When running your ecommerce business, you can’t forget about accounting. After all, how are you and your team going to get paid? And how will you know if you’re doing well or could improve?
Numbers may seem daunting. But with the right systems, tracking your finances won’t be hard. In fact, it could be automated.
There are a few different ways of handling your finances. Enterprise resource planning (ERP) systems are one of the most popular approaches. However, we’d like to challenge your thinking and offer you a few alternatives.
- What is an ERP?
- What are the alternatives?
- What is our ideal tech stack?
- When should an ecommerce think about setting up an ERP alternative?
What is an ERP?
An ERP system stands for Enterprise Resource Planning system. In the accounting world, these systems include Netsuite, SAP and SAP Business One, and Microsoft Dynamics NAV. Traditionally, these systems have been used by very large companies who process large volumes of information. These systems are designed to operate as individual modules – for example sales, purchases, and general ledger. When detailed information is transferred from one system to another, it is summarized or batched to limit the quantity of data in each system.
Originally these ERP systems were built for desktop computers, and powered by internal company servers. More recently these systems have been redesigned to be hosted in the cloud.
Large ecommerce companies would work with these modern ERP systems because smaller accounting programs, such as MYOB and Xero, could not cope with the volume of real time data to be processed. In addition, many of these companies had customized requirements that could be configured by the ERP software, such as activity-based costing algorithms to allocate head office costs to various departments.
These ERP systems would often require a six to seven figure investment to implement, and ongoing license fees and support would be a huge additional annual cost. ERP implementation is, of course, another big undertaking.
What are the alternatives?
In this age of cloud-based SaaS(software as a service (SaaS) systems, we would like to challenge your large ecommerce business to consider another solution to the traditional model of an in-house accounting department. What if we told you that it is possible to run your large ecommerce business using Xero? With a number of add-on solutions that communicate with Xero by sending summarized data via an API (sending data through an application programming interface), it is indeed possible..
In addition, your in- house accounting department could be staffed virtually by accounting team members that reside anywhere in the world.
By replacing the ERP solution with SaaS solutions and your in-house accounting function with virtual accounting members, this service could be delivered at a fraction of the cost.
What is our ideal tech stack?
Sales channel for B2B and B2C: Maropost Commerce Cloud
Inventory Management System: Maropost Commerce Cloud or Cin7
Accounts Payable Solution: Dext and Approval Max
Accounting System: Xero
When you think about it, the cloud- based SaaS systems interact with each other just like the original ERP systems were designed to do. You may use Commerce Cloud for example, for processing orders and collecting customer data, and this system can send in batched data to your general ledger package. In high volume situations, Commerce Cloud may process more than 1,000 orders per day. The SaaS solution that is set up to transfer data between Commerce Cloud and Xero would summarize these orders into one sale, per payment gateway in Xero.
Huge accounts payable department? No problem! Combine Dext with Approval Max for automated processing of supplier invoices, and approval max will take over the heavy lifting when it comes to tiered approval limits. High volume inventory management processing? Daisy chain Maropost Commerce to Ship Station and implement a production planning and forecasting tool.
When should an ecommerce business think about setting up an ERP alternative?
All ecommerce businesses should consider alternatives to an existing ERP solution if the outcome will be reduced cost and complexity.
Moving away from an ERP systems allows your business to choose the best practice SaaS solution for your business specifically. If that solution does not deliver, your business can cut and paste over to a new software system.
In this new and evolving world, it is possible to design a lean, best practice accounting function for your large ecommerce business that cherry picks only the best practice solutions. The business can evolve and change any of these solutions as easily as replacing a spoke in a wheel. You can use an outsourced tax and bookkeeping solution to deliver accurate month-end financials to replace the high costs of an in house accounting team.
Learn more about our Crossbeam integration and simplify your bookkeeping today!
Tracey Newman
Director of Bean Ninjas Australia, co-founder of Crossbeam
Tracey Newman is an Australian Chartered Accountant and Tax Agent. She is a specialist in eCommerce businesses looking to scale. She is a Director of Bean Ninjas Australia, which is an eCommerce accountancy firm. Tracey is a co-founder of Crossbeam, which is a tool designed to sync data from Commerce Cloud to Xero.
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