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Just Right: A Goldilocks Level of Detail in E-Commerce Books

Kelly Gonsalves
Posted by Kelly Gonsalves on Apr 28, 2022 11:50:35 AM

If there is one thing technology and automation have brought us, it’s an increase in available data. In fact, e-commerce sales come with more data about our transactions than we’ve ever had before.

That's great until you see just how much information that is.

The trick now is choosing what matters - for taxes, for reporting, for your work, and ultimately for the client! These days one of the most important things we do is decide what is essential to the bookkeeping, and what can be left behind.

So a list of best practices for e-commerce bookkeeping simply has to include something about detail - what to (and not to) include in the books! Here’s what I think matters for most e-commerce clients. And why.

YES to Bookings by Platform

What does booking by platform mean? When you record sales, don’t summarize sales in a way that prevents e-commerce sales platforms (i.e., Etsy, Amazon, etc.) from being featured in reporting.

How does this help? For clients, the benefit is in the reporting. When sales are viewable by platform, platforms can be compared to other things. If sales entries aren’t attached to where they happened, reporting can’t determine if that matters.

For our workflows, booking by platform means we don’t have to standardize the differences between platforms to get them all into one entry. Instead, each platform can reflect its own way of putting the right data into the right accounts. The connection between platform data and the bookkeeping is more clear.

When does booking by platform matter most? Everything from advertising to the way you receive funds can differ between e-commerce platforms. So there isn’t a time when it can be guaranteed NOT to matter. That said, my experience is that it matters most in reconciliations. Money almost always comes in by platform.

NO to Recreating the Platform

What does “recreating” a platform mean? In other words, don’t bring all sales details into the bookkeeping. It’s easy to assume that if the sales details provided by a platform are good, then more details within those platform bookings is even better!

Some apps connecting e-commerce platforms to a general ledger software (like QuickBooks) do things this way. But it’s not better. There’s a level of detail that is an inconvenience. When there is so much detail that you can’t see the bigger picture easily, it can make the bookkeeping almost unusable for reporting.

What exactly does booking every sale do to your processes? Mapping every sale requires a lot of upkeep. Any change your client makes or any new issue that arises can throw the whole thing off. Then you’re left searching a LOT of transactions to find the problem. It’s a lot of effort just to record detail that already exists somewhere else!

What kind of detail does matter? There are two types of details that matter. First, any details that don't exist anywhere else should be brought into the bookkeeping. Second, details that help you evaluate something else should also be brought in. Booking individual sales, even automatically, is rarely either of these.

Why Daily Summaries are Just Right

What is a daily sales summary? Basically, it’s a summary entry of sales for the day. The associated payments, taxes, and fees are usually in there too; but not always. In fact, a lot of what’s provided and how it is provided varies between sales platforms.

Deposits tend to be by day, so daily summaries make reconciling easier. But that’s not what makes them a best practice. Think of sales summaries as building blocks; daily sales summaries are better “sized” blocks for e-commerce bookkeeping.

1. Summarizing by period, month, or longer is too big. As soon as summarized sales data is recorded, you can’t easily report on smaller time periods. At least, you can’t report on them well.

2. Summarizing by daypart, item, or pay-type is too small. For e-commerce, this data is less useful when compared with other kinds of data. But these details can still be recorded inside a daily summary, where valuable. Best of both worlds!

3. Summarizing to highlight certain data is too narrow. It’s easy to book sales to emphasize one metric. For instance, when you summarize by pay period, labor cost is a snap! But the reality is less fun – connecting summaries to a favorite KPI means you’re likely missing out on others. You can’t use the books to report how your client does during holiday weekends if that data, or the blocks to build it, doesn’t exist in the bookkeeping.

4. Summarizing by day allows the focus to change. Daily summaries aren’t just for when sales by day matter; they allow for so much more. Daily summaries can build to create summaries by weeks or as a run-up to year-end. They also help compare monthly fees to sales or whether ads are having an impact. It’s their diverse ability to build that counts.

5. Summarizing by day is typically the unifier between platforms. Daily sales numbers are usually the thing platforms have in common. Keeping bookkeeping results standard across platforms is crucial to good reporting, especially when the data coming in isn’t so standard. Also “daily” tends to be how deposits are grouped. This makes daily summaries very useful for reconciliations.

Best Practice: Daily Summaries by Platform

Let’s get these kids together! Daily sales are usually the largest unit of time that functions as a useful building block. Combine this with a summary by platform and you have a bridge that unifies data across different sales channels and time periods.

Earlier I said that the kind of detail that matters most is the kind you can’t get anywhere else. So you might be thinking - these numbers are on the platforms! So, why replicate it all?

Bookkeeping is usually the only place where a total daily picture exists.

This is where all sales funnels can be seen together, but also as themselves. It’s where all sales channel results are converted to data comparable between them on metrics that matter. It paints the big picture, but you can still drill down into the detail at a level that’s valuable to the business.

By connecting daily sales with the sales source in the books, you can report on ways they might be affecting each other, how that varies over time, and relates to all kinds of other variables.

So, why doesn’t everyone book Daily Sales Summaries by Platform?

In short, people don't book Daily Sales Summaries by platform because it’s really time-consuming. The number of platforms clients use is only increasing. Booking four platforms for the month might mean over 120 entries! So keeping costs to the practice and the customer within reason has caused many bookkeepers and accountants to book sales by the month and work out the confusion when they need to reconcile.

Luckily, there is a solution to this problem.

New technology means that an app can book daily summaries for each connected platform, making time and labor less of a factor in keeping good e-commerce books. The best app for this is Bookkeep, and they do it affordably, so clients don’t have to choose between good books and affordable bookkeeping. Daily sales summaries by platform are built-in to Bookkeep’s approach to bookkeeping and e-commerce integration.

My goal in e-commerce books is to capture the data and units of detail that serve the reporting, reconciliations, and comparisons that are needed to best represent the business itself. I’ve found that using daily summary sales by platform allows a balance between flexibility and functionality that works for me and my clients. It’s the best practice level of detail needed to get the most out of the data, without being one bit more detailed or complicated than necessary.

It’s nice to have an app like Bookkeep that agrees.

Topics: E-Commerce


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