboard
  • Direct Integration
  • Inventory Management
  • Invoicing
  • Tax Filing
  • Multi-User Access
  • Accounts Payable and Receivable
  • Bank Reconciliation
  • Like QuickBooks, it also operates on the cloud. It can be accessed on mobile devices as long as there is an internet connection.

    Software #3: Sage

    For every small business owner, the ultimate goal is growth. If you envision managing a larger workforce and handling a growing client base, you can count on Sage.This tool has HR and CRM features that will be very helpful in managing your growing workforce. 

    These functionalities can effectively centralize and manage customer data, which is a big help for ecommerce sellers. This way, you can nurture stronger client relationships, track interactions, and identify opportunities for growth and upselling.

    Sage has:

  • Cash Flow Management
  • Job Costing
  • Analysis and Inventory Management Tools
  • Multi-Year Reporting
  • Payroll Management
  • Software #4: FreshBooks

    Many accounting software for small businesses pride themselves on being simple and user-friendly, and FreshBooks is one of them. The platform has been designed with the non-accountant in mind, offering intuitive features and a clean interface. Managing financial tasks is easy, making it accessible for entrepreneurs and small business owners. 

    FreshBooks has:

  • A Double-Entry Accounting System
  • Estimates Proposals
  • Time Tracking
  • Project Management
  • Seamless Online Payment
  • Google Contacts
  • Mobile Integration
  • Software #5: Wave Accounting

    Wave Accounting is another addition to the user-friendly list. Its tagline flaunts that the tool was not made for accountants but for business owners themselves. Hence, its features are perfect for individuals with little bookkeeping and accounting knowledge. If you don’t have much time to learn the ropes of financial management, Wave Accounting is an excellent start.

    Wave Accounting has:

  • Optical Character Recognition Technology
  • Invoicing
  • Faster Payments
  • Income and Expense Tracking
  • Payroll Management
  • Financial Advisors
  • Software #6: Zoho Books

    You won’t be disappointed with Zoho Books. This free accounting software has superb customer service to help you establish and maintain your accounting and bookkeeping system.

    Zoho Books has:

  • Automated Workflows
  • Bank Reconciliation
  • Custom Invoices
  • Expense Tracking
  • Projects and Timesheets
  • Recurring Transactions
  • Sales Approval
  • Unloop As Your Ecommerce Accounting Service

    Now that you have all the essential information about top-notch bookkeeping software, you can check out which satisfies your business needs most to get the best.

    If managing your startup's books proves daunting, Unloop is here to alleviate your burden. As one of the premier financial teams in North America, Unloop offers ecommerce services to go along with precise and detailed accounting. 

    Regardless of your sales channel—Amazon, Shopify, DTC, multichannel, or wholesale—we tailor our accounting services to your unique requirements. We can help you with the following:

    • Forecasting
    • Bookkeeping
    • Accounts Payable
    • Payroll
    • Tax Management

    Let’s discuss our offers further. Book a call now!

    Read more

    Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

    Any big or small business owner must ensure their employees receive the hard-earned money they deserve. Nevertheless, mistakes during payroll processing are bound to happen. Thankfully, the emergence of an automated payroll system allows you to pay your employees seamlessly. 

    Let's delve into the depths of an automated payroll solution and how it can transform your business’s financial operations.

    The World of An Automated Payroll System

    Before we get into the nitty-gritty of payroll automation, it's crucial to understand the processes behind it. As you might have already guessed, payroll involves giving your employees accurate salaries on time.

    To do so, you have to calculate

    •  the amount of money they will receive, 
    • how many hours they've worked, and 
    • how to distribute their wages in an organized manner. 

    Additionally, you have to consider several other factors, such as 

    • payroll taxes, sick and vacation leaves, 
    • holiday and overtime pay, 
    • bonuses, 
    • reimbursements, and 
    • other employee benefits. 

    To any business owner without an established finance team, these tasks may become too confusing and daunting to handle on their own. Learning to do these accounting tasks accurately also takes much time and effort.

    Fortunately, you won't have to stress too much over perfecting these tiresome payroll processes. With an automated payroll, you have an organized tool for the job. A computerized payroll system will simplify and speed up how you calculate and distribute your employee's paychecks.

    An automated system can do the following processes:

    • Precise payroll calculations and deductions
    • Speedy wage distribution
    • Employee time tracking
    • Enhanced and organized recording of transactions
    • Proper tax filing and management

    You might still be skeptical about streamlining your payroll tasks to organized software. To ease any of your worries, we've gathered a few reasons why you should automate payroll to improve your business.

    graphic showing the benefits of using an automated payroll system

    Saves Time

    Time is precious and should not be wasted. Even the tiniest moments count when you're operating and handling a business. Hence, it's only logical to spend every second wisely. 

    You would have to spend hours upon hours doing manual data entry for payroll when you should be working on important business matters. An automated payroll system allows you to allocate more time to those tasks.

    Reduces Payroll Errors

    Even the slightest mistake can cause grave consequences when calculating employee wages. The payroll team must ensure accurate and timely wage distribution.

    However, with the dizzying amount of accounting and recordkeeping tasks involved in payroll, some people will inevitably make mistakes and unintentionally issue inaccurate employee payments. These errors can cause financial issues for both the employee and the employer and lead to severe legal penalties.

    Precise and accurate payment calculations are guaranteed with a computerized payroll system. The software can correctly and swiftly compute and adjust an employee's pay while considering possible wage deductions, raises, bonuses, and more.

    Files Taxes Efficiently

    One of the most confusing and headache-inducing parts of payroll processing is filing and calculating tax withholdings. Getting this part right is crucial as it involves various laws and regulations. An error may likely result in legal trouble for your business.

    With automated payroll systems, you don't have to calculate all of your employee's gross pay and take out tax deductions on your own. You can let the software accurately figure out and navigate the complicated world of tax filing.

    Provides Transparency to Employees

    Using automated payroll software can also foster employee trust. Most automated systems allow staff members to access their paychecks easily and view possible changes in their regular wages. These are possible with employee self-service portals and other employee-centric features.

    They can also update and input payroll information easily using automated systems. Because of this feature, the system can smoothly adjust employee pay stubs according to real-time changes.

    Improves Employer-Employee Relations

    Paying employees with an automated system can indirectly improve your relationship with them. Receiving befitting compensation for their work is one of the primary ways to motivate employees. With computerized payroll systems, employees are guaranteed accurate and timely pay. 

    Moreover, with the transparency that automated systems provide, you can improve and develop trust and confidence in your employees. They will feel secure knowing that you pay them what they're due.

    payroll book with weekly time sheets, a pen, and a calculator on a work desk

    Automating Payroll 101

    Manually handling your payroll may seem like a breeze at first. But as your business grows, it will become more complicated and time-consuming. The sooner you implement payroll automation, the more time and resources you'll save in the long run.

    Hopefully, the benefits mentioned above are enough to convince you to start automating your payroll. Your next course of action is learning how to switch from manual to automated payroll. You can either use payroll automation software or hire a payroll service.

    Using Payroll Automation Software

    Take matters into your own hands by searching for payroll automation software that suits your business. Choosing payroll software will primarily depend on your company's size, business needs, and other related factors. 

    Besides the payroll software cost, here are some features you must consider:

    • Has time tracking features
    • Provides comprehensive reporting
    • Provides automatic tax filing
    • Has robust data security
    • Has direct deposit
    • Has available support 24/7

    Besides calculating your employee's wages, automated software can also provide regular comprehensive payroll reports to help monitor your finances. Some even use combined HR and payroll software for more efficient employee and payroll management

    Once you've made your choice, all you have to do is input the necessary payroll data and documents, such as employee information and tax forms, into the software. Ensure that what you've placed in the system is accurate to avoid financial errors.

    Hiring Payroll Services

    Another option is to hire management assistance from professional payroll services. They especially come in handy for owners of large corporations and businesses handling a significant number of employees.

    All you have to do is track your employees' work hours and forward this data to the service provider. The service will calculate the payroll amount based on those hours and deduct taxes from their paychecks before rolling them out during payday. Naturally, they would typically use automated software.

    shot of an employer handing a payroll cheque to their employee

    Get the Ideal Payroll Service With Unloop

    Payroll is part and parcel of any business, no matter the industry. Plenty of accounting tasks necessitate payroll processing, from tracking your employees' work hours to delivering their wages on time. While these tasks can be done independently and manually, doing so will be time-consuming and may lead to unintentional errors.

    So, switch to stress-free automated payroll management with Unloop's payroll services. Our team of professionals uses efficient, up-to-date tools like QuickBooks to ensure automated, organized, and efficient payroll processing for your company. Book a call with us today!

    How an Automated Payroll System Can Turn Your Business Around
    Watch Now

    Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

    Any big or small business owner must ensure their employees receive the hard-earned money they deserve. Nevertheless, mistakes during payroll processing are bound to happen. Thankfully, the emergence of an automated payroll system allows you to pay your employees seamlessly. 

    Let's delve into the depths of an automated payroll solution and how it can transform your business’s financial operations.

    The World of An Automated Payroll System

    Before we get into the nitty-gritty of payroll automation, it's crucial to understand the processes behind it. As you might have already guessed, payroll involves giving your employees accurate salaries on time.

    To do so, you have to calculate

    •  the amount of money they will receive, 
    • how many hours they've worked, and 
    • how to distribute their wages in an organized manner. 

    Additionally, you have to consider several other factors, such as 

    • payroll taxes, sick and vacation leaves, 
    • holiday and overtime pay, 
    • bonuses, 
    • reimbursements, and 
    • other employee benefits. 

    To any business owner without an established finance team, these tasks may become too confusing and daunting to handle on their own. Learning to do these accounting tasks accurately also takes much time and effort.

    Fortunately, you won't have to stress too much over perfecting these tiresome payroll processes. With an automated payroll, you have an organized tool for the job. A computerized payroll system will simplify and speed up how you calculate and distribute your employee's paychecks.

    An automated system can do the following processes:

    • Precise payroll calculations and deductions
    • Speedy wage distribution
    • Employee time tracking
    • Enhanced and organized recording of transactions
    • Proper tax filing and management

    You might still be skeptical about streamlining your payroll tasks to organized software. To ease any of your worries, we've gathered a few reasons why you should automate payroll to improve your business.

    graphic showing the benefits of using an automated payroll system

    Saves Time

    Time is precious and should not be wasted. Even the tiniest moments count when you're operating and handling a business. Hence, it's only logical to spend every second wisely. 

    You would have to spend hours upon hours doing manual data entry for payroll when you should be working on important business matters. An automated payroll system allows you to allocate more time to those tasks.

    Reduces Payroll Errors

    Even the slightest mistake can cause grave consequences when calculating employee wages. The payroll team must ensure accurate and timely wage distribution.

    However, with the dizzying amount of accounting and recordkeeping tasks involved in payroll, some people will inevitably make mistakes and unintentionally issue inaccurate employee payments. These errors can cause financial issues for both the employee and the employer and lead to severe legal penalties.

    Precise and accurate payment calculations are guaranteed with a computerized payroll system. The software can correctly and swiftly compute and adjust an employee's pay while considering possible wage deductions, raises, bonuses, and more.

    Files Taxes Efficiently

    One of the most confusing and headache-inducing parts of payroll processing is filing and calculating tax withholdings. Getting this part right is crucial as it involves various laws and regulations. An error may likely result in legal trouble for your business.

    With automated payroll systems, you don't have to calculate all of your employee's gross pay and take out tax deductions on your own. You can let the software accurately figure out and navigate the complicated world of tax filing.

    Provides Transparency to Employees

    Using automated payroll software can also foster employee trust. Most automated systems allow staff members to access their paychecks easily and view possible changes in their regular wages. These are possible with employee self-service portals and other employee-centric features.

    They can also update and input payroll information easily using automated systems. Because of this feature, the system can smoothly adjust employee pay stubs according to real-time changes.

    Improves Employer-Employee Relations

    Paying employees with an automated system can indirectly improve your relationship with them. Receiving befitting compensation for their work is one of the primary ways to motivate employees. With computerized payroll systems, employees are guaranteed accurate and timely pay. 

    Moreover, with the transparency that automated systems provide, you can improve and develop trust and confidence in your employees. They will feel secure knowing that you pay them what they're due.

    payroll book with weekly time sheets, a pen, and a calculator on a work desk

    Automating Payroll 101

    Manually handling your payroll may seem like a breeze at first. But as your business grows, it will become more complicated and time-consuming. The sooner you implement payroll automation, the more time and resources you'll save in the long run.

    Hopefully, the benefits mentioned above are enough to convince you to start automating your payroll. Your next course of action is learning how to switch from manual to automated payroll. You can either use payroll automation software or hire a payroll service.

    Using Payroll Automation Software

    Take matters into your own hands by searching for payroll automation software that suits your business. Choosing payroll software will primarily depend on your company's size, business needs, and other related factors. 

    Besides the payroll software cost, here are some features you must consider:

    • Has time tracking features
    • Provides comprehensive reporting
    • Provides automatic tax filing
    • Has robust data security
    • Has direct deposit
    • Has available support 24/7

    Besides calculating your employee's wages, automated software can also provide regular comprehensive payroll reports to help monitor your finances. Some even use combined HR and payroll software for more efficient employee and payroll management

    Once you've made your choice, all you have to do is input the necessary payroll data and documents, such as employee information and tax forms, into the software. Ensure that what you've placed in the system is accurate to avoid financial errors.

    Hiring Payroll Services

    Another option is to hire management assistance from professional payroll services. They especially come in handy for owners of large corporations and businesses handling a significant number of employees.

    All you have to do is track your employees' work hours and forward this data to the service provider. The service will calculate the payroll amount based on those hours and deduct taxes from their paychecks before rolling them out during payday. Naturally, they would typically use automated software.

    shot of an employer handing a payroll cheque to their employee

    Get the Ideal Payroll Service With Unloop

    Payroll is part and parcel of any business, no matter the industry. Plenty of accounting tasks necessitate payroll processing, from tracking your employees' work hours to delivering their wages on time. While these tasks can be done independently and manually, doing so will be time-consuming and may lead to unintentional errors.

    So, switch to stress-free automated payroll management with Unloop's payroll services. Our team of professionals uses efficient, up-to-date tools like QuickBooks to ensure automated, organized, and efficient payroll processing for your company. Book a call with us today!

    Read more

    Learning how to calculate accounts receivable is an important step towards better financial management, and the reason is obvious for anyone that owns a business; nobody wants to forget the money they're owed, especially when it's a huge amount.

    In this blog, we'll discuss everything there is to know about accounts receivable, the formulas involved in calculating it, and why you need to keep tabs on this account that's on your company's balance sheet.

    Understanding Accounts Receivable

    For starters, let's discuss what accounts receivable is. The short of it is that it's the money that customers owe a business on credit. But how does that happen exactly?

    Accounts receivable are recorded on the business's books when a customer receives goods or services from the business but can't pay at the time of purchase.

    For example, an Amazon seller may provide products to a client and invoice them for the products. If the client does not pay immediately, the amount owed by the client for the products is recorded as an accounts receivable.

    Accounts receivable can also be accrued through installment payments or financing arrangements, such as when a customer purchases a product on credit and pays for it over time.

    During the pandemic, many businesses learned that proper accounts receivable management can lead to sturdy financial positions. You see, accruing accounts receivable allows businesses to provide flexibility to their customers while still being able to track and manage the money owed to them. 

    Accounts Receivable vs. Accounts Payable

    Owing money can also work both ways. With accounts receivable, a business is owed by its customers for every product or service it sells on credit. Accounts payable is the opposite. It happens when the business owes its vendors or suppliers money for goods or services received but has yet to pay for them.

    On the balance sheet, both accounts are recorded differently. Accounts receivable are recorded as assets, while accounts payable are considered liabilities. 

    A good balance between accounts receivable and accounts payable is critical for maintaining a healthy cash flow and financial stability.

    Recognizing Accounts Receivable

    Accounts receivable is only recognized as an asset when a business has a legal right to receive payment from a customer for goods or services that have been provided but not yet paid for.

    Accounts receivable are classified as a current asset because it is expected to be collected relatively quickly, typically within 30 to 60 days. As such, accounts receivable represent an essential component of a business's overall financial health, as it reflects the amount of cash the business expects to receive soon.

    Under the cash basis accounting method, accounts receivable are only recorded once payment is received. Any sales made on credit or outstanding invoices are recorded as revenue once the payment is received. Hence, the accounts receivable balance remains zero until the customer pays.

    On the other hand, under the accrual accounting method, accounts receivable are recorded as soon as the sale is made or the service is provided, even if payment has yet to be received. This means that the revenue is recognized at the time of the sale or service, regardless of when payment is received. The accounts receivable balance reflects the total amount owed by customers as of the end of the reporting period.

    Methods of Calculating Accounts Receivable

    So how do you calculate accounts receivable? Do you rely on accounting software to handle everything financial-related? Do you hire an accountant to deal with the math?

    The truth is, it's best if new business owners like yourself understand how it's calculated to better maneuver net sales and other essential accounts in your day-to-day transactions.

    Currently, there are two standard methods for accounts receivable calculation: the balance sheet method and the aging method.

    The balance sheet method involves taking the total accounts receivable balance on the balance sheet and subtracting any allowances for doubtful accounts.

    The allowance for doubtful accounts is an estimated amount of uncollectible debts based on experience or other factors. The result is the net accounts receivable balance, which represents the amount the business expects to collect from its customers.

    Accounts Receivable (AR) - Allowance for Doubtful Accounts (ADA) = Net Accounts Receivable (NAR)

    The aging method involves categorizing the accounts receivable by the age of the invoice or outstanding payment. Typically, businesses will group the accounts receivable in 30-day intervals, such as current, 1–30 days, 31–60 days, and so on.

    For each age category, the business estimates the percentage of the outstanding balance likely to be collected. This percentage is based on historical data or industry averages. The sum of the estimated amounts for each age category is the total estimated accounts receivable balance.

    (Amounts outstanding up to 30 days × Estimated percentage collectible) + (Amounts outstanding 31–60 days × Estimated percentage collectible) + (Amounts outstanding 61–90 days × Estimated percentage collectible) + (Amounts outstanding over 90 days × Estimated percentage collectible) = Total estimated accounts receivables

    Which Method Should I Use?

    The balance sheet method is simple and quick but provides less detailed information on the accounts receivable than the aging method.

    The aging method takes more time and effort to calculate, but it provides a more detailed breakdown of the accounts receivable by age, which can help determine which invoices are most overdue and require immediate attention.

    Ultimately, businesses should choose the best method for their needs and resources.

    Business owner managing accounts receivable

    Analyzing Accounts Receivable

    Analyzing accounts receivable is vital for cash flow, financial planning, and risk management. It allows businesses to identify areas where they may be experiencing delays in payment or facing issues with collection, enabling them to take corrective action and improve their cash flow.

    By understanding the trends and patterns in their accounts receivable, businesses can make more accurate financial projections and plan for future growth.

    Now, there are several metrics that businesses can use to analyze accounts receivable. Here are some of the most commonly used ones.

    Accounts Receivable Turnover Ratio

    This ratio measures how often a business collects its average accounts receivable balance during a given period. The accounts receivable turnover ratio formula is:

    Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable

    A high ratio indicates that the business is collecting its receivables in a timely manner, while a low ratio indicates that the business is taking a long time to collect its receivables or needs a better collection process.

    Days Sales Outstanding (DSO)

    DSO measures the average number of days it takes for a business to collect payment on its sales. The formula for DSO is:

    DSO = (Accounts Receivable / Net Credit Sales) x Number of Days in the Period

    Unlike the accounts receivable turnover ratio, a lower DSO indicates that a business collects payment more quickly. In comparison, a higher DSO indicates that the business is taking longer to collect a payment, which can lead to cash flow problems and may require additional efforts to improve the accounts receivable collection process.

    Bad Debt Ratio

    This ratio measures the percentage of accounts receivable the business writes off as bad debt. The formula is:

    Bad Debt Ratio = (Total Bad Debts / Net Credit Sales) x 100

    A lower lousy debt ratio indicates that the business effectively manages its accounts receivable and minimizes the risk of bad debts.

    Average Collection Period

    This metric measures the average number of days it takes for a business to collect payment on its accounts receivable. The formula is:

    Average Collection Period = (Accounts Receivable / Net Credit Sales) x Number of Days in the Period

    A lower average collection period indicates that the business is collecting payment more quickly, while a higher average collection period indicates the business is taking a long time to collect payment.

    Managing Accounts Receivables

    In the same way that we ought to calculate accounts receivable accurately, we want to be sure that we're managing collections responsibly. The goal is always to what your company collects so we can avoid future financial difficulties and maximize the company's ability to generate revenue.

    To better manage your accounts receivables, here are a few tips that can help:

    1. Establish Clear Payment Terms: Communicating payment terms to customers at the outset can help avoid misunderstandings and reduce the likelihood of late payments. Payment terms should include the payment due date, accepted forms, and consequences for late payments.
    2. Invoice Promptly: Invoicing customers promptly can help ensure timely payment. Automated invoicing systems can streamline the process and reduce delays.
    3. Follow-Up on Overdue Payments: Regularly following up with customers on overdue payments is essential for ensuring timely payment. This can involve sending reminders or making phone calls to customers.
    4. Offer Incentives for Early Payment: Offering incentives such as discounts or other perks for early customers can encourage prompt payment and reduce the likelihood of late payments.
    5. Conduct Credit Checks: Conducting credit checks on new customers can help identify potential credit risks and avoid the risk of bad debts.
    6. Use Collection Agencies as a Last Resort: If all other attempts to collect payment have failed, businesses may need to use a collection agency. However, this should be considered a last resort, as collection agencies often charge high fees and may harm the business's relationship with the customer.
    Business owner working with accounting experts

    Work With Accounting Experts

    In conclusion, calculating and managing accounts receivable is critical to a business's financial health. It is important to regularly analyze accounts receivable, identify issues, and implement effective strategies to manage them.

    At Unloop, we understand that and want to ensure you succeed. 

    By working with our accounting experts, you can focus on running your business while we handle your accounting needs, ensuring that your business stays on track and financially healthy—we’ve even got accounts payable services!

    Contact us today to learn how we can help you manage your accounts receivable and achieve financial success.

    How To Calculate Accounts Receivable for New Business Owners
    Watch Now

    Learning how to calculate accounts receivable is an important step towards better financial management, and the reason is obvious for anyone that owns a business; nobody wants to forget the money they're owed, especially when it's a huge amount.

    In this blog, we'll discuss everything there is to know about accounts receivable, the formulas involved in calculating it, and why you need to keep tabs on this account that's on your company's balance sheet.

    Understanding Accounts Receivable

    For starters, let's discuss what accounts receivable is. The short of it is that it's the money that customers owe a business on credit. But how does that happen exactly?

    Accounts receivable are recorded on the business's books when a customer receives goods or services from the business but can't pay at the time of purchase.

    For example, an Amazon seller may provide products to a client and invoice them for the products. If the client does not pay immediately, the amount owed by the client for the products is recorded as an accounts receivable.

    Accounts receivable can also be accrued through installment payments or financing arrangements, such as when a customer purchases a product on credit and pays for it over time.

    During the pandemic, many businesses learned that proper accounts receivable management can lead to sturdy financial positions. You see, accruing accounts receivable allows businesses to provide flexibility to their customers while still being able to track and manage the money owed to them. 

    Accounts Receivable vs. Accounts Payable

    Owing money can also work both ways. With accounts receivable, a business is owed by its customers for every product or service it sells on credit. Accounts payable is the opposite. It happens when the business owes its vendors or suppliers money for goods or services received but has yet to pay for them.

    On the balance sheet, both accounts are recorded differently. Accounts receivable are recorded as assets, while accounts payable are considered liabilities. 

    A good balance between accounts receivable and accounts payable is critical for maintaining a healthy cash flow and financial stability.

    Recognizing Accounts Receivable

    Accounts receivable is only recognized as an asset when a business has a legal right to receive payment from a customer for goods or services that have been provided but not yet paid for.

    Accounts receivable are classified as a current asset because it is expected to be collected relatively quickly, typically within 30 to 60 days. As such, accounts receivable represent an essential component of a business's overall financial health, as it reflects the amount of cash the business expects to receive soon.

    Under the cash basis accounting method, accounts receivable are only recorded once payment is received. Any sales made on credit or outstanding invoices are recorded as revenue once the payment is received. Hence, the accounts receivable balance remains zero until the customer pays.

    On the other hand, under the accrual accounting method, accounts receivable are recorded as soon as the sale is made or the service is provided, even if payment has yet to be received. This means that the revenue is recognized at the time of the sale or service, regardless of when payment is received. The accounts receivable balance reflects the total amount owed by customers as of the end of the reporting period.

    Methods of Calculating Accounts Receivable

    So how do you calculate accounts receivable? Do you rely on accounting software to handle everything financial-related? Do you hire an accountant to deal with the math?

    The truth is, it's best if new business owners like yourself understand how it's calculated to better maneuver net sales and other essential accounts in your day-to-day transactions.

    Currently, there are two standard methods for accounts receivable calculation: the balance sheet method and the aging method.

    The balance sheet method involves taking the total accounts receivable balance on the balance sheet and subtracting any allowances for doubtful accounts.

    The allowance for doubtful accounts is an estimated amount of uncollectible debts based on experience or other factors. The result is the net accounts receivable balance, which represents the amount the business expects to collect from its customers.

    Accounts Receivable (AR) - Allowance for Doubtful Accounts (ADA) = Net Accounts Receivable (NAR)

    The aging method involves categorizing the accounts receivable by the age of the invoice or outstanding payment. Typically, businesses will group the accounts receivable in 30-day intervals, such as current, 1–30 days, 31–60 days, and so on.

    For each age category, the business estimates the percentage of the outstanding balance likely to be collected. This percentage is based on historical data or industry averages. The sum of the estimated amounts for each age category is the total estimated accounts receivable balance.

    (Amounts outstanding up to 30 days × Estimated percentage collectible) + (Amounts outstanding 31–60 days × Estimated percentage collectible) + (Amounts outstanding 61–90 days × Estimated percentage collectible) + (Amounts outstanding over 90 days × Estimated percentage collectible) = Total estimated accounts receivables

    Which Method Should I Use?

    The balance sheet method is simple and quick but provides less detailed information on the accounts receivable than the aging method.

    The aging method takes more time and effort to calculate, but it provides a more detailed breakdown of the accounts receivable by age, which can help determine which invoices are most overdue and require immediate attention.

    Ultimately, businesses should choose the best method for their needs and resources.

    Business owner managing accounts receivable

    Analyzing Accounts Receivable

    Analyzing accounts receivable is vital for cash flow, financial planning, and risk management. It allows businesses to identify areas where they may be experiencing delays in payment or facing issues with collection, enabling them to take corrective action and improve their cash flow.

    By understanding the trends and patterns in their accounts receivable, businesses can make more accurate financial projections and plan for future growth.

    Now, there are several metrics that businesses can use to analyze accounts receivable. Here are some of the most commonly used ones.

    Accounts Receivable Turnover Ratio

    This ratio measures how often a business collects its average accounts receivable balance during a given period. The accounts receivable turnover ratio formula is:

    Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable

    A high ratio indicates that the business is collecting its receivables in a timely manner, while a low ratio indicates that the business is taking a long time to collect its receivables or needs a better collection process.

    Days Sales Outstanding (DSO)

    DSO measures the average number of days it takes for a business to collect payment on its sales. The formula for DSO is:

    DSO = (Accounts Receivable / Net Credit Sales) x Number of Days in the Period

    Unlike the accounts receivable turnover ratio, a lower DSO indicates that a business collects payment more quickly. In comparison, a higher DSO indicates that the business is taking longer to collect a payment, which can lead to cash flow problems and may require additional efforts to improve the accounts receivable collection process.

    Bad Debt Ratio

    This ratio measures the percentage of accounts receivable the business writes off as bad debt. The formula is:

    Bad Debt Ratio = (Total Bad Debts / Net Credit Sales) x 100

    A lower lousy debt ratio indicates that the business effectively manages its accounts receivable and minimizes the risk of bad debts.

    Average Collection Period

    This metric measures the average number of days it takes for a business to collect payment on its accounts receivable. The formula is:

    Average Collection Period = (Accounts Receivable / Net Credit Sales) x Number of Days in the Period

    A lower average collection period indicates that the business is collecting payment more quickly, while a higher average collection period indicates the business is taking a long time to collect payment.

    Managing Accounts Receivables

    In the same way that we ought to calculate accounts receivable accurately, we want to be sure that we're managing collections responsibly. The goal is always to what your company collects so we can avoid future financial difficulties and maximize the company's ability to generate revenue.

    To better manage your accounts receivables, here are a few tips that can help:

    1. Establish Clear Payment Terms: Communicating payment terms to customers at the outset can help avoid misunderstandings and reduce the likelihood of late payments. Payment terms should include the payment due date, accepted forms, and consequences for late payments.
    2. Invoice Promptly: Invoicing customers promptly can help ensure timely payment. Automated invoicing systems can streamline the process and reduce delays.
    3. Follow-Up on Overdue Payments: Regularly following up with customers on overdue payments is essential for ensuring timely payment. This can involve sending reminders or making phone calls to customers.
    4. Offer Incentives for Early Payment: Offering incentives such as discounts or other perks for early customers can encourage prompt payment and reduce the likelihood of late payments.
    5. Conduct Credit Checks: Conducting credit checks on new customers can help identify potential credit risks and avoid the risk of bad debts.
    6. Use Collection Agencies as a Last Resort: If all other attempts to collect payment have failed, businesses may need to use a collection agency. However, this should be considered a last resort, as collection agencies often charge high fees and may harm the business's relationship with the customer.
    Business owner working with accounting experts

    Work With Accounting Experts

    In conclusion, calculating and managing accounts receivable is critical to a business's financial health. It is important to regularly analyze accounts receivable, identify issues, and implement effective strategies to manage them.

    At Unloop, we understand that and want to ensure you succeed. 

    By working with our accounting experts, you can focus on running your business while we handle your accounting needs, ensuring that your business stays on track and financially healthy—we’ve even got accounts payable services!

    Contact us today to learn how we can help you manage your accounts receivable and achieve financial success.

    Read more

    Amazon has revolutionized the shopping process for both large and small businesses. Selling your products online allows your business to expose your products to millions of customers. However, since online selling is continuing to be popular with entrepreneurs, you also have millions of competitors out there.

    If you are determined to put your business online, Amazon is the best for you. Setting up an Amazon Business account helps companies get ahead by giving Amazon-exclusive discounts on pricing, plus it offers features to aid in your business operations.

    What Is an Amazon Business Account? 

    Amazon Business is a business-focused account that caters to all businesses, from small and medium to large enterprises. The main purpose of a business account is for businesses to have an approval process so they can keep their spending in check.

    Business accounts allow an entity to create multiple users to make purchases for the company. Your business also enjoys the benefits of efficient and swift deliveries. But, it doesn’t stop there! Once you have a business account, you can upgrade to a Prime account which opens your business to more exclusive benefits. 

    But unlike business accounts (which are free), Prime members need to pay a membership fee to enjoy its features. 

    Amazon Business Prime Membership Fees 

    Amazon Prime membership fees may vary depending on the number of users that use the account. Here is a breakdown of their annual prices.

    Number of Users 1 user3 users10 users 100 users Unlimited Users 
    Price$69 $179$499$1,299$10,099

    4 Benefits of Amazon Business Accounts

    You may be thinking that you already have a personal account, So why do you still need to get a Business account? Amazon offers many features and services exclusive to business account holders. For example, having these accounts opens you to business-only selections, bulk discounts, and a wide variety of product lines.

    Once your Amazon Business account is set up, you can add multiple sellers in one central account, which anyone in your business can use. The benefits of an Amazon business account is for both the seller and buyer, and here's what you can do with it. 

    amazon gift card

    An Amazon Business Account Is Free

    Amazon helps with the selling process when you set up a business account, and it's free. Whether you're a small-scale one-person business or a larger enterprise, it doesn't matter. Any company can open a business account.

    To set up your account:

    1. Open the Amazon Business membership page and click on "Create a business account."
    2. Provide a work email and type in your password.
    3. After verifying your email address and providing the necessary information, your account creation will be complete.

    Access to Business-Only Prices

    There are over 5 million products currently available across business accounts on Amazon. Aside from access to an unlimited number of items, you also enjoy exclusive prices for business account holders. Whether you do B2B transactions or use your business account as a buyer, you'll enjoy discounts that are not available on personal accounts.

    Amazon offers lower prices for bulk purchases. Furthermore, you can ask sellers for discounts.

    Potential for Big Sales

    In 2022, there were currently 200 million active users on Amazon. This number grows each year. When you enroll in Amazon Business, your products will be listed in the vast Amazon catalog, which is accessible to millions of established customers.

    Eligible for the FBA program

    Whether you sell from the US or are an international seller, you will be eligible for the FBA program. Amazon is available in numerous countries worldwide, and is continually expanding. Amazon has warehouses in different locations even outside of the US, so international sellers can enjoy the FBA program too.

    Furthermore, since the primary feature of FBA is storing your products and shipping, you can save money from renting warehouse space and hiring extra workers for the shipping and packing process. You can also guarantee that the FBA program will handle your products correctly to satisfy your customers.

    amazon business prime

    Is It Worth Upgrading to Amazon Business Prime Account?

    You can choose to upgrade to a Business Prime account if you already have a Business account. The Prime account is a membership offered by Amazon for businesses and companies. Using a Business Prime account comes with more benefits compared to a standard business account. However, Amazon charges businesses when they upgrade to Prime depending on the number of users in your account.

    So is it worth upgrading to a Business Prime account? Here are a few benefits of Amazon Business Prime memberships.

    Fast and Convenient Shipping Rates

    With a Prime account, you can send orders to your customers faster. Customers who shop from your business can enjoy discounted shipping rates, and even free one- or two-day shipping on eligible items. Free shipping will entice shoppers to buy from your business primarily because of the savings they can get.

    Free Survey and Analytics Tool

    It's vital for businesses to know the feedback of their customers regarding their products and services. Amazon helps companies gather their customer's reviews by using a third-party application. The free tool Amazon provides sends surveys to your customers via SMS, emails, POS kiosks, and other integrated services.

    The free analytics tool is beneficial for businesses to track their growth, and with Amazon Prime, you get to enjoy these tools for free.

    Amazon Business American Card

    You will receive an Amazon Business American Express card upon membership with Amazon Prime. This card is exclusive to Prime holders and has no annual fees. With the card, you can enjoy 5% cashback or 90 days to pay with no interest for your purchases.

    Amazon Workdocs and Guided Buying

    Amazon Workdocs allows you to store your essential business files in one location. You can quickly locate invoices, receipts, and other documents, allowing for collaborations.

    The guided buying allows you to create buying policies for your Business Prime account. 

    If you have staff, you might give them the responsibility of making purchases from other companies. You can control the items they buy through the guided buying feature. You can list approved items they can purchase and put up restricted categories.

    Sign Up for a Business Account Today!

    If there's a way to make selling on Amazon better and more convenient, grab it. Utilize the advantages of having an Amazon Business account. If you have the budget for a Business Prime membership, you're in for more benefits and tons of savings for your business. So don't forget to sign your business up today.

    Running a small ecommerce firm may also be time-consuming and labour-intensive. While you handle selling your products and launching advertisements, Unloop can help with the accounting side of things. Unloop can help your business stay on top of taxes, expenses, payroll, and several other accounting tasks.

    Book a call with us and learn more about how to get started.

    Amazon Business Account Benefits for Online Sellers
    Watch Now

    Amazon has revolutionized the shopping process for both large and small businesses. Selling your products online allows your business to expose your products to millions of customers. However, since online selling is continuing to be popular with entrepreneurs, you also have millions of competitors out there.

    If you are determined to put your business online, Amazon is the best for you. Setting up an Amazon Business account helps companies get ahead by giving Amazon-exclusive discounts on pricing, plus it offers features to aid in your business operations.

    What Is an Amazon Business Account? 

    Amazon Business is a business-focused account that caters to all businesses, from small and medium to large enterprises. The main purpose of a business account is for businesses to have an approval process so they can keep their spending in check.

    Business accounts allow an entity to create multiple users to make purchases for the company. Your business also enjoys the benefits of efficient and swift deliveries. But, it doesn’t stop there! Once you have a business account, you can upgrade to a Prime account which opens your business to more exclusive benefits. 

    But unlike business accounts (which are free), Prime members need to pay a membership fee to enjoy its features. 

    Amazon Business Prime Membership Fees 

    Amazon Prime membership fees may vary depending on the number of users that use the account. Here is a breakdown of their annual prices.

    Number of Users 1 user3 users10 users 100 users Unlimited Users 
    Price$69 $179$499$1,299$10,099

    4 Benefits of Amazon Business Accounts

    You may be thinking that you already have a personal account, So why do you still need to get a Business account? Amazon offers many features and services exclusive to business account holders. For example, having these accounts opens you to business-only selections, bulk discounts, and a wide variety of product lines.

    Once your Amazon Business account is set up, you can add multiple sellers in one central account, which anyone in your business can use. The benefits of an Amazon business account is for both the seller and buyer, and here's what you can do with it. 

    amazon gift card

    An Amazon Business Account Is Free

    Amazon helps with the selling process when you set up a business account, and it's free. Whether you're a small-scale one-person business or a larger enterprise, it doesn't matter. Any company can open a business account.

    To set up your account:

    1. Open the Amazon Business membership page and click on "Create a business account."
    2. Provide a work email and type in your password.
    3. After verifying your email address and providing the necessary information, your account creation will be complete.

    Access to Business-Only Prices

    There are over 5 million products currently available across business accounts on Amazon. Aside from access to an unlimited number of items, you also enjoy exclusive prices for business account holders. Whether you do B2B transactions or use your business account as a buyer, you'll enjoy discounts that are not available on personal accounts.

    Amazon offers lower prices for bulk purchases. Furthermore, you can ask sellers for discounts.

    Potential for Big Sales

    In 2022, there were currently 200 million active users on Amazon. This number grows each year. When you enroll in Amazon Business, your products will be listed in the vast Amazon catalog, which is accessible to millions of established customers.

    Eligible for the FBA program

    Whether you sell from the US or are an international seller, you will be eligible for the FBA program. Amazon is available in numerous countries worldwide, and is continually expanding. Amazon has warehouses in different locations even outside of the US, so international sellers can enjoy the FBA program too.

    Furthermore, since the primary feature of FBA is storing your products and shipping, you can save money from renting warehouse space and hiring extra workers for the shipping and packing process. You can also guarantee that the FBA program will handle your products correctly to satisfy your customers.

    amazon business prime

    Is It Worth Upgrading to Amazon Business Prime Account?

    You can choose to upgrade to a Business Prime account if you already have a Business account. The Prime account is a membership offered by Amazon for businesses and companies. Using a Business Prime account comes with more benefits compared to a standard business account. However, Amazon charges businesses when they upgrade to Prime depending on the number of users in your account.

    So is it worth upgrading to a Business Prime account? Here are a few benefits of Amazon Business Prime memberships.

    Fast and Convenient Shipping Rates

    With a Prime account, you can send orders to your customers faster. Customers who shop from your business can enjoy discounted shipping rates, and even free one- or two-day shipping on eligible items. Free shipping will entice shoppers to buy from your business primarily because of the savings they can get.

    Free Survey and Analytics Tool

    It's vital for businesses to know the feedback of their customers regarding their products and services. Amazon helps companies gather their customer's reviews by using a third-party application. The free tool Amazon provides sends surveys to your customers via SMS, emails, POS kiosks, and other integrated services.

    The free analytics tool is beneficial for businesses to track their growth, and with Amazon Prime, you get to enjoy these tools for free.

    Amazon Business American Card

    You will receive an Amazon Business American Express card upon membership with Amazon Prime. This card is exclusive to Prime holders and has no annual fees. With the card, you can enjoy 5% cashback or 90 days to pay with no interest for your purchases.

    Amazon Workdocs and Guided Buying

    Amazon Workdocs allows you to store your essential business files in one location. You can quickly locate invoices, receipts, and other documents, allowing for collaborations.

    The guided buying allows you to create buying policies for your Business Prime account. 

    If you have staff, you might give them the responsibility of making purchases from other companies. You can control the items they buy through the guided buying feature. You can list approved items they can purchase and put up restricted categories.

    Sign Up for a Business Account Today!

    If there's a way to make selling on Amazon better and more convenient, grab it. Utilize the advantages of having an Amazon Business account. If you have the budget for a Business Prime membership, you're in for more benefits and tons of savings for your business. So don't forget to sign your business up today.

    Running a small ecommerce firm may also be time-consuming and labour-intensive. While you handle selling your products and launching advertisements, Unloop can help with the accounting side of things. Unloop can help your business stay on top of taxes, expenses, payroll, and several other accounting tasks.

    Book a call with us and learn more about how to get started.

    Read more

    Trading in your Windows-based accounting system for Apple accounting software can be daunting at first. It often requires a significant adjustment in how you oversee financial operations. You might also feel like the new application holds your potential back, leaving you stuck and frustrated.

    Don’t worry! The switch may have its challenges, but it also offers exciting opportunities. There is now free accounting software specifically made for your current setup.

    Start your accounting journey on the right foot with these tips for finding the right software solution designed for Mac users. Get ready to streamline and facilitate every financial aspect of running a small business.

    The Relevance of Accounting Software for Apple

    Apple is committed to revolutionizing the business world by introducing cutting-edge features such as accounting into its operating system. They aim to simplify digital operations for enterprises and open up more opportunities that provide maximum return on investment, freeing them from compatibility problems.

    Thanks to Mac-friendly accounting software, entrepreneurs everywhere can experience an exponential increase in productivity and workflows. No longer should they miss out on the huge gains of modern financial programs—software is a must-have for new Apple users who want to continue their business efficiency.

    Financial statements and graph visualizations are also taken to a whole new level when using accounting software for Mac. Every table and chart a business produces showcases its best work like never before. They can even present data points without sacrificing quality.

    Best of all, small business owners won't have to worry about inaccuracies that come with manually handling accounts. Like with Windows, software is automated and adaptive for Mac users everywhere. 

    All these factors make software an ideal solution for successful financial collaborations.

    What To Consider in Accounting Software for Mac Desktops

    accounting summary report

    With the overwhelming variety of Mac accounting software programs, it can be challenging to choose just one. But you’ll soon discover the best accounting software for your accounting needs by considering certain key factors in your decision-making process.

    Here are a few things to keep in mind.

    #1: Available Online and Offline 

    The availability of both online and offline versions is a great starting point for your research. With cloud-based accounting software, you can get vital information from any corner, making financial processes much more manageable.

    At the same time, going offline provides users with secure access free of connection errors or other technical trouble. Users can take full advantage of their informational needs and wants by having both options available.

    #2: iOS Apps

    There may be times when you’ll need to move your financial data from your Mac computer to other Apple devices such as iPads or iPhones. This extra feature can make transferring and syncing records much more accessible and smoother. 

    By staying connected with your accounts, you can ensure that no important update or deadline slips past unnoticed. It may be a low priority for some, but getting an iOS app can make a difference in terms of convenience.

    #3: Payroll Integration

    Don't get bogged down with payroll calculations; choose an accounting software solution for your Mac desktop with integrated payroll management tools. With this feature, you can easily access employee data analytics and calculate salaries to help you breeze through those operations. 

    Payroll integration guarantees timely tax withholdings, employee payments, and federal and state regulations compliance. Automating these business processes improves bookkeeping tasks and offers an extra layer of assurance and peace of mind.

    #4: Automatic Reconciliation

    Keep your Mac desktop running with accounting software that includes automatic reconciliation features. As the name suggests, it allows small businesses to manage monthly transactions without the time-consuming hassle of data entry and manual reconciliations.

    Automated reconciliation can verify bank accounts, credit cards, and other transactions within the accounting system against their sources. From there, users can gain insight into company finances—all in a fraction of the usual processing period.

    #5: Unlimited Users

    Finding an accounting platform with unlimited user access is ideal for effective operation and future growth so your team can thrive without additional financial burdens.

    Companies can control their data and collaboration efforts with unlimited access to a single account. These accounting software features also have major implications for tracking employee productivity. Integrating this with team management tools means they can maximize efficiency in their accounting tasks like never before.

    #6: Customer Support

    For Mac desktop users, customer support is an often ignored yet fundamental element when choosing the perfect accounting software. Eye-catching interfaces and tech enhancements may be a plus, but strong customer support can address any issues or queries you may have—proving why this feature shouldn't go unnoticed.

    Poor customer service can leave you feeling stranded and frustrated. Make sure your digital experience is worry-free by selecting an accounting solution that delivers reliable, patient, and knowledgeable support when dealing with account-related matters.

    #7: Client Data Management

    Good accounting software should give you easy access to the customer-facing aspects of your financials, such as professional invoices, purchase order management, and customer accounts. This way, you can prepare for conversations with clients and vendors.

    Leveraging an integrated client data system can also open a world of market access. It makes it easier to manage emails, conduct follow-up interactions with customers, get an overview of the customer journey, and make data-driven decisions that propel your enterprise forward.

    #8: Expense Management

    Here’s your chance to be resourceful without sacrificing productivity. Accounting software with excellent expense tracking, reporting capabilities, and tax calculation is much-need for any business. 

    You can’t go wrong with these accounting features to easily manage hundreds of transactions and sort them out quickly. By finding a way to accurately break down expenses, measure necessary data research, and initiate automated calculations, you can access any information related to expenses without intricacy.

    What Accounting Software Can You Use for Apple Devices?

    Apple devices on a wooden table

    It’s time to move on to the next step—finding the right accounting programs for your device. With all the knowledge you need, you can dive into some of the excellent options available from Apple.

    Below are the best accounting solutions for Apple’s operating system. From the highly advanced to simple, user-friendly tools, there’s sure to be an accounting app that fits what you’re looking for.

    #1: QuickBooks Online

    QuickBooks Online is the go-to choice for small business owners looking to control their money operations. This cloud accounting software empowers entrepreneurs with features like invoice tracking, expense monitoring, and secure payment acceptance, enabling them to stay on top of their finances without inconvenience. 

    Another version of QuickBooks is available to many Mac Users: QuickBooks Desktop App for Mac. It can give you instant insight into cash flow and profitability. It can also link directly to bank accounts, so you don't have to load multiple financial applications. Unfortunately, you can no longer enjoy this version after May 2023. So use it while you can.

    #2: FreshBooks

    FreshBooks is another small business accounting software option for Apple. From tracking billable hours to safeguarding data integrity in the cloud, this tool offers an Apple-friendly approach to tackling all your monetary resources.

    With FreshBooks, companies can trust that their accounting operations have powerful capabilities to monitor and evaluate expenses. This gives an unbeatable view of its return on investment while categorizing personal and business finances.

    #3: Sage Business Cloud Accounting

    Sage's basic subscription offers the perfect starting point for small business owners who want to get their finances in order. Accounting and organizational tools give users a helping hand to focus on growing their business without worrying about numbers or clutter.

    With its intuitive interface, 1-on-1 expert session, and secure payment processing options, this scalable accounting software is setting a new benchmark in the field, proving to be an invaluable asset for any Mac user. 

    #4: Xero

    Xero is the perfect pick for taking care of those pesky accounting tasks. With clear interfaces and convenient features like capturing snapshots of key accounts, you can easily reference previous versions with one click, making it perfect for even the busiest business owner.

    Xero also can add additional users to their plan without increased cost. It is perfect for companies with multiple staff involved in their accounting processes. Apple users no longer have to strain over the paperwork. Instead, they can keep things efficient and organized.

    Discover More Efficient Accounting Solutions With Unloop

    Financial management through Apple can be a struggle, especially when you’re not accustomed to the PC and android environment. It takes patience, attention to detail, and organizational skills that may not come naturally to most.

    But one thing is sure: those frustrating days of handling your financial operations will now be in the past. Thanks to the availability of high-quality, reliable accounting software for Mac, you can make your bookkeeping, budgeting, and project management easier than ever before.

    Feeling uncertain? Unloop can help free you up! Our accounting professionals will find the perfect software for your small business to ensure everything runs smoothly and accurately. 

    Get in touch today, and we'll sort things out!

    A Small Business Owner’s Guide to Apple Accounting Software
    Watch Now

    Trading in your Windows-based accounting system for Apple accounting software can be daunting at first. It often requires a significant adjustment in how you oversee financial operations. You might also feel like the new application holds your potential back, leaving you stuck and frustrated.

    Don’t worry! The switch may have its challenges, but it also offers exciting opportunities. There is now free accounting software specifically made for your current setup.

    Start your accounting journey on the right foot with these tips for finding the right software solution designed for Mac users. Get ready to streamline and facilitate every financial aspect of running a small business.

    The Relevance of Accounting Software for Apple

    Apple is committed to revolutionizing the business world by introducing cutting-edge features such as accounting into its operating system. They aim to simplify digital operations for enterprises and open up more opportunities that provide maximum return on investment, freeing them from compatibility problems.

    Thanks to Mac-friendly accounting software, entrepreneurs everywhere can experience an exponential increase in productivity and workflows. No longer should they miss out on the huge gains of modern financial programs—software is a must-have for new Apple users who want to continue their business efficiency.

    Financial statements and graph visualizations are also taken to a whole new level when using accounting software for Mac. Every table and chart a business produces showcases its best work like never before. They can even present data points without sacrificing quality.

    Best of all, small business owners won't have to worry about inaccuracies that come with manually handling accounts. Like with Windows, software is automated and adaptive for Mac users everywhere. 

    All these factors make software an ideal solution for successful financial collaborations.

    What To Consider in Accounting Software for Mac Desktops

    accounting summary report

    With the overwhelming variety of Mac accounting software programs, it can be challenging to choose just one. But you’ll soon discover the best accounting software for your accounting needs by considering certain key factors in your decision-making process.

    Here are a few things to keep in mind.

    #1: Available Online and Offline 

    The availability of both online and offline versions is a great starting point for your research. With cloud-based accounting software, you can get vital information from any corner, making financial processes much more manageable.

    At the same time, going offline provides users with secure access free of connection errors or other technical trouble. Users can take full advantage of their informational needs and wants by having both options available.

    #2: iOS Apps

    There may be times when you’ll need to move your financial data from your Mac computer to other Apple devices such as iPads or iPhones. This extra feature can make transferring and syncing records much more accessible and smoother. 

    By staying connected with your accounts, you can ensure that no important update or deadline slips past unnoticed. It may be a low priority for some, but getting an iOS app can make a difference in terms of convenience.

    #3: Payroll Integration

    Don't get bogged down with payroll calculations; choose an accounting software solution for your Mac desktop with integrated payroll management tools. With this feature, you can easily access employee data analytics and calculate salaries to help you breeze through those operations. 

    Payroll integration guarantees timely tax withholdings, employee payments, and federal and state regulations compliance. Automating these business processes improves bookkeeping tasks and offers an extra layer of assurance and peace of mind.

    #4: Automatic Reconciliation

    Keep your Mac desktop running with accounting software that includes automatic reconciliation features. As the name suggests, it allows small businesses to manage monthly transactions without the time-consuming hassle of data entry and manual reconciliations.

    Automated reconciliation can verify bank accounts, credit cards, and other transactions within the accounting system against their sources. From there, users can gain insight into company finances—all in a fraction of the usual processing period.

    #5: Unlimited Users

    Finding an accounting platform with unlimited user access is ideal for effective operation and future growth so your team can thrive without additional financial burdens.

    Companies can control their data and collaboration efforts with unlimited access to a single account. These accounting software features also have major implications for tracking employee productivity. Integrating this with team management tools means they can maximize efficiency in their accounting tasks like never before.

    #6: Customer Support

    For Mac desktop users, customer support is an often ignored yet fundamental element when choosing the perfect accounting software. Eye-catching interfaces and tech enhancements may be a plus, but strong customer support can address any issues or queries you may have—proving why this feature shouldn't go unnoticed.

    Poor customer service can leave you feeling stranded and frustrated. Make sure your digital experience is worry-free by selecting an accounting solution that delivers reliable, patient, and knowledgeable support when dealing with account-related matters.

    #7: Client Data Management

    Good accounting software should give you easy access to the customer-facing aspects of your financials, such as professional invoices, purchase order management, and customer accounts. This way, you can prepare for conversations with clients and vendors.

    Leveraging an integrated client data system can also open a world of market access. It makes it easier to manage emails, conduct follow-up interactions with customers, get an overview of the customer journey, and make data-driven decisions that propel your enterprise forward.

    #8: Expense Management

    Here’s your chance to be resourceful without sacrificing productivity. Accounting software with excellent expense tracking, reporting capabilities, and tax calculation is much-need for any business. 

    You can’t go wrong with these accounting features to easily manage hundreds of transactions and sort them out quickly. By finding a way to accurately break down expenses, measure necessary data research, and initiate automated calculations, you can access any information related to expenses without intricacy.

    What Accounting Software Can You Use for Apple Devices?

    Apple devices on a wooden table

    It’s time to move on to the next step—finding the right accounting programs for your device. With all the knowledge you need, you can dive into some of the excellent options available from Apple.

    Below are the best accounting solutions for Apple’s operating system. From the highly advanced to simple, user-friendly tools, there’s sure to be an accounting app that fits what you’re looking for.

    #1: QuickBooks Online

    QuickBooks Online is the go-to choice for small business owners looking to control their money operations. This cloud accounting software empowers entrepreneurs with features like invoice tracking, expense monitoring, and secure payment acceptance, enabling them to stay on top of their finances without inconvenience. 

    Another version of QuickBooks is available to many Mac Users: QuickBooks Desktop App for Mac. It can give you instant insight into cash flow and profitability. It can also link directly to bank accounts, so you don't have to load multiple financial applications. Unfortunately, you can no longer enjoy this version after May 2023. So use it while you can.

    #2: FreshBooks

    FreshBooks is another small business accounting software option for Apple. From tracking billable hours to safeguarding data integrity in the cloud, this tool offers an Apple-friendly approach to tackling all your monetary resources.

    With FreshBooks, companies can trust that their accounting operations have powerful capabilities to monitor and evaluate expenses. This gives an unbeatable view of its return on investment while categorizing personal and business finances.

    #3: Sage Business Cloud Accounting

    Sage's basic subscription offers the perfect starting point for small business owners who want to get their finances in order. Accounting and organizational tools give users a helping hand to focus on growing their business without worrying about numbers or clutter.

    With its intuitive interface, 1-on-1 expert session, and secure payment processing options, this scalable accounting software is setting a new benchmark in the field, proving to be an invaluable asset for any Mac user. 

    #4: Xero

    Xero is the perfect pick for taking care of those pesky accounting tasks. With clear interfaces and convenient features like capturing snapshots of key accounts, you can easily reference previous versions with one click, making it perfect for even the busiest business owner.

    Xero also can add additional users to their plan without increased cost. It is perfect for companies with multiple staff involved in their accounting processes. Apple users no longer have to strain over the paperwork. Instead, they can keep things efficient and organized.

    Discover More Efficient Accounting Solutions With Unloop

    Financial management through Apple can be a struggle, especially when you’re not accustomed to the PC and android environment. It takes patience, attention to detail, and organizational skills that may not come naturally to most.

    But one thing is sure: those frustrating days of handling your financial operations will now be in the past. Thanks to the availability of high-quality, reliable accounting software for Mac, you can make your bookkeeping, budgeting, and project management easier than ever before.

    Feeling uncertain? Unloop can help free you up! Our accounting professionals will find the perfect software for your small business to ensure everything runs smoothly and accurately. 

    Get in touch today, and we'll sort things out!

    Read more

    If you want to establish or change your accounting system, you may have heard of or used two basic accounting methods: the cash and accrual accounting methods. These are the textbook methods that every business can choose from.

    But there's another method that some entities use. It's called modified accrual accounting, and it can be an excellent record keeping method if you want to see your business's numbers more clearly.

    Let Unloop explain the modified accrual method to you. But before we do, we'll also go over the two primary accounting methods to give you a more thorough understanding.

    Cash Basis Accounting

    Most starting businesses adopt a cash basis method of accounting. This way of financial recordkeeping recognizes transactions only when the money comes in or goes out, making bookkeeping easy.

    What's Great About Cash Basis Accounting?

    Here are some reasons why cash basis accounting is fantastic for both traditional and ecommerce businesses.

    Straightforward

    Accountants and bookkeepers use the double-entry method when recording transactions. But what makes it straightforward is they only use cash as a debit or credit account in each transaction.

    Cash Accurate

    Since transactions are only recorded when the business spends or receives cash, managers, and small business owners have an accurate view of the movement of cash assets within the business.

    Simple Reporting

    Bookkeeping and accounting using the cash basis make financial statement reporting simple. In a given period, there will only be a few accounts presented, making it easier to analyze. Reading the simple reports generated from a cash basis accounting method helps in quick decision-making.

    Limitations of Cash Basis Accounting

    Despite the ease and simplicity of cash basis accounting, it has certain drawbacks.

    Challenging for Complex Transactions

    When transactions become more complex in real-world events, the cash basis method may have difficulty keeping up. For example, when a business purchases a significant asset on an installment basis, this could affect multiple accounts for an extended period, and official recording may only take place after a long period.

    A Narrow View of the Business

    Cash basis accounting only sees transactions as they come and go. This limits the view of a manager or a business owner because, in the real world, transactions are incurred or earned earlier or later than usual.

    Accrual Basis Accounting

    The accrual basis method allows revenue recognition even if it has yet to be received. and recognizes expenses before anything is paid or incurred. As long as the economic event happened, accrual basis accounting will record it. That’s why large businesses with expanded activity and high annual income adopt accrual accounting rather than cash accounting.

    What’s Great About the Accrual Accounting Method?

    Here's why big businesses use accrual accounting when recording business transactions.

    Can Handle Complex Transactions

    Accrual accounting lets accountants and bookkeepers record transactions involving multiple accounts. For example, if they are a software company that sold $100 of a single product on the current date and the buyer pays $10 initially while the rest is payable in 90 days, they can record everything on the current date and not after 90 days when the payment is completed.

    Business Accurate

    Using the accrual method is business accurate because it allows accountants and bookkeepers to record transactions as they happen. This gives managers and owners an accurate view of what's happening in the business in real-time.

    Widely Acceptable

    Generally Accepted Accounting Principles (GAAP) approves the use of accrual accounting. It is also the type of accounting method that banks and tax authorities require for any business with substantial profit earnings or loan requests.

    Limitations of Accrual Basis Accounting Method

    As great as the accrual method is, it also has several drawbacks.

    It Is Complex

    Recording transactions using the accrual method can be complex. Putting them together in a financial statement can be more challenging than with cash basis accounting, as there can be many accounts to balance.

    Prone to Fraud and Errors

    Unlike the cash basis method, where you can have one debit and credit account in a double-entry transaction, accrual accounting can have multiple and the amounts in each account may vary—which is where errors occur and fraudulent transactions can sneak in.

    modified accrual basis is complex and requires skilled accountants

    What Is Modified Accrual Accounting?

    The modified accrual accounting is a hybrid of the two methods. It uses the best features of cash and accrual basis and adapts depending on the transaction's nature. This is also known as the modified cash basis or hybrid accounting method.

    Short-Term

    When recording economic events in the short term, primarily if it affects the entity's cash balance, the modified accrual basis adapts the cash method.

    These transactions are the ones incurred monthly or daily. Regular business expenses such as utilities and suppliers adopt a cash-based accounting method.

    Long-Term

    If an economic event affects the business long-term, such as in years, the accrual method is used to record the transaction.

    Acquisitions of property or big-ticket equipment are recorded using the accrual method. The transaction is recognized at the date the transaction is made for more accurate recording purposes.

    Advantages of Modified Accrual Accounting

    A critical advantage of the modified accrual method is balanced reporting. The financial statements of entities using this method will show little shortage or surplus as the more significant expenses are distributed throughout the business's life, and the more minor expenses are justified.

    Limitations of Modified Accrual Accounting

    It can be the most complex of methods because it uses a combination of cash and accrual basis. Switching between two methods when recording transactions will test any bookkeeper or accountant.

    Can Ecommerce Businesses Use Modified Accrual Accounting?

    No, they can't. GAAP and International Financial Reporting Standards (IFRS) don't allow modified accrual accounting.

    Government entities generally use the modified accrual method. But private, for-profit entities such as ecommerce marketplace sellers can also use it for internal purposes to improve their vision.

    What Can Ecommerce Businesses Do Instead?

    You can get experts to decide which method is best for your business, given its current situation. On the other hand, if you started with either a cash or accrual basis, you can let experts continue to use those methods effectively.

    Unloop can help you decide what can be done for your business. Book a call or check out our bookkeeping services to find out more.

    Modified Accrual Accounting: What Is It and Can You Use It?
    Watch Now

    If you want to establish or change your accounting system, you may have heard of or used two basic accounting methods: the cash and accrual accounting methods. These are the textbook methods that every business can choose from.

    But there's another method that some entities use. It's called modified accrual accounting, and it can be an excellent record keeping method if you want to see your business's numbers more clearly.

    Let Unloop explain the modified accrual method to you. But before we do, we'll also go over the two primary accounting methods to give you a more thorough understanding.

    Cash Basis Accounting

    Most starting businesses adopt a cash basis method of accounting. This way of financial recordkeeping recognizes transactions only when the money comes in or goes out, making bookkeeping easy.

    What's Great About Cash Basis Accounting?

    Here are some reasons why cash basis accounting is fantastic for both traditional and ecommerce businesses.

    Straightforward

    Accountants and bookkeepers use the double-entry method when recording transactions. But what makes it straightforward is they only use cash as a debit or credit account in each transaction.

    Cash Accurate

    Since transactions are only recorded when the business spends or receives cash, managers, and small business owners have an accurate view of the movement of cash assets within the business.

    Simple Reporting

    Bookkeeping and accounting using the cash basis make financial statement reporting simple. In a given period, there will only be a few accounts presented, making it easier to analyze. Reading the simple reports generated from a cash basis accounting method helps in quick decision-making.

    Limitations of Cash Basis Accounting

    Despite the ease and simplicity of cash basis accounting, it has certain drawbacks.

    Challenging for Complex Transactions

    When transactions become more complex in real-world events, the cash basis method may have difficulty keeping up. For example, when a business purchases a significant asset on an installment basis, this could affect multiple accounts for an extended period, and official recording may only take place after a long period.

    A Narrow View of the Business

    Cash basis accounting only sees transactions as they come and go. This limits the view of a manager or a business owner because, in the real world, transactions are incurred or earned earlier or later than usual.

    Accrual Basis Accounting

    The accrual basis method allows revenue recognition even if it has yet to be received. and recognizes expenses before anything is paid or incurred. As long as the economic event happened, accrual basis accounting will record it. That’s why large businesses with expanded activity and high annual income adopt accrual accounting rather than cash accounting.

    What’s Great About the Accrual Accounting Method?

    Here's why big businesses use accrual accounting when recording business transactions.

    Can Handle Complex Transactions

    Accrual accounting lets accountants and bookkeepers record transactions involving multiple accounts. For example, if they are a software company that sold $100 of a single product on the current date and the buyer pays $10 initially while the rest is payable in 90 days, they can record everything on the current date and not after 90 days when the payment is completed.

    Business Accurate

    Using the accrual method is business accurate because it allows accountants and bookkeepers to record transactions as they happen. This gives managers and owners an accurate view of what's happening in the business in real-time.

    Widely Acceptable

    Generally Accepted Accounting Principles (GAAP) approves the use of accrual accounting. It is also the type of accounting method that banks and tax authorities require for any business with substantial profit earnings or loan requests.

    Limitations of Accrual Basis Accounting Method

    As great as the accrual method is, it also has several drawbacks.

    It Is Complex

    Recording transactions using the accrual method can be complex. Putting them together in a financial statement can be more challenging than with cash basis accounting, as there can be many accounts to balance.

    Prone to Fraud and Errors

    Unlike the cash basis method, where you can have one debit and credit account in a double-entry transaction, accrual accounting can have multiple and the amounts in each account may vary—which is where errors occur and fraudulent transactions can sneak in.

    modified accrual basis is complex and requires skilled accountants

    What Is Modified Accrual Accounting?

    The modified accrual accounting is a hybrid of the two methods. It uses the best features of cash and accrual basis and adapts depending on the transaction's nature. This is also known as the modified cash basis or hybrid accounting method.

    Short-Term

    When recording economic events in the short term, primarily if it affects the entity's cash balance, the modified accrual basis adapts the cash method.

    These transactions are the ones incurred monthly or daily. Regular business expenses such as utilities and suppliers adopt a cash-based accounting method.

    Long-Term

    If an economic event affects the business long-term, such as in years, the accrual method is used to record the transaction.

    Acquisitions of property or big-ticket equipment are recorded using the accrual method. The transaction is recognized at the date the transaction is made for more accurate recording purposes.

    Advantages of Modified Accrual Accounting

    A critical advantage of the modified accrual method is balanced reporting. The financial statements of entities using this method will show little shortage or surplus as the more significant expenses are distributed throughout the business's life, and the more minor expenses are justified.

    Limitations of Modified Accrual Accounting

    It can be the most complex of methods because it uses a combination of cash and accrual basis. Switching between two methods when recording transactions will test any bookkeeper or accountant.

    Can Ecommerce Businesses Use Modified Accrual Accounting?

    No, they can't. GAAP and International Financial Reporting Standards (IFRS) don't allow modified accrual accounting.

    Government entities generally use the modified accrual method. But private, for-profit entities such as ecommerce marketplace sellers can also use it for internal purposes to improve their vision.

    What Can Ecommerce Businesses Do Instead?

    You can get experts to decide which method is best for your business, given its current situation. On the other hand, if you started with either a cash or accrual basis, you can let experts continue to use those methods effectively.

    Unloop can help you decide what can be done for your business. Book a call or check out our bookkeeping services to find out more.

    Read more

    Accounts payable is a powerful leverage. Accounts payable helps businesses purchase goods and sell them for profit without upfront cash outlay, and finding the right accounts payable software for small businesses helps track these transactions.

    Using accounts payable helps small businesses grow fast. It allows companies to cover demand surges and boost production using suppliers' resources. These credit purchases free up liquid assets, letting firms allot more to other business activities such as investing or financing.

    But purchasing on credit tests your money management skills. With every accounts payable transaction comes a promise to pay vendors on time. So, to maintain goodwill and grow your business, you must know the challenges that come with it. 

    Unloop knows those challenges. Let us break it down and give you tips on how to set up an efficient accounts payable system that can run on autopilot. Together with that, let us also give you the software that can assist you. 

    Small Business Credit Challenges and Solutions

    Managing accounts payable is one of the pain points of many businesses. Whatever the size and type of industry you're in, you'll face these issues as long as you purchase raw materials or merchandise on credit.

    Challenge #1: Challenges in the Invoice Process

    Whenever businesses send bills using the paper method, they face numerous challenges. Invoices can stack up on file cabinets and get lost in the mix. When this happens, your staff will need to request another one from the supplier, which may result in duplicates that lead to issues in the accounts payable process down the road.

    Solution: A good accounts payable software with an excellent invoice processing system will make invoice data entry and tracking easier.

    Challenge #2: Discrepancies in Processing Payments

    Duplicate invoice processing can lead to duplicate payments. If several people manage accounts payable bills, tracking payments becomes challenging, leading to unnecessary cash outlay.

    Aside from duplicate payments, incorrect and missing payments happen, too. These vendor payment discrepancies may seem insignificant in small amounts, but they pile up over time and cause huge losses.

    Solution: Improved accounts payable processes help reduce payment issues. A system you or an appointed staff manages normalizes accurate payments from the business.

    Challenge #3: Unapproved Vendor Payments

    In some cases, your staff have to pay impromptu bills. So, they skip a few steps in the process, especially if it's time-sensitive. This action can fly under the radar and cause issues in your business’s accounting and finance department.

    Unapproved payments can extend beyond fulfilling credit obligations to vendors. If left unchecked, it can lead to other unauthorized expenses that can cost the business significantly in the long run.

    Solution: You or your management staff can curb this from happening if you automate accounts payable and set up a centralized approval system.

    Challenge #4: Inability To Pay Bills Timely

    Both traditional and ecommerce businesses need to be efficient. Fast processing is vital for timely supplier payments when managing accounts payable.

    A slow accounts payable process results in a cash flow bottleneck. Your suppliers may postpone important transactions because of delays in expected cash inflow. This hold-up is detrimental to your supplier's business and yours. They can impose a penalty when you're overdue, or you can lose your supplier completely.

    Solution: Getting accounts payable automation software brings efficiency to the processing of your bill. It removes the manual paperwork process and connects accounts in a single place, allowing instant cash transfers.

    Reasons To Shift From Manual to an Automated Accounting Software

    Investing in accounting software makes the account payable woes mentioned above easy to manage. However, some businesses still prefer the old-fashioned way. Although it’s time-consuming, traditional methods are practically free. But before you decide to stay old school, here are some downsides to it to give you a little push on finally going for accounting automation.

    Manual Accounting is Prone to Human Error

    Human errors are one of the dangers of manually doing accounts payables. From simple arithmetic mistakes to more complex errors and miscommunication on transactions, a number of things can go wrong in doing things manually. Even a small mistake can cause large consequences, especially for small businesses.

    Real-Time Insights Are a Challenge in Traditional Accounting

    Reports are essential to assess the status of your business. When you rely on manual reports, you are limited to generating them in a short timeframe. If you want an annual expense report, you'll have to review tons of records and assemble them—you'll spend more than a week just doing that.

    It will be harder for your business to spot patterns and pain points because you can't see the bigger picture. If problems need addressing, you won't know until they become significant.

    Scaling a Manual System Is a Struggle

    When your business grows, you need more data to track and record. When you expand your business, you'll probably deal with more vendors, and to pay them when it’s due using memory is impossible. Your transactions will increase, and keeping up with them will be more challenging.

    The bottom line is, a manual accounts payable system is not scalable. In the long run, it will only cause your business more complications.

    A chart that shows the factors to look for when choosing an accounts payable software

    Accounts Payable Software: Small Business Must-Haves

    You are now aware of what a software automation solution can do to assist you efficiently. Remembering these characteristics will help you choose among the sea of tools available today. To slim down your selection, here are the five best accounts payable software you can invest in.

    Bill

    Bill accounting software is considered one of the best for accounts payable due to its user-friendly interface, advanced security features, and robust automation capabilities. 

    With Bill, organizations can easily track invoices, automate payment processes, and eliminate manual data entry errors. Let's dive into the software's features that make it an indispensable tool for modern finance teams.

    Ease of Documentation

    Invoice processing is easier with Bill. You can make invoice exchanges by sending emails to your colleagues and suppliers. You can also store invoices in the software using your email.

    Bill makes it easy whether you have a physical or an electronic invoice. For a physical document, you can use your smartphone to take a picture of and convert it electronically. If you have an electronic one, you can upload it online.

    What's excellent about Bill is the invoice automation feature. It uses AI assist that scans your document and inputs all the comprehensible details of your invoice.

    Secure Collaborations

    Bill allows multiple users to access the account. The software can handle various collaborations between owners, bookkeepers, and business staff. This makes it convenient for everyone to work on accounts payable discrepancies and payments.

    To avoid unauthorized payments, approved administrators can choose the access level of Bill account users. You and your managers can restrict or allow vital functions from certain users, thereby preventing fraud or mismanagement.

    Bank and Payment Reconciliations

    Upon setting up your bank account, Bill uses ACH payment methods for faster transactions. The software syncs to your bank and updates the accounts payable balance whenever there is debit and credit. 

    The software also lets your vendors sync their bank accounts to Bill. This helps make payment processing more efficient because the business and your vendor's bank account are connected to the platform.

    Payment Tracking

    The accounts payable software allows you to track and manage payments in real-time. You'll know the payment status and whether it's delayed, received, or cashed. This feature is handy if you're used to using ACH or electronic fund transfers as modes of payment. You can estimate when the payment will clear and credit your supplier's bank account, letting you pay on time.

    QuickBooks Online

    If you're using Bill as your AP automation software, we recommend combining it with Quickbooks Online. It's an excellent accounting platform for accounts payable. The two make a powerful combination of robust accounts payable and accounting systems. The data entry of complex AP transactions syncs to your accounting books as it should, which makes for accurate financial reporting.

    Fully Automate Your Accounts Payable

    Having Bill and QuickBooks Online for your small business is having the right tools for the best accounts payable process. They both have features that partially automate invoice processing such as info entry and transaction sync.

    But running Bill and QuickBooks Online will take effort. Why not fully automate your accounts payable and accounting system with the help of experts? They can do most of the work to give you the following benefits.

    Timely Payments: Bookkeepers will determine how much you owe and when it is due so they can set it up for you.

    One-Click Approval: Every due payment will be shown to you or your manager, ready for approval. Once approved, they start the payment process.

    Best Exchange Rates: Professionals can use the most cost-efficient forex rates to the business's advantage when making overseas payments.

    Quickbooks Online website on a mobile phone inserted on a jeans' pocket

    NetSuite

    NetSuite is a cloud accounting solution that automates small business payment processes such as processing supplier invoices, transaction matching, journal entries, and reconciliations. NetSuite automates the majority of accounting processes, so it eliminates manual tasks and significantly reduces human error.

    Below are some of Netsuite’s best features.

    Purchase Orders Management

    You can make, track, and manage your orders more efficiently by using NetSuite’s purchase orders management feature. It offers real-time visibility into order status, vendor performance, and inventory levels. 

    Vendor Management

    Vendor management allows businesses to effectively manage vendor relationships. It centralizes vendor information, tracks performance, and streamlines communication. With real-time data, it enhances collaboration, negotiates better terms, and ensures compliance.

    Automated Data Entry and Extraction

    Data entry and extraction leverages advanced technology to automate mundane data entry tasks and extract relevant information from documents. This feature particularly focuses on accounts payable, reducing user manual efforts that minimizes human error. Through this feature, data processing becomes faster. 

    TeamPay Accounts Payable Software

    TeamPay is an automated invoice processing software that handles routing for approval and payments. It provides complete visibility into POs. Create, pay, and manage bills via virtual cards, checks, wire, or ACH.

    Here are some of the highlights of TeamPay.

    Automatic Recurring Payments and Bills

    If you want to automate regular payments, such as subscriptions and bills, TeamPay can help. The software has a feature that simplifies financial operations by scheduling and executing payments on predefined dates.

    Requisition Management

    The requisition Management feature streamlines the procurement process by enabling employees to request purchases online. It enforces spending policies, automates approvals, and centralizes requisition data.

    Workflow Management

    TeamPay's workflow management feature allows businesses to design, customize, and automate their spend approval processes. Your business approval chains and routes will stay organized while ensuring alignment with your company policies.

    Airbase

    Airbase is an all-in-one spend management platform that gives small businesses control over every dollar they spend. Processing bills and invoices in one automated platform, scheduling and sending payments, and syncing with your accounting system are made easier with Airbase.

    Here are more of its outstanding software accounts payable features.

    Check Writing

    Send checks digitally, streamlining payment processes, through the help of AirBase. Detail checking is done automatically, allowing you to save time. Because everything’s automated, checks are also easier to track.

    Electronic Fund Transfer

    Airbase's Electronic Fund Transfer (EFT) functionality facilitates secure and efficient financial transactions. It enables businesses to electronically transfer funds for various purposes, such as payroll, vendor payments, and expense reimbursements. 

    Expense Tracking

    Through Airbase’s expense tracking, reporting, reimbursements, and approval workflows are made easier. It centralizes expense data, provides real-time visibility, and enforces spending policies.

    A Smooth Accounts Payable Process With Unloop

    Managing accounts payable is crucial to a business's success. However, there are challenges to purchasing on credit that small businesses need to overcome, such as invoicing challenges, payment discrepancies, unapproved vendor payments, and slow processing of bills.

    Turning to accounts payable software can help small businesses manage these challenges more efficiently. Just take note of the features we enumerated here to pick the right tool. To determine the best one, always consider the needs of your small business.

    Regarding accounts payable management, you can use some help from Unloop. We are a team of bookkeepers with skills and experience in accounts payable management. We specialize in ecommerce small businesses and have been using Bill and QBO to run ecommerce accounting systems efficiently.

    If you decide to get Bill and QBO or already have specific software in mind, you can trust that we'll maximize these tools to your business's advantage. Book a call with us now, so we can discuss our offers with you.

    Accounts Payable Software: Small Businesses Credit Challenges and Tools That Fix Them
    Watch Now

    Accounts payable is a powerful leverage. Accounts payable helps businesses purchase goods and sell them for profit without upfront cash outlay, and finding the right accounts payable software for small businesses helps track these transactions.

    Using accounts payable helps small businesses grow fast. It allows companies to cover demand surges and boost production using suppliers' resources. These credit purchases free up liquid assets, letting firms allot more to other business activities such as investing or financing.

    But purchasing on credit tests your money management skills. With every accounts payable transaction comes a promise to pay vendors on time. So, to maintain goodwill and grow your business, you must know the challenges that come with it. 

    Unloop knows those challenges. Let us break it down and give you tips on how to set up an efficient accounts payable system that can run on autopilot. Together with that, let us also give you the software that can assist you. 

    Small Business Credit Challenges and Solutions

    Managing accounts payable is one of the pain points of many businesses. Whatever the size and type of industry you're in, you'll face these issues as long as you purchase raw materials or merchandise on credit.

    Challenge #1: Challenges in the Invoice Process

    Whenever businesses send bills using the paper method, they face numerous challenges. Invoices can stack up on file cabinets and get lost in the mix. When this happens, your staff will need to request another one from the supplier, which may result in duplicates that lead to issues in the accounts payable process down the road.

    Solution: A good accounts payable software with an excellent invoice processing system will make invoice data entry and tracking easier.

    Challenge #2: Discrepancies in Processing Payments

    Duplicate invoice processing can lead to duplicate payments. If several people manage accounts payable bills, tracking payments becomes challenging, leading to unnecessary cash outlay.

    Aside from duplicate payments, incorrect and missing payments happen, too. These vendor payment discrepancies may seem insignificant in small amounts, but they pile up over time and cause huge losses.

    Solution: Improved accounts payable processes help reduce payment issues. A system you or an appointed staff manages normalizes accurate payments from the business.

    Challenge #3: Unapproved Vendor Payments

    In some cases, your staff have to pay impromptu bills. So, they skip a few steps in the process, especially if it's time-sensitive. This action can fly under the radar and cause issues in your business’s accounting and finance department.

    Unapproved payments can extend beyond fulfilling credit obligations to vendors. If left unchecked, it can lead to other unauthorized expenses that can cost the business significantly in the long run.

    Solution: You or your management staff can curb this from happening if you automate accounts payable and set up a centralized approval system.

    Challenge #4: Inability To Pay Bills Timely

    Both traditional and ecommerce businesses need to be efficient. Fast processing is vital for timely supplier payments when managing accounts payable.

    A slow accounts payable process results in a cash flow bottleneck. Your suppliers may postpone important transactions because of delays in expected cash inflow. This hold-up is detrimental to your supplier's business and yours. They can impose a penalty when you're overdue, or you can lose your supplier completely.

    Solution: Getting accounts payable automation software brings efficiency to the processing of your bill. It removes the manual paperwork process and connects accounts in a single place, allowing instant cash transfers.

    Reasons To Shift From Manual to an Automated Accounting Software

    Investing in accounting software makes the account payable woes mentioned above easy to manage. However, some businesses still prefer the old-fashioned way. Although it’s time-consuming, traditional methods are practically free. But before you decide to stay old school, here are some downsides to it to give you a little push on finally going for accounting automation.

    Manual Accounting is Prone to Human Error

    Human errors are one of the dangers of manually doing accounts payables. From simple arithmetic mistakes to more complex errors and miscommunication on transactions, a number of things can go wrong in doing things manually. Even a small mistake can cause large consequences, especially for small businesses.

    Real-Time Insights Are a Challenge in Traditional Accounting

    Reports are essential to assess the status of your business. When you rely on manual reports, you are limited to generating them in a short timeframe. If you want an annual expense report, you'll have to review tons of records and assemble them—you'll spend more than a week just doing that.

    It will be harder for your business to spot patterns and pain points because you can't see the bigger picture. If problems need addressing, you won't know until they become significant.

    Scaling a Manual System Is a Struggle

    When your business grows, you need more data to track and record. When you expand your business, you'll probably deal with more vendors, and to pay them when it’s due using memory is impossible. Your transactions will increase, and keeping up with them will be more challenging.

    The bottom line is, a manual accounts payable system is not scalable. In the long run, it will only cause your business more complications.

    A chart that shows the factors to look for when choosing an accounts payable software

    Accounts Payable Software: Small Business Must-Haves

    You are now aware of what a software automation solution can do to assist you efficiently. Remembering these characteristics will help you choose among the sea of tools available today. To slim down your selection, here are the five best accounts payable software you can invest in.

    Bill

    Bill accounting software is considered one of the best for accounts payable due to its user-friendly interface, advanced security features, and robust automation capabilities. 

    With Bill, organizations can easily track invoices, automate payment processes, and eliminate manual data entry errors. Let's dive into the software's features that make it an indispensable tool for modern finance teams.

    Ease of Documentation

    Invoice processing is easier with Bill. You can make invoice exchanges by sending emails to your colleagues and suppliers. You can also store invoices in the software using your email.

    Bill makes it easy whether you have a physical or an electronic invoice. For a physical document, you can use your smartphone to take a picture of and convert it electronically. If you have an electronic one, you can upload it online.

    What's excellent about Bill is the invoice automation feature. It uses AI assist that scans your document and inputs all the comprehensible details of your invoice.

    Secure Collaborations

    Bill allows multiple users to access the account. The software can handle various collaborations between owners, bookkeepers, and business staff. This makes it convenient for everyone to work on accounts payable discrepancies and payments.

    To avoid unauthorized payments, approved administrators can choose the access level of Bill account users. You and your managers can restrict or allow vital functions from certain users, thereby preventing fraud or mismanagement.

    Bank and Payment Reconciliations

    Upon setting up your bank account, Bill uses ACH payment methods for faster transactions. The software syncs to your bank and updates the accounts payable balance whenever there is debit and credit. 

    The software also lets your vendors sync their bank accounts to Bill. This helps make payment processing more efficient because the business and your vendor's bank account are connected to the platform.

    Payment Tracking

    The accounts payable software allows you to track and manage payments in real-time. You'll know the payment status and whether it's delayed, received, or cashed. This feature is handy if you're used to using ACH or electronic fund transfers as modes of payment. You can estimate when the payment will clear and credit your supplier's bank account, letting you pay on time.

    QuickBooks Online

    If you're using Bill as your AP automation software, we recommend combining it with Quickbooks Online. It's an excellent accounting platform for accounts payable. The two make a powerful combination of robust accounts payable and accounting systems. The data entry of complex AP transactions syncs to your accounting books as it should, which makes for accurate financial reporting.

    Fully Automate Your Accounts Payable

    Having Bill and QuickBooks Online for your small business is having the right tools for the best accounts payable process. They both have features that partially automate invoice processing such as info entry and transaction sync.

    But running Bill and QuickBooks Online will take effort. Why not fully automate your accounts payable and accounting system with the help of experts? They can do most of the work to give you the following benefits.

    Timely Payments: Bookkeepers will determine how much you owe and when it is due so they can set it up for you.

    One-Click Approval: Every due payment will be shown to you or your manager, ready for approval. Once approved, they start the payment process.

    Best Exchange Rates: Professionals can use the most cost-efficient forex rates to the business's advantage when making overseas payments.

    Quickbooks Online website on a mobile phone inserted on a jeans' pocket

    NetSuite

    NetSuite is a cloud accounting solution that automates small business payment processes such as processing supplier invoices, transaction matching, journal entries, and reconciliations. NetSuite automates the majority of accounting processes, so it eliminates manual tasks and significantly reduces human error.

    Below are some of Netsuite’s best features.

    Purchase Orders Management

    You can make, track, and manage your orders more efficiently by using NetSuite’s purchase orders management feature. It offers real-time visibility into order status, vendor performance, and inventory levels. 

    Vendor Management

    Vendor management allows businesses to effectively manage vendor relationships. It centralizes vendor information, tracks performance, and streamlines communication. With real-time data, it enhances collaboration, negotiates better terms, and ensures compliance.

    Automated Data Entry and Extraction

    Data entry and extraction leverages advanced technology to automate mundane data entry tasks and extract relevant information from documents. This feature particularly focuses on accounts payable, reducing user manual efforts that minimizes human error. Through this feature, data processing becomes faster. 

    TeamPay Accounts Payable Software

    TeamPay is an automated invoice processing software that handles routing for approval and payments. It provides complete visibility into POs. Create, pay, and manage bills via virtual cards, checks, wire, or ACH.

    Here are some of the highlights of TeamPay.

    Automatic Recurring Payments and Bills

    If you want to automate regular payments, such as subscriptions and bills, TeamPay can help. The software has a feature that simplifies financial operations by scheduling and executing payments on predefined dates.

    Requisition Management

    The requisition Management feature streamlines the procurement process by enabling employees to request purchases online. It enforces spending policies, automates approvals, and centralizes requisition data.

    Workflow Management

    TeamPay's workflow management feature allows businesses to design, customize, and automate their spend approval processes. Your business approval chains and routes will stay organized while ensuring alignment with your company policies.

    Airbase

    Airbase is an all-in-one spend management platform that gives small businesses control over every dollar they spend. Processing bills and invoices in one automated platform, scheduling and sending payments, and syncing with your accounting system are made easier with Airbase.

    Here are more of its outstanding software accounts payable features.

    Check Writing

    Send checks digitally, streamlining payment processes, through the help of AirBase. Detail checking is done automatically, allowing you to save time. Because everything’s automated, checks are also easier to track.

    Electronic Fund Transfer

    Airbase's Electronic Fund Transfer (EFT) functionality facilitates secure and efficient financial transactions. It enables businesses to electronically transfer funds for various purposes, such as payroll, vendor payments, and expense reimbursements. 

    Expense Tracking

    Through Airbase’s expense tracking, reporting, reimbursements, and approval workflows are made easier. It centralizes expense data, provides real-time visibility, and enforces spending policies.

    A Smooth Accounts Payable Process With Unloop

    Managing accounts payable is crucial to a business's success. However, there are challenges to purchasing on credit that small businesses need to overcome, such as invoicing challenges, payment discrepancies, unapproved vendor payments, and slow processing of bills.

    Turning to accounts payable software can help small businesses manage these challenges more efficiently. Just take note of the features we enumerated here to pick the right tool. To determine the best one, always consider the needs of your small business.

    Regarding accounts payable management, you can use some help from Unloop. We are a team of bookkeepers with skills and experience in accounts payable management. We specialize in ecommerce small businesses and have been using Bill and QBO to run ecommerce accounting systems efficiently.

    If you decide to get Bill and QBO or already have specific software in mind, you can trust that we'll maximize these tools to your business's advantage. Book a call with us now, so we can discuss our offers with you.

    Read more

    Many entrepreneurs know that accounting for startups is unnecessary. A common rationale is that an early-phase startup involves only expenses in its financial transactions. During the early phase, the startup founder tries to build a new product without the certainty of commercial value.

    Yet, accounting can also be the key to measuring how far the business has come and if it should continue. Let Unloop unpack the nature of startups, its typical operating procedures, and why founders should establish an accounting system early on.

    An infographic containing a comparison table between small businesses and startups.

    Small Businesses vs. Startups

    To a layman, a startup and a small business are interchangeable. However, differences in certain aspects of their structure and objectives, such as the following, separate the two.

    Growth

    When you think about a small business, what usually comes to mind are restaurants, cafes, or brick-and-mortar retail shops. Small businesses typically compete in a stable market with other businesses, projecting their growth to be slow and steady.

    On the other hand, startups are built for rapid business growth, so startup businesses usually differ from conventional ones. For example, a startup restaurant would have a system different from regular restaurants. Otherwise, it remains a small business.

    Typically, startups grow faster by creating innovative ventures that can disrupt an existing market. McDonald's is a great example of a startup—it changed the way food was made and inadvertently created a new industry: fast food.

    Structure

    A startup and a small business can have identical structures. But there is a high possibility a startup will switch to a business structure that best suits its goals, like growth. Fast growth requires a startup founder to be ready to scrap any ineffective parts of their organization. It is one of the key characteristics of a startup: instability. It is a process that involves high risks and high rewards.

    Meanwhile, small businesses limit themselves to conventional, tried-and-true organizational structures. For example, if you run a restaurant, there is a natural hierarchy in the kitchen. There is a chef de cuisine, a sous chef, then the garde manger, and so on—and success in the industry means sticking to the formula.

    Financing

    Financing determines the major difference between a startup and a small business because their objectives stem from whoever is financing their operations. Since startups are risky, expensive ventures, they are usually funded by angel investors or venture capitalists for equity, from which they will expect quick returns in exchange for taking on most, if not all, of the exposure, hence the need for scalable growth.

    A small business is usually self-funded, either from the owner's savings or a personal loan. Because funding comes from the owner's pocket, the risk exposure is high, so the owner tends to grow the business slowly to make sure decisions would lead to a steady flow of income.

    Overview of the Startup Method

    Until the late 2000s, most people thought a startup was just another business. But since then, the idea of creating startups has become standardized and more focused on innovation, and it isn’t exclusive to big players.

    It’s important to recognize this process in your own business for you to better navigate accounting under the context of a startup. Note the brief review of the method below.

    • Solution Brainstorming - The founder sees the problem or the opportunity in the market and generates ideas on how to solve them. The team runs every idea under the feasibility, profitability, and market reception criteria and decides on one solution to pursue.
    • Prototyping - The team will materialize the chosen idea by developing a product with all the essential features to make it functional. This is called the minimum viable product (MVP) or prototype.
    • Beta Testing - The founder and their team release the prototype to a select group of consumers who will give feedback about experience and product features.
    • Iteration - This means going back to the drawing board to make improvements to the product prototype or, if found unviable commercially, to scrap the product and move on to the next.
    • Planning Business Structure - This step involves registering the startup as a formal business—usually a corporation—with the founders and the team getting a piece of the initial private stock offering.
    • Product Development - At this phase, the team has gathered all data from the beta testing and all the necessary iteration data. They're now ready to build the product with more polished features.
    • Commercial Product Launch - The product is uploaded as a product listing on a website or an ecommerce marketplace.
    A team of professionals having a brainstorming session by posting notes on a clear glass.

    Startup Expectations: Why It's Wise To Do Accounting for Startups

    Based on the methods laid out above, we can build a case for setting up startup accounting systems as early as possible. Here are some things that happen when you run a startup.

    The Development Process Can Take Time

    Whether you're innovating a disruptive solution or offering a simple product, the development will take time. Depending on the complexity of the product, it can be days or even years before you build your first MVP.

    We've all heard of the adage time is money. So all the time spent renting a co-working space to brainstorm and develop a product will drain down the startup's business bank accounts. In certain cases, founders will lose track of their financial position and may need another round of funding to get off the ground.

    The Startup May Need Rounds of Funding

    Funding doesn't always have to come from the founder. In some cases, the founder may only have an idea, a skillset, and a few people willing to contribute labor. If they want the startup to take off, they'll need outside funding.

    The best bet will be venture capitalists and private investors, and they will need to see how their investment is performing. So it's always a good idea to account for the money you're meant to grow. Financial records and bank statements give founders a rundown of transactions, but to keep track of where the fund is going, you need to generate financial reports, which makes accounting systems necessary.

    There Are Stakeholders That May Need a Salary

    In a typical scenario, people working in a startup are doing it part-time as a passion project. But once it gets off the ground, things can get more hands-on to the point that most or all the people involved in the project will need to work full-time.

    When the founder and their team dedicate themselves to the project like regular employees, they'll need a salary to survive. This also means they have to pay taxes. That's where establishing an accounting system and hiring an accountant can help.

    Profits May Take Time To Roll In (If at All)

    If there's a single expectation you should have before performing accounting for startups, it is that profits may not roll in soon. Like product development, it can take months or years to realize a positive bottom line.

    By establishing an accounting system early on in the startup, you'll know through financial statements whether you're already making a profit from the day-to-day operations or are still on the road to paying your startup costs before the product launch.

    How Establishing an Accounting System Early Helps a Startup

    When it comes to startups, the decision to establish an accounting system early on is often a low-priority task. That's reasonable, considering there is no business coming in yet. It's only when investors throw big money at it that founders begin to appreciate the benefits of accounting. But let us show you what getting your accounting fixed early will do for your startup.

    A Solid Accounting System

    For startups, establishing an accounting system can be as easy as subscribing to accounting software and having a team of experts run it part-time. An accountant or bookkeeper recording transactions and overseeing the startup's financial data helps place the foundation of the accounting process that will grow along with the startup.

    This means no more headaches about planning the right processes later, as it can get more complex when the startup becomes a medium or large-scale business.

    Bookkeeping for Startups Creates a Source of Financial Records

    All the financial data should be recorded properly at the beginning. Even if it's all going to the expense account, it can become part of financial reports during the product development phase.

    This information is useful to the founders and other stakeholders as it gives them an idea of the startup's financial health and how its budgeting resources.

    Helps Founders Manage Startup Performance

    Once the startup becomes a fully-operational business that earns profit, all the business transactions recorded also form part of the financial statement (i.e., the income statement, balance sheet, and cash flow statement). This information will be essential for evaluating how the business is doing.

    Financial statements help owners see the business's financial health and make important business decisions, such as taking the company public, requesting another round of investments, or closing shop.

    Sorts Out the Startup's Bank Account

    Another thing that happens with startups is disorganized finances. Some founders think that the money they toss into the de facto startup is unofficial as it isn't formally registered to any trade and commerce authority. So their personal finances, and perhaps along with their investors, are mixed into the startup as one and the same.

    Knowing accounting basics and employing proper accounting methods from the get-go helps founders separate personal, investors, and startup business transactions. This makes reconciling bank statements and financial reporting for the startup smooth sailing in the long run.

    Assists in Paying Tax Obligations

    Recall that when founders and the team start getting salaries for their work in the startup, they're obligated to remit payroll taxes, especially if the startup is already legalized.

    Once the startup earns significant profits, it may be subject to different taxes. For example, income tax is one of the many financial obligations of any business entity. During tax season, they must file income tax returns to stay compliant. Establishing an accounting system early on and having it run by experts will make filing easier and more accurate.

    How Startup Accountants Put Your Accounting System to Good Use

    Once you have an accounting system in place, you also have to run it on top of managing your startup. To most founders, this can be overwhelming, especially if their skillset leans toward building and running their own business.

    Given this scenario, investing in bookkeeping software run by startup accountants from an outsourced accounting firm is a step in the right direction. Here are some ways it can make your life as a business owner easier.

    Saves Time (and Money)

    Can you imagine handling your own accounting on top of everything? Accounting and bookkeeping services take away the extra stress from your job and allow you to spend more energy on running your business.

    Outsourced accounting firms save you money since hiring accounting services is much cheaper than adding an entire team of accountants to your payroll.

    Accurate Financial Analysis

    Once you have your data ready, it's important you evaluate them accurately. But even if you have the most accurate books, the data in them won't matter unless you have an experienced team analyzing them for you.

    Accounting services for startups follow generally accepted accounting principles (GAAP) and use either cash accounting or accrual accounting method depending on the startup business's needs. They also know how to analyze your financial reports specifically for your business's long-term goals. To do so, they will produce and analyze the following financial statements:

    • Balance sheets
    • Income statements
    • Cash flow statements
    • Statements of owner's equity

    Helps You Make Expert Financial Decisions

    Any financial decision can make or break your startup—that's how volatile startups are. If you want it to grow continuously and produce adequate results, you'll have to make decisions that are nothing short of the best.

    Accounting services for startups have an in-house team of seasoned accountants who specialize in launching your startup further. They can help make decisions concerning investments, stock options, and valuation. This is especially helpful for taxes since companies always struggle with the technical side of filing taxes and how to save money on tax returns.

    Accounting for Startups Easily Measures Progress

    Consider that even the smallest projects incur costs. To measure the project's success, the cost incurred to pull it off is always part of the equation. That goes the same for startups.

    So whether you're in the ideation phase or already on your 100th iteration, an accounting system will help you count your costs. This gives you, the founder, the chance to recoup them. Unloop can help you establish an accounting system that fits your needs, whatever startup stage you're in. So book a call with us if you need your startup’s finances sorted, or check out our bookkeeping services now.

    Accounting for Startups: Outsourcing To Measure Progress (and Profits)
    Watch Now

    Many entrepreneurs know that accounting for startups is unnecessary. A common rationale is that an early-phase startup involves only expenses in its financial transactions. During the early phase, the startup founder tries to build a new product without the certainty of commercial value.

    Yet, accounting can also be the key to measuring how far the business has come and if it should continue. Let Unloop unpack the nature of startups, its typical operating procedures, and why founders should establish an accounting system early on.

    An infographic containing a comparison table between small businesses and startups.

    Small Businesses vs. Startups

    To a layman, a startup and a small business are interchangeable. However, differences in certain aspects of their structure and objectives, such as the following, separate the two.

    Growth

    When you think about a small business, what usually comes to mind are restaurants, cafes, or brick-and-mortar retail shops. Small businesses typically compete in a stable market with other businesses, projecting their growth to be slow and steady.

    On the other hand, startups are built for rapid business growth, so startup businesses usually differ from conventional ones. For example, a startup restaurant would have a system different from regular restaurants. Otherwise, it remains a small business.

    Typically, startups grow faster by creating innovative ventures that can disrupt an existing market. McDonald's is a great example of a startup—it changed the way food was made and inadvertently created a new industry: fast food.

    Structure

    A startup and a small business can have identical structures. But there is a high possibility a startup will switch to a business structure that best suits its goals, like growth. Fast growth requires a startup founder to be ready to scrap any ineffective parts of their organization. It is one of the key characteristics of a startup: instability. It is a process that involves high risks and high rewards.

    Meanwhile, small businesses limit themselves to conventional, tried-and-true organizational structures. For example, if you run a restaurant, there is a natural hierarchy in the kitchen. There is a chef de cuisine, a sous chef, then the garde manger, and so on—and success in the industry means sticking to the formula.

    Financing

    Financing determines the major difference between a startup and a small business because their objectives stem from whoever is financing their operations. Since startups are risky, expensive ventures, they are usually funded by angel investors or venture capitalists for equity, from which they will expect quick returns in exchange for taking on most, if not all, of the exposure, hence the need for scalable growth.

    A small business is usually self-funded, either from the owner's savings or a personal loan. Because funding comes from the owner's pocket, the risk exposure is high, so the owner tends to grow the business slowly to make sure decisions would lead to a steady flow of income.

    Overview of the Startup Method

    Until the late 2000s, most people thought a startup was just another business. But since then, the idea of creating startups has become standardized and more focused on innovation, and it isn’t exclusive to big players.

    It’s important to recognize this process in your own business for you to better navigate accounting under the context of a startup. Note the brief review of the method below.

    • Solution Brainstorming - The founder sees the problem or the opportunity in the market and generates ideas on how to solve them. The team runs every idea under the feasibility, profitability, and market reception criteria and decides on one solution to pursue.
    • Prototyping - The team will materialize the chosen idea by developing a product with all the essential features to make it functional. This is called the minimum viable product (MVP) or prototype.
    • Beta Testing - The founder and their team release the prototype to a select group of consumers who will give feedback about experience and product features.
    • Iteration - This means going back to the drawing board to make improvements to the product prototype or, if found unviable commercially, to scrap the product and move on to the next.
    • Planning Business Structure - This step involves registering the startup as a formal business—usually a corporation—with the founders and the team getting a piece of the initial private stock offering.
    • Product Development - At this phase, the team has gathered all data from the beta testing and all the necessary iteration data. They're now ready to build the product with more polished features.
    • Commercial Product Launch - The product is uploaded as a product listing on a website or an ecommerce marketplace.
    A team of professionals having a brainstorming session by posting notes on a clear glass.

    Startup Expectations: Why It's Wise To Do Accounting for Startups

    Based on the methods laid out above, we can build a case for setting up startup accounting systems as early as possible. Here are some things that happen when you run a startup.

    The Development Process Can Take Time

    Whether you're innovating a disruptive solution or offering a simple product, the development will take time. Depending on the complexity of the product, it can be days or even years before you build your first MVP.

    We've all heard of the adage time is money. So all the time spent renting a co-working space to brainstorm and develop a product will drain down the startup's business bank accounts. In certain cases, founders will lose track of their financial position and may need another round of funding to get off the ground.

    The Startup May Need Rounds of Funding

    Funding doesn't always have to come from the founder. In some cases, the founder may only have an idea, a skillset, and a few people willing to contribute labor. If they want the startup to take off, they'll need outside funding.

    The best bet will be venture capitalists and private investors, and they will need to see how their investment is performing. So it's always a good idea to account for the money you're meant to grow. Financial records and bank statements give founders a rundown of transactions, but to keep track of where the fund is going, you need to generate financial reports, which makes accounting systems necessary.

    There Are Stakeholders That May Need a Salary

    In a typical scenario, people working in a startup are doing it part-time as a passion project. But once it gets off the ground, things can get more hands-on to the point that most or all the people involved in the project will need to work full-time.

    When the founder and their team dedicate themselves to the project like regular employees, they'll need a salary to survive. This also means they have to pay taxes. That's where establishing an accounting system and hiring an accountant can help.

    Profits May Take Time To Roll In (If at All)

    If there's a single expectation you should have before performing accounting for startups, it is that profits may not roll in soon. Like product development, it can take months or years to realize a positive bottom line.

    By establishing an accounting system early on in the startup, you'll know through financial statements whether you're already making a profit from the day-to-day operations or are still on the road to paying your startup costs before the product launch.

    How Establishing an Accounting System Early Helps a Startup

    When it comes to startups, the decision to establish an accounting system early on is often a low-priority task. That's reasonable, considering there is no business coming in yet. It's only when investors throw big money at it that founders begin to appreciate the benefits of accounting. But let us show you what getting your accounting fixed early will do for your startup.

    A Solid Accounting System

    For startups, establishing an accounting system can be as easy as subscribing to accounting software and having a team of experts run it part-time. An accountant or bookkeeper recording transactions and overseeing the startup's financial data helps place the foundation of the accounting process that will grow along with the startup.

    This means no more headaches about planning the right processes later, as it can get more complex when the startup becomes a medium or large-scale business.

    Bookkeeping for Startups Creates a Source of Financial Records

    All the financial data should be recorded properly at the beginning. Even if it's all going to the expense account, it can become part of financial reports during the product development phase.

    This information is useful to the founders and other stakeholders as it gives them an idea of the startup's financial health and how its budgeting resources.

    Helps Founders Manage Startup Performance

    Once the startup becomes a fully-operational business that earns profit, all the business transactions recorded also form part of the financial statement (i.e., the income statement, balance sheet, and cash flow statement). This information will be essential for evaluating how the business is doing.

    Financial statements help owners see the business's financial health and make important business decisions, such as taking the company public, requesting another round of investments, or closing shop.

    Sorts Out the Startup's Bank Account

    Another thing that happens with startups is disorganized finances. Some founders think that the money they toss into the de facto startup is unofficial as it isn't formally registered to any trade and commerce authority. So their personal finances, and perhaps along with their investors, are mixed into the startup as one and the same.

    Knowing accounting basics and employing proper accounting methods from the get-go helps founders separate personal, investors, and startup business transactions. This makes reconciling bank statements and financial reporting for the startup smooth sailing in the long run.

    Assists in Paying Tax Obligations

    Recall that when founders and the team start getting salaries for their work in the startup, they're obligated to remit payroll taxes, especially if the startup is already legalized.

    Once the startup earns significant profits, it may be subject to different taxes. For example, income tax is one of the many financial obligations of any business entity. During tax season, they must file income tax returns to stay compliant. Establishing an accounting system early on and having it run by experts will make filing easier and more accurate.

    How Startup Accountants Put Your Accounting System to Good Use

    Once you have an accounting system in place, you also have to run it on top of managing your startup. To most founders, this can be overwhelming, especially if their skillset leans toward building and running their own business.

    Given this scenario, investing in bookkeeping software run by startup accountants from an outsourced accounting firm is a step in the right direction. Here are some ways it can make your life as a business owner easier.

    Saves Time (and Money)

    Can you imagine handling your own accounting on top of everything? Accounting and bookkeeping services take away the extra stress from your job and allow you to spend more energy on running your business.

    Outsourced accounting firms save you money since hiring accounting services is much cheaper than adding an entire team of accountants to your payroll.

    Accurate Financial Analysis

    Once you have your data ready, it's important you evaluate them accurately. But even if you have the most accurate books, the data in them won't matter unless you have an experienced team analyzing them for you.

    Accounting services for startups follow generally accepted accounting principles (GAAP) and use either cash accounting or accrual accounting method depending on the startup business's needs. They also know how to analyze your financial reports specifically for your business's long-term goals. To do so, they will produce and analyze the following financial statements:

    • Balance sheets
    • Income statements
    • Cash flow statements
    • Statements of owner's equity

    Helps You Make Expert Financial Decisions

    Any financial decision can make or break your startup—that's how volatile startups are. If you want it to grow continuously and produce adequate results, you'll have to make decisions that are nothing short of the best.

    Accounting services for startups have an in-house team of seasoned accountants who specialize in launching your startup further. They can help make decisions concerning investments, stock options, and valuation. This is especially helpful for taxes since companies always struggle with the technical side of filing taxes and how to save money on tax returns.

    Accounting for Startups Easily Measures Progress

    Consider that even the smallest projects incur costs. To measure the project's success, the cost incurred to pull it off is always part of the equation. That goes the same for startups.

    So whether you're in the ideation phase or already on your 100th iteration, an accounting system will help you count your costs. This gives you, the founder, the chance to recoup them. Unloop can help you establish an accounting system that fits your needs, whatever startup stage you're in. So book a call with us if you need your startup’s finances sorted, or check out our bookkeeping services now.

    Read more

    Warren Buffet once said to an intern, "accounting is the language of business." In our contemporary business landscape, this makes sense. Every formal ecommerce or traditional small business you trade with knows this language—it's a necessity.

    Success in anything is related to communication. How well you communicate dictates how far you can go; to communicate, you must know the language. The same thing goes with the language of business—accounting.

    Let Unloop tell you why accounting is the language of business and how you can learn it to take your business to a whole new realm of success.

    Why Is Accounting the Language of Business?

    Just as we need language and speech to exchange ideas, accounting is born out of the need to exchange money. As soon as we used money as a medium of trade, the need to count it followed—this is in the spirit of fair trade.

    Since then, counting money has grown more sophisticated. It has become known as accounting, and we use it today because of the following.

    It Supports Finance

    In the context of business, finance is the discipline of managing money. Yet, for money management to exist, there has to be something tangible to work on. That's what accounting provides—numbers.

    Accounting allows business owners to look at their financial transactions and interpret them to manage their business's resources effectively.

    Accounting Aids Economics (and Vice Versa)

    On a macro level, accounting generates financial and economic data that policymakers can use to formulate monetary and fiscal policies that will eventually keep the nation's economy healthy.

    On a micro level, business managers also use financial statements to create new business and management policies to help the business grow, be it a traditional one or one in an online marketplace.

    It’s the Lingua Franca of the Business World

    Accounting follows a standard called the Generally Accepted Accounting Principles (GAAP). This solidifies the accounting concepts, processes, and methods used enough to make it adaptable by everyone doing business.

    Every business that pays taxes uses the same language with few variations, which adapt to the region or state they do business with. But more or less, this allows all accountants and business people to understand each other. It makes it easy to interpret and audit financial documents and make sound business decisions.

    The Pillars of the Language of Accounting

    The road to learning the language of business starts with the fundamental parts. Like in speech—where we have nouns, pronouns, verbs, adjectives, and adverbs that serve as building blocks of sentences—accounting has the following five pillars.

    Assets

    Every tangible or intangible thing put into the business is considered an asset. It can be property, equipment, furniture, vehicles, labor, and money on hand or to be received.

    Recognizing assets involves determining their value in monetary terms. That said, the easiest to quantify is the most liquid form of asset: cash. As for other assets, such as property, accountants find their market value and record their money equivalent.

    Liabilities

    Long and short-term debts incurred by a business fall under liabilities. This is considered a pillar because it is part of every business's nature to get into debt.

    Liabilities are expressed in monetary terms representing the amount of obligation a business has. Some examples of liabilities are short and long-term loans, accounts payable, mortgages, and other expenses that are yet to be paid.

    Equity - Capital

    Equity is a stakeholder or a sole proprietor's share of the business expressed in monetary terms. Accountants determine this by getting the difference between assets and liabilities; the resulting amount represents a businessperson's ownership value.

    This pillar increases or decreases in value depending on business performance. In any business structure, the goal is always to increase the amount of equity. Commonly this is done by making efforts to increase sales and revenue, but accountants and finance people know other activities that can grow equity.

    Expenses

    This pillar expresses the day-to-day expenditure of a business. It's straightforward, but expenses can behave differently and come from different business sides.

    For example, you have expenses from producing goods (often called costs), then you also have expenses coming from administrative functions, such as payroll and supplies. To get an accurate picture, accountants must classify all these expenses accordingly.

    Revenue

    Money that comes into the business, mainly from selling goods and services, is called revenue. But just like expenses, revenue can come from other sources besides sales. Revenue can also come from interests earned or rental income from a property, just to name a few.

    Financial Statements: Communicating the Accounting Language

    The pillars of accounting language make up business transactions recorded in the books. These are then processed and arranged into an understandable form called financial statements.

    Financial statements communicate the accounting language that most accounting professionals, managers, and business owners can understand. They come in three forms.

    The Income Statement

    This instrument breaks down revenue and expenses incurred during a period of business operations. Essentially, it communicates how much money the business earned from sales and other sources of revenue. It also tells you how much of the revenue the business keeps after all expenses are accounted for.

    The resulting bottom line, also known as net profit after tax, forms part of the business's assets which will affect the balance sheet.

    The Balance Sheet

    Balance sheets communicate the value of the business. It breaks down assets, liabilities, and equity to arrive at a monetary equivalent of a business's worth and, eventually, how much the owner can get from it.

    This instrument follows the accounting formula of Assets = Liabilities + Equity, meaning the total amount of the asset section must be equal to the combined amount of liability and capital represented in another section.

    The Cash Flow Statement

    The cash flow statement filters all the cash transactions of a business and categorizes them into three different business activities: operations, financing, and investment. This is one accounting statement that communicates the degree of money inflow and outflow.

    A cash flow statement is important to business managers as it gives them a bird's eye view of where cash resources are used and how it stalls or propels business growth.

    Accounting Professionals Are Your Translators

    Accounting professionals understand the pillars of accounting and the complexities attached to them. They act as translators. They keep all transactions to arrange them into financial statements that communicate accounting in understandable format.

    As translators, they have knowledge and skill sets that allow them to make complicated things simple. These skills allow them to do the following.

    Bookkeeping

    Bookkeeping is classifying and recording business transactions in line with generally accepted accounting principles. The bookkeeping process follows full cycle accounting and builds the business's accounting records which the accountant will use to draw up accounting reports.

    Financial Statement Reporting

    Preparing financial statements comes after bookkeeping and is done monthly or yearly. Generating financial reports depends on bookkeeping, and the more accurate the financial records, the more financial statements communicate to stakeholders.

    Auditing

    Accountants can also check the methods other accountants use. This is called auditing and helps ensure that recordkeeping and financial statement reporting align with the standards.

    Tax Compliance

    Part of understanding the language of accounting is being adept with taxes and how it affects the business. So accountants study different taxes and keep themselves up to date with current tax laws to ensure accurate and compliant tax expense recording.

    Consulting

    If there's anyone who knows how your business works, it's the accountant. They look at the numbers and see the nut and bolts of your business. As such, they can take on a consulting capacity and advise managers on which parts of the business need attention to ensure increased profits and equity.

    Understanding the Accounting Language Is a Process

    Any business owner wanting to increase their chances of success must understand accounting. But just like any language, it takes time to learn.

    The good news is you can speed up the learning process by working with someone fluent in the language. These are the accountants.

    Work with them, let them help you understand the language using financial statements, allow yourself to read them, and be sure to ask your accountant questions. In time, once you have more insights and have read many financial statements, you'll be poised to lead your business to greater heights.To learn what the language of business is and how to use it to increase your chances of success, book a call with us or check out our bookkeeping services now.

    Accounting Is the Language of Business, and You Must Learn It To Succeed
    Watch Now

    Warren Buffet once said to an intern, "accounting is the language of business." In our contemporary business landscape, this makes sense. Every formal ecommerce or traditional small business you trade with knows this language—it's a necessity.

    Success in anything is related to communication. How well you communicate dictates how far you can go; to communicate, you must know the language. The same thing goes with the language of business—accounting.

    Let Unloop tell you why accounting is the language of business and how you can learn it to take your business to a whole new realm of success.

    Why Is Accounting the Language of Business?

    Just as we need language and speech to exchange ideas, accounting is born out of the need to exchange money. As soon as we used money as a medium of trade, the need to count it followed—this is in the spirit of fair trade.

    Since then, counting money has grown more sophisticated. It has become known as accounting, and we use it today because of the following.

    It Supports Finance

    In the context of business, finance is the discipline of managing money. Yet, for money management to exist, there has to be something tangible to work on. That's what accounting provides—numbers.

    Accounting allows business owners to look at their financial transactions and interpret them to manage their business's resources effectively.

    Accounting Aids Economics (and Vice Versa)

    On a macro level, accounting generates financial and economic data that policymakers can use to formulate monetary and fiscal policies that will eventually keep the nation's economy healthy.

    On a micro level, business managers also use financial statements to create new business and management policies to help the business grow, be it a traditional one or one in an online marketplace.

    It’s the Lingua Franca of the Business World

    Accounting follows a standard called the Generally Accepted Accounting Principles (GAAP). This solidifies the accounting concepts, processes, and methods used enough to make it adaptable by everyone doing business.

    Every business that pays taxes uses the same language with few variations, which adapt to the region or state they do business with. But more or less, this allows all accountants and business people to understand each other. It makes it easy to interpret and audit financial documents and make sound business decisions.

    The Pillars of the Language of Accounting

    The road to learning the language of business starts with the fundamental parts. Like in speech—where we have nouns, pronouns, verbs, adjectives, and adverbs that serve as building blocks of sentences—accounting has the following five pillars.

    Assets

    Every tangible or intangible thing put into the business is considered an asset. It can be property, equipment, furniture, vehicles, labor, and money on hand or to be received.

    Recognizing assets involves determining their value in monetary terms. That said, the easiest to quantify is the most liquid form of asset: cash. As for other assets, such as property, accountants find their market value and record their money equivalent.

    Liabilities

    Long and short-term debts incurred by a business fall under liabilities. This is considered a pillar because it is part of every business's nature to get into debt.

    Liabilities are expressed in monetary terms representing the amount of obligation a business has. Some examples of liabilities are short and long-term loans, accounts payable, mortgages, and other expenses that are yet to be paid.

    Equity - Capital

    Equity is a stakeholder or a sole proprietor's share of the business expressed in monetary terms. Accountants determine this by getting the difference between assets and liabilities; the resulting amount represents a businessperson's ownership value.

    This pillar increases or decreases in value depending on business performance. In any business structure, the goal is always to increase the amount of equity. Commonly this is done by making efforts to increase sales and revenue, but accountants and finance people know other activities that can grow equity.

    Expenses

    This pillar expresses the day-to-day expenditure of a business. It's straightforward, but expenses can behave differently and come from different business sides.

    For example, you have expenses from producing goods (often called costs), then you also have expenses coming from administrative functions, such as payroll and supplies. To get an accurate picture, accountants must classify all these expenses accordingly.

    Revenue

    Money that comes into the business, mainly from selling goods and services, is called revenue. But just like expenses, revenue can come from other sources besides sales. Revenue can also come from interests earned or rental income from a property, just to name a few.

    Financial Statements: Communicating the Accounting Language

    The pillars of accounting language make up business transactions recorded in the books. These are then processed and arranged into an understandable form called financial statements.

    Financial statements communicate the accounting language that most accounting professionals, managers, and business owners can understand. They come in three forms.

    The Income Statement

    This instrument breaks down revenue and expenses incurred during a period of business operations. Essentially, it communicates how much money the business earned from sales and other sources of revenue. It also tells you how much of the revenue the business keeps after all expenses are accounted for.

    The resulting bottom line, also known as net profit after tax, forms part of the business's assets which will affect the balance sheet.

    The Balance Sheet

    Balance sheets communicate the value of the business. It breaks down assets, liabilities, and equity to arrive at a monetary equivalent of a business's worth and, eventually, how much the owner can get from it.

    This instrument follows the accounting formula of Assets = Liabilities + Equity, meaning the total amount of the asset section must be equal to the combined amount of liability and capital represented in another section.

    The Cash Flow Statement

    The cash flow statement filters all the cash transactions of a business and categorizes them into three different business activities: operations, financing, and investment. This is one accounting statement that communicates the degree of money inflow and outflow.

    A cash flow statement is important to business managers as it gives them a bird's eye view of where cash resources are used and how it stalls or propels business growth.

    Accounting Professionals Are Your Translators

    Accounting professionals understand the pillars of accounting and the complexities attached to them. They act as translators. They keep all transactions to arrange them into financial statements that communicate accounting in understandable format.

    As translators, they have knowledge and skill sets that allow them to make complicated things simple. These skills allow them to do the following.

    Bookkeeping

    Bookkeeping is classifying and recording business transactions in line with generally accepted accounting principles. The bookkeeping process follows full cycle accounting and builds the business's accounting records which the accountant will use to draw up accounting reports.

    Financial Statement Reporting

    Preparing financial statements comes after bookkeeping and is done monthly or yearly. Generating financial reports depends on bookkeeping, and the more accurate the financial records, the more financial statements communicate to stakeholders.

    Auditing

    Accountants can also check the methods other accountants use. This is called auditing and helps ensure that recordkeeping and financial statement reporting align with the standards.

    Tax Compliance

    Part of understanding the language of accounting is being adept with taxes and how it affects the business. So accountants study different taxes and keep themselves up to date with current tax laws to ensure accurate and compliant tax expense recording.

    Consulting

    If there's anyone who knows how your business works, it's the accountant. They look at the numbers and see the nut and bolts of your business. As such, they can take on a consulting capacity and advise managers on which parts of the business need attention to ensure increased profits and equity.

    Understanding the Accounting Language Is a Process

    Any business owner wanting to increase their chances of success must understand accounting. But just like any language, it takes time to learn.

    The good news is you can speed up the learning process by working with someone fluent in the language. These are the accountants.

    Work with them, let them help you understand the language using financial statements, allow yourself to read them, and be sure to ask your accountant questions. In time, once you have more insights and have read many financial statements, you'll be poised to lead your business to greater heights.To learn what the language of business is and how to use it to increase your chances of success, book a call with us or check out our bookkeeping services now.

    Read more

    The previous years only showed us that ecommerce is booming and continuing to be popular with entrepreneurs. Platforms like Amazon and Shopify have proven lucrative avenues for establishing online stores and generating revenue. But amidst the thriving landscape, it is crucial not to overlook the critical aspect of accounting for an ecommerce business.

    Along with the flow of money, accounting is essential in keeping your store running. Unfortunately, this area can present a serious problem, especially for those new to the industry. We understand the intricacies first-timers face, so we’re here to help!

    This blog addresses these common challenges head-on and equips you with tips and tricks to conquer them confidently.

    8 Specific Accounting Challenges Businesses Face

    Accounting is the backbone of ecommerce financial management. Without it, companies would struggle to make informed decisions, track their financial health, and comply with regulatory requirements. 

    Unfortunately, ecommerce business owners often have many daily responsibilities to handle. Their time and energy are often spread thin, from shipping logistics to customer service. Constantly juggling tasks can make it difficult to dedicate the mental focus and attention required for accurate accounting.

    The round-the-clock nature of ecommerce operations also means that enterprises are persistently on the move. Such activity can lead to fatigue and mental exhaustion, making it harder to perform complex accounting tasks. Errors and inaccuracies can occur, potentially affecting financial records and decision-making.

    Given that the road is not always smooth in ecommerce accounting, it is important to be proactive in identifying and addressing certain problems you might face. Done properly, you might figure out what could be done to optimize your efficiency and maintain stability.

    Below are eight of these challenges you may face:

    #1: Inventory Management

    Inventory management is a tough endeavor for both large and small enterprises in many ways:

    5 Challenges of Inventory Management
    Product ListingsA rough estimate of the number of items is essential for accurate product listings. 
    Tracking Goods Across WarehouseRegular inventory checks, real-time tracking systems, and effective warehouse communication are essential to maintain inventory accuracy and meet customer demand.
    Dealing With Delivery DelaysDelayed shipments can impact order fulfillment, stock levels, and customer satisfaction.
    Surplus Stock ManagementHolding excess inventory ties up valuable resources and affects cash flow.
    Managing Demand FluctuationsBusinesses must implement dynamic pricing strategies, pre-order systems, or leverage real-time sales data to make informed inventory replenishment decisions.

    As you can see, inventory management requires vigilance. It’s impossible to deliver all these tasks on your own without the right tools, techniques, and support. 

    #2: Sales Tax

    Sales tax is a part of the ecommerce accounting system that often instills a sense of dread among small business owners. But you can’t run from it forever. Everyone needs to comply with sales taxes. You must understand how tax collection is done and pay proper tax collection agencies the correct amounts.

    Sadly, many things could go wrong if you don’t know how to handle sales taxes. It can be any of the following:

    • Neglected Updates: Sales tax rates vary based on location or the type of product being sold. Failing to stay informed about the latest updates can result in incorrect tax calculations and potential non-compliance.
    • Underutilized Platform Features: Let’s say you sell products on Amazon. You can use a service to automatically collect consumers' sales taxes and guarantee accurate remittance.
    • Overlooked Due Dates: Depending on sales volume, revenue agencies may require businesses to remit sales tax on a quarterly, semi-annual, or yearly basis. Failing to meet these deadlines can lead to penalties and financial setbacks.

    #3: Product Returns

    One way or another, you will have to handle refunds and returns. These returns can pose challenges to your accounting. Here’s why:

    • Restocking Inventory: When an item is returned, you need to have it restocked in your inventory to put it up again for listing.
    • Recording Return in Accounting System: Recording involves updating sales records, adjusting revenue accounts, and reconciling payment transactions to account for the refunded amount.
    • Accounting for Refurbishing or Repair Costs: These costs should be properly recorded to reflect the impact on the overall cost of goods sold.
    • Processing Refunds: Recording the refund in your accounts payable or cash disbursement records ensures proper financial reporting and reflects the outflow of funds associated with the return.
    • Track Associated Expenses: These costs should be allocated appropriately to indicate their impact on the company's financial statements.

    Refunds can also disrupt your cash flow. Here’s a brief example:

    Once an item is sold, you write it off as sales. But when the item is refunded, and you've reimbursed the customer, you must record it as an expense

    This way, your cash flow statement is balanced at the end of the accounting period.

    #4: Business Expenses

    Cash is king for ecommerce business owners. But remember, running a business is not always about revenue and income sales. You must know your expenses to create a profitable margin and price items accordingly.

    Commonly overlooked aspects of expense tracking for ecommerce store owners include:

    • Product Sold: The direct costs associated with manufacturing expenses, wholesale purchase costs, or packaging costs. It determines the profitability of your products.
    • Cost Ledger: A detailed cost ledger provides a holistic view of your business expenses and cost structure, helping you identify areas for cost optimization.
    • Profit and Loss Statement: This financial statement summarizes the business's revenue, expenses, and net profit or loss over a specific period.

    Expenses are no longer new to any seasoned ecommerce business owner. That’s why most of them already determined the suitable accounting method for their business entity, whether cash-basis accounting or accrual accounting. From there, they can make sound financial decisions and maintain accurate financial reports.

    #5: Bank Reconciliation

    Bank reconciliation involves comparing the transactions recorded in your system with the corresponding entries in your bank statement. It is a crucial process for ensuring the accuracy and integrity of your financial data.

    However, a few factors can make bank reconciliation daunting for ecommerce companies:

    • High Transaction Volume: Online companies often have a large volume of sales transactions, refunds, and fees, leading to many entries in their bank statements. Reconciling these numerous transactions manually can be prone to errors.
    • Payment Processing Delays: In ecommerce, delays can occur between when a customer places an order and when the funds are deposited into your business bank account. This creates discrepancies between your accounting records and your bank balance.

    #6: Third-Party Marketplace Fees

    Suppose you're selling on big ecommerce platforms like Amazon, Shopify, or eBay. In that case, you are paying third-party fees without even realizing it. Fees like this are considered business expenses. They will be negative on your balance sheets if you don't manage them correctly.

    #7: Customer Demands 

    Online market trends change rapidly. One day, a product people seldom buy will suddenly become in demand and swiftly go out of stock. Meeting customer demands is a good thing for your business. But when does it become a challenge?

    • Overbuying Items: Businesses struggling with accurate demand forecasting may overestimate the level of demand and end up purchasing more inventory than necessary.
    • Insufficient Market Insights: Without comprehensive and up-to-date data, you may not gain a clear understanding of customer preferences, market trends, and competitive dynamics. This can lead to misjudgment in product demand and overbuying.
    • Lack of Supply Chain Coordination: Any disruptions or delays in the supply chain can hinder the ability to meet customer demands, impacting customer satisfaction and overall business performance.

    #8: Different Currencies

    Expanding your business and reaching international clients opens up a world of opportunities. But when receiving payments in different currencies, things can get tricky.

    Here’s an illustration of why it can give you a run for your money: 

    The Challenges of Multiple Currencies in Ecommerce
    Fluctuating Exchange RatesExchange rates constantly change, making it hard to keep up. One moment, the rate may work in your favor, but it can also quickly turn against you. 
    Hidden FeesCurrency conversion often comes with additional fees. These costs can eat into your profits and add up quickly. 
    ComplianceEach country has unique rules and requirements for currency conversions. Failing to comply can result in legal issues and financial penalties.

    The Game-Changing Solution: Ecommerce Accounting Software 

    We’re here to tell you that the challenges mentioned above are no match for your business when you have the perfect solution: leveraging cutting-edge accounting software.

    With the click of a button, accounting software effortlessly generates essential financial reports like profit and loss, balance sheets, and cash flow statements. You’ll have real-time insights into your financial health, helping you closely monitor your cash flow.

    What's more, accounting software can guide you in performing various ecommerce bookkeeping tasks. You can seamlessly integrate with your sales platforms, payment gateways, and inventory management systems, streamlining data entry and eliminating the need for manual reconciliations.

    As your business grows and deals with multiple currencies, accounting software can handle the intricacies of such transactions. It can automatically convert currencies, calculate exchange rates, and ensure precise financial reporting across different markets.

    IMPORTANT NOTE: Choose accounting software that aligns with your requirements and offers features like inventory tracking, tax management, and integration capabilities. 

    Take the time to research and select a reputable software provider that offers excellent customer support to ensure your accounting software remains efficient and up to date.

    Unloop: Simplifying Accounting for Ecommerce Business Owners

    You don’t have to rely on accounting software alone. There are accountants for ecommerce businesses ready to handle your accounting needs. Unloop is one of them.

    We offer different accounting services for ecommerce business owners. We offer expert assistance in the following areas:

    Bookkeeping

    Accounts Payable Services

    ✅Forecasting

    Payroll

    Taxes

    Hiring a professional is good for your business when things get too demanding. We aim to take the burden off your shoulders and streamline your financial management, allowing you to focus on growing your business.
    We hope this blog post helps you manage your accounting tasks better. But if you need a hand, don't forget to book a call with us!

    8 Challenges of Accounting for Ecommerce Business Owners
    Watch Now

    The previous years only showed us that ecommerce is booming and continuing to be popular with entrepreneurs. Platforms like Amazon and Shopify have proven lucrative avenues for establishing online stores and generating revenue. But amidst the thriving landscape, it is crucial not to overlook the critical aspect of accounting for an ecommerce business.

    Along with the flow of money, accounting is essential in keeping your store running. Unfortunately, this area can present a serious problem, especially for those new to the industry. We understand the intricacies first-timers face, so we’re here to help!

    This blog addresses these common challenges head-on and equips you with tips and tricks to conquer them confidently.

    8 Specific Accounting Challenges Businesses Face

    Accounting is the backbone of ecommerce financial management. Without it, companies would struggle to make informed decisions, track their financial health, and comply with regulatory requirements. 

    Unfortunately, ecommerce business owners often have many daily responsibilities to handle. Their time and energy are often spread thin, from shipping logistics to customer service. Constantly juggling tasks can make it difficult to dedicate the mental focus and attention required for accurate accounting.

    The round-the-clock nature of ecommerce operations also means that enterprises are persistently on the move. Such activity can lead to fatigue and mental exhaustion, making it harder to perform complex accounting tasks. Errors and inaccuracies can occur, potentially affecting financial records and decision-making.

    Given that the road is not always smooth in ecommerce accounting, it is important to be proactive in identifying and addressing certain problems you might face. Done properly, you might figure out what could be done to optimize your efficiency and maintain stability.

    Below are eight of these challenges you may face:

    #1: Inventory Management

    Inventory management is a tough endeavor for both large and small enterprises in many ways:

    5 Challenges of Inventory Management
    Product ListingsA rough estimate of the number of items is essential for accurate product listings. 
    Tracking Goods Across WarehouseRegular inventory checks, real-time tracking systems, and effective warehouse communication are essential to maintain inventory accuracy and meet customer demand.
    Dealing With Delivery DelaysDelayed shipments can impact order fulfillment, stock levels, and customer satisfaction.
    Surplus Stock ManagementHolding excess inventory ties up valuable resources and affects cash flow.
    Managing Demand FluctuationsBusinesses must implement dynamic pricing strategies, pre-order systems, or leverage real-time sales data to make informed inventory replenishment decisions.

    As you can see, inventory management requires vigilance. It’s impossible to deliver all these tasks on your own without the right tools, techniques, and support. 

    #2: Sales Tax

    Sales tax is a part of the ecommerce accounting system that often instills a sense of dread among small business owners. But you can’t run from it forever. Everyone needs to comply with sales taxes. You must understand how tax collection is done and pay proper tax collection agencies the correct amounts.

    Sadly, many things could go wrong if you don’t know how to handle sales taxes. It can be any of the following:

    • Neglected Updates: Sales tax rates vary based on location or the type of product being sold. Failing to stay informed about the latest updates can result in incorrect tax calculations and potential non-compliance.
    • Underutilized Platform Features: Let’s say you sell products on Amazon. You can use a service to automatically collect consumers' sales taxes and guarantee accurate remittance.
    • Overlooked Due Dates: Depending on sales volume, revenue agencies may require businesses to remit sales tax on a quarterly, semi-annual, or yearly basis. Failing to meet these deadlines can lead to penalties and financial setbacks.

    #3: Product Returns

    One way or another, you will have to handle refunds and returns. These returns can pose challenges to your accounting. Here’s why:

    • Restocking Inventory: When an item is returned, you need to have it restocked in your inventory to put it up again for listing.
    • Recording Return in Accounting System: Recording involves updating sales records, adjusting revenue accounts, and reconciling payment transactions to account for the refunded amount.
    • Accounting for Refurbishing or Repair Costs: These costs should be properly recorded to reflect the impact on the overall cost of goods sold.
    • Processing Refunds: Recording the refund in your accounts payable or cash disbursement records ensures proper financial reporting and reflects the outflow of funds associated with the return.
    • Track Associated Expenses: These costs should be allocated appropriately to indicate their impact on the company's financial statements.

    Refunds can also disrupt your cash flow. Here’s a brief example:

    Once an item is sold, you write it off as sales. But when the item is refunded, and you've reimbursed the customer, you must record it as an expense

    This way, your cash flow statement is balanced at the end of the accounting period.

    #4: Business Expenses

    Cash is king for ecommerce business owners. But remember, running a business is not always about revenue and income sales. You must know your expenses to create a profitable margin and price items accordingly.

    Commonly overlooked aspects of expense tracking for ecommerce store owners include:

    • Product Sold: The direct costs associated with manufacturing expenses, wholesale purchase costs, or packaging costs. It determines the profitability of your products.
    • Cost Ledger: A detailed cost ledger provides a holistic view of your business expenses and cost structure, helping you identify areas for cost optimization.
    • Profit and Loss Statement: This financial statement summarizes the business's revenue, expenses, and net profit or loss over a specific period.

    Expenses are no longer new to any seasoned ecommerce business owner. That’s why most of them already determined the suitable accounting method for their business entity, whether cash-basis accounting or accrual accounting. From there, they can make sound financial decisions and maintain accurate financial reports.

    #5: Bank Reconciliation

    Bank reconciliation involves comparing the transactions recorded in your system with the corresponding entries in your bank statement. It is a crucial process for ensuring the accuracy and integrity of your financial data.

    However, a few factors can make bank reconciliation daunting for ecommerce companies:

    • High Transaction Volume: Online companies often have a large volume of sales transactions, refunds, and fees, leading to many entries in their bank statements. Reconciling these numerous transactions manually can be prone to errors.
    • Payment Processing Delays: In ecommerce, delays can occur between when a customer places an order and when the funds are deposited into your business bank account. This creates discrepancies between your accounting records and your bank balance.

    #6: Third-Party Marketplace Fees

    Suppose you're selling on big ecommerce platforms like Amazon, Shopify, or eBay. In that case, you are paying third-party fees without even realizing it. Fees like this are considered business expenses. They will be negative on your balance sheets if you don't manage them correctly.

    #7: Customer Demands 

    Online market trends change rapidly. One day, a product people seldom buy will suddenly become in demand and swiftly go out of stock. Meeting customer demands is a good thing for your business. But when does it become a challenge?

    • Overbuying Items: Businesses struggling with accurate demand forecasting may overestimate the level of demand and end up purchasing more inventory than necessary.
    • Insufficient Market Insights: Without comprehensive and up-to-date data, you may not gain a clear understanding of customer preferences, market trends, and competitive dynamics. This can lead to misjudgment in product demand and overbuying.
    • Lack of Supply Chain Coordination: Any disruptions or delays in the supply chain can hinder the ability to meet customer demands, impacting customer satisfaction and overall business performance.

    #8: Different Currencies

    Expanding your business and reaching international clients opens up a world of opportunities. But when receiving payments in different currencies, things can get tricky.

    Here’s an illustration of why it can give you a run for your money: 

    The Challenges of Multiple Currencies in Ecommerce
    Fluctuating Exchange RatesExchange rates constantly change, making it hard to keep up. One moment, the rate may work in your favor, but it can also quickly turn against you. 
    Hidden FeesCurrency conversion often comes with additional fees. These costs can eat into your profits and add up quickly. 
    ComplianceEach country has unique rules and requirements for currency conversions. Failing to comply can result in legal issues and financial penalties.

    The Game-Changing Solution: Ecommerce Accounting Software 

    We’re here to tell you that the challenges mentioned above are no match for your business when you have the perfect solution: leveraging cutting-edge accounting software.

    With the click of a button, accounting software effortlessly generates essential financial reports like profit and loss, balance sheets, and cash flow statements. You’ll have real-time insights into your financial health, helping you closely monitor your cash flow.

    What's more, accounting software can guide you in performing various ecommerce bookkeeping tasks. You can seamlessly integrate with your sales platforms, payment gateways, and inventory management systems, streamlining data entry and eliminating the need for manual reconciliations.

    As your business grows and deals with multiple currencies, accounting software can handle the intricacies of such transactions. It can automatically convert currencies, calculate exchange rates, and ensure precise financial reporting across different markets.

    IMPORTANT NOTE: Choose accounting software that aligns with your requirements and offers features like inventory tracking, tax management, and integration capabilities. 

    Take the time to research and select a reputable software provider that offers excellent customer support to ensure your accounting software remains efficient and up to date.

    Unloop: Simplifying Accounting for Ecommerce Business Owners

    You don’t have to rely on accounting software alone. There are accountants for ecommerce businesses ready to handle your accounting needs. Unloop is one of them.

    We offer different accounting services for ecommerce business owners. We offer expert assistance in the following areas:

    Bookkeeping

    Accounts Payable Services

    ✅Forecasting

    Payroll

    Taxes

    Hiring a professional is good for your business when things get too demanding. We aim to take the burden off your shoulders and streamline your financial management, allowing you to focus on growing your business.
    We hope this blog post helps you manage your accounting tasks better. But if you need a hand, don't forget to book a call with us!

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    Stop guessing

    Know exactly where your ecommerce business stands financially.
    +1 877 421 7270
    228 Park Ave S #82849
    New York, NY 10003
    United States
    7676 Woodbine Ave #2
    Markham, ON L3R 2N2
    Canada
    228 Park Ave S #82849
    New York, NY 10003
    United States
    7676 Woodbine Ave #2
    Markham, ON L3R 2N2
    Canada
    About unloop

    Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting.. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.

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