Financial Tools for Ecommerce Businesses

2/22/2021

Financial Tools for Ecommerce Businesses

It is undeniable that top business performance requires the right financial tools and resources.

Having the right pieces in place provides better data and drives results. And while there are literally millions of online tools and apps and software programs for ecommerce companies to use, using the right financial tools can be the real differentiator between successful businesses and their competitors.

So, what kinds of ecommerce financial tools are essential?

Accounting Software
Having a strong handle on your company’s finances is essential whether you are selling online or offline. For businesses selling in both capacities, your bookkeeping software should account for the sales and expenses incurred across both realms.

Ecommerce companies will lean on their accounting software to not only keep track of invoices and expenses but also track things like sales tax collection, payroll, and reimbursements. Furthermore, an accounting platform should allow you to generate the common financial reports needed to provide to business partners, lenders, and investors. But that does not mean that all accounting platforms are created equal.

In fact, using the wrong accounting software is the most common ecommerce accounting mistake that business owners make. As our team explains,

Not using an accounting software to streamline and automate functions is a colossal mistake. Running a successful e-commerce business requires leaning on an accounting system that can keep pace… Choosing an accounting software is a critical decision. Utilizing the right software for your business type, financial acumen, and business life stage is a hugely important first step. Businesses that just use whatever is free or quick to set up or trending right now can find their day-to-day operations and future growth hampered by their rash choice.

Take the time to understand your company’s financial needs and evaluate multiple accounting platforms to determine how well each one meets those requirements.

Top Accounting Software Options:

For an easy-to-understand comparison of the two most common accounting platforms, QuickBooks and Xero, visit our popular resource: QuickBooks Online vs Xero

Web Analytics and Conversion Rate Optimization (CRO)
In addition to keeping the books for their companies, business owners must also regularly analyze how their business investments are generating revenue. This is where CRO becomes a key activity. A MarTech Advisor article explains,

In practice, CRO is the process of creating compelling User Experiences (UX) for your site visitors to inspire them to take the action you want them to — purchasing products, registering for services, signing up for free trials and so on. CRO includes various elements such as optimizing landing page designs, testing different versions of content, improving visual experience for better content experience and UX. CRO is not about finding quick-fix solutions to a site or a landing page. Though sometimes tiny changes can significantly impact conversions but understanding what these changes are, requires investigation.

CRO analysis helps identify which marketing efforts and sales channels are driving revenue and where these efforts can be scaled up to increase profitability. The Ecommerce Training Academy further elaborates,

The importance of conversion rate optimization for online retailers is that it allows them to make the most of the site traffic that they already have and effectively making more money without having to spend much more for the optimization or for customer acquisition.

Without the right tools, CRO accuracy is next to impossible, which is why utilizing conversion tracking software is so crucial.

Most Popular Ecommerce CRO Tools:

Google Analytics
VWO (Visual Website Optimizer)
Optimizely
Neatly

Inventory Management
Inventory management is key to effective cash flow management. And while multichannel inventory management is crucial for ecommerce businesses, it is one of the most challenging ongoing things for these companies to handle. As a result, inventory management software is one of the most important tools for ecommerce business owners to utilize.

Some inventory management software has tie ins with 3PL (third-party logistics) and shipping platforms as well, making it an even more robust solution for ecommerce retailers that want to outsource these functions. Using one platform to manage inventory, shipping, and transportation logistics streamlines operations – optimizing efficiency, reducing operating costs, and improving business agility.

Top-Rated Inventory Management Platforms:

Time Management
In some cases, time may be the “inventory” that a business is managing. Time tracking is certainly crucial for companies that offer services that are billed by the hour, such as consulting firms and other professional service providers.

However, time tracking is also incredibly valuable for all organizations as part of their financial planning. Accurate time tracking aids in identifying business trends and increasing operational efficiency. Without knowing where employees are spending their time, you cannot accurately determine which activities are profitable. Furthermore, time tracking is instrumental in informing hiring decisions. But most critically, time tracking improves forecasting and budgeting efforts, guiding strategic planning efforts.

Widely Used Time Tracking Tools for Businesses:

Want to find out more about your accounting software options? Read “Comparing Traditional Software vs Cloud Accounting Software” to understand the differences and determine which is best for your ecommerce business.

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