The accounting profession is undergoing a significant transformation, evolving from traditional bookkeeping into what can now be best described as data flow management. Many accountants and finance teams, however, find themselves struggling to adapt.
As e-commerce continues to reshape business, accounting firms and bookkeepers must understand how these platforms control the movement of funds and ensure regular reconciliations are done between payouts and sales reports. This may sound easy, but each platform treats the process a bit differently. For instance, Shopify and PayPal deduct fees, loans, sales tax and other app charges, while Amazon also takes out inventory management fees, leaving retailers and restaurants with a lot less in their bank accounts and statements that don't always match their financial reports.
The days of relying on bank balances to reveal the health of the business are long gone. Today, bookkeepers and accounting professionals need to understand how to master these often complex accounting data flows from both sales and payment systems.
Those who can effectively address this challenge can not only enhance productivity, but will also reduce errors and maintain client satisfaction. Ensuring all digital tools and the people managing them work together not only keeps books accurate but also provides a competitive edge.
More apps, more problems
One specific hurdle that has emerged is "app fatigue." The sheer volume of necessary applications and tools can overwhelm teams, leading to difficulties in data integration, increased activity redundancy and escalating costs that undermine the intended benefits.
App fatigue is a pervasive issue among various businesses, large and small. A recent Wall Street Journal article highlighted that the apparel brand Carhartt is now managing 121 software-as-a-service subscriptions, a significant increase from 59 five years ago and just 20 a decade ago. Since each app is effectively creating a data flow, directing and taming those flows can be challenging.
Today's accountants must juggle numerous applications, from client communication and document sharing to core accounting software and specialized inventory systems alongside specialized selling and payment platforms, sales tax automation, payroll systems and more. All of this requires technological proficiency and, often, dedicated tech support.
Therefore, a comprehensive strategy is necessary to address the challenges of app fatigue, tech integration and data flow management, starting from client onboarding and resulting in higher levels of in-house proficiency.
Create a thorough onboarding process
Accounting firms should adopt a tech-first approach during client onboarding, ensuring they understand and have access to all platforms used by the client. This includes sales systems, payment platforms and even less-considered platforms like payroll services, as well as all credit cards used for the business and associated bank accounts.
The key is to ask the right questions repeatedly and verify the information against actual data flows seen in the electronic accounting system, and bank accounts to make sure nothing is missed.
For instance, if a firm notices PayPal deposits but hasn't been informed of the client using a platform like Shopify (which commonly utilizes PayPal), it's important to dig deeper. Otherwise, this type of oversight can lead to incomplete books and potentially significant compliance issues, particularly with sales taxes and other regulatory requirements.
Embrace software automation
The job of the accountant is increasingly evolving into setting up connections and managing the flow of data into the right parts of their accounting system. Automation streamlines this process, facilitating easier monitoring and analysis and minimizing errors.
Platforms can automate the flow of revenue, payment and sales tax data, which eliminates the need for manual data entry and enhances the accuracy of financial reporting. However, the solution extends beyond just using individual tools. It involves creating a unified system where all apps and platforms are integrated and there is regular reporting on the status of clients' books. This cohesion can support effective data flow management and reduces the need for multiple logins.
Leverage tech expertise and practice management tools
Lastly, to effectively manage and automate complex data workflows, accounting teams serving e-commerce clients should consider either hiring tech-savvy personnel or engaging external firms specialized in building and integrating these systems.
These experts can help to integrate a wide range of applications and systems, as well as troubleshoot issues and stay current with technological advancements. They can also set up proactive monitoring systems to ensure that any new platforms adopted by clients are integrated swiftly, to maintain the accuracy and integrity of financial records.
Simultaneously, using sophisticated no-code/low-code CRM systems can streamline client onboarding and manage ongoing operations. These management tools reduce the clutter of multiple platforms. They also support secure and effective communication tailored to accounting needs, which can improve client interactions and ensure the security of sensitive data.
Ultimately, the industry's biggest tech priority is learning how to master integrations and improve and automate data workflows. By taking these steps, accountants can better serve e-commerce clients, enabling them to make informed decisions that drive growth. This will also help position their firm for success in an increasingly digital marketplace.
