Revenue accountants are essential to the financial management of many types of industries- really, just about any field of business that processes sales and service revenue. A revenue accountant's primary focus is to keep track of all revenue records that belong to a company or organization. Your role as a revenue accountant may vary considerably depending on the nature of the business.
What is Revenue Accounting?
Revenue is the money generated from normal business operations, calculated as the average sales price times the number of units sold, also known as sales on the income statement.
Hundreds of channels exist to collect revenue in today's online and cloud-based sales environment.
- Hybrid Sales & Payment platforms such as Shopify, Stripe, Square, and PayPal
- Pure Ecommerce Sales platforms like Squarespace, WooCommerce, Wix, and BigCommerce
- Pure Payment platforms like Amazon Pay, Venmo, Sezzle, Afterpay, Affirm, and Klarna
- Restaurant Delivery Marketplaces like GrubHub, Uber Eats, ChowNow, and DoorDash
- Pure Brick & Mortar Sales like SpotOn, Touch Bistro, ShopKeep, Greenbits, and Clover
- Ecommerce Marketplaces like Amazon, eBay, Etsy, and Walmart
And that is just to name a few in each category. 50- 74% of clients for most US accounting firms are using eCommerce or digital payment systems. Depending on the client, their business could be multichannel, meaning they use several different platforms to sell their products or get paid.
Why Does Your Business Needs Automated Accounting Software?
All those payment and sales platforms make revenue accounting sound intimidating, but that's what businesses require today. Obviously, it's difficult and time-consuming for anyone to keep up with all the different eCommerce platform workflows. Imagine pulling each separate report, analyzing that data, and manually entering it into the preferred accounting system. According to our recent research report, three-quarters of businesses report that eCommerce platforms have created additional manual bookkeeping work, with firms estimating that these extra processing steps cost them 5-7 staff days per month.
Why automation is more efficient
There are so many revenue channels today that regularly add features and evolve. So automation is the best way to keep up with all the different workflows, especially with multiple physical and online "stores" using various platforms that apply different rules.
Modern businesses need information faster to make rapid business decisions. Automation is critical to getting better information more quickly. Automation accelerates accrual-based bookkeeping, supports more efficient workflows, and makes businesses more aware of their daily financial health. You should remember that with any automation, the setup needs to be done correctly and monitored regularly.
How to Select the Best Accounting Automation Software Programs in the Market?
You will want to select an accounting automation platform that integrates with your GL program and sales channels. That means less time spent on manual data entry (and fewer mistakes!), so you have more time to focus on what you need (or want to) rather than manually entering data all day.
Before selecting an app, consider the following:
1. Understand the business
It would be best if you had a general understanding of the business and the income and cost of goods sold. What are they selling, and what expenses are there against sales? Are there gift cards, discounts, or other special exceptions? Knowing this information can help you set up the proper workflow and can influence the tools you use. Plus, the complexity of the business can affect the price you charge for your services.
2. Understand the platform(s)
You need to clearly understand from the business owner where they are selling and how they are taking payments. Regardless, these sales need to be captured and consolidated while giving the necessary detail to clearly understand the business and future projections.
Some online stores have their own "financial period." Amazon Seller, for example, generally pays out every two weeks. Some handle “buy now, pay later” differently. Some will hold balances and make deductions against balances instead of depositing them into a bank account.
If the business is multichannel, find software that gives you daily summaries by the platform to understand when and where the money is coming from. About 82% of US accounting firms always or sometimes run monthly activity reports by revenue source as their most common reconciliation step.
3. Practice Accrual Accounting
The "accrual method" is a way of booking information that prioritizes the connection of sales to the day the sale happened rather than the day you received the money for said sale. The same goes for expenses, the day they were assessed, not the day they were deducted. Which means you have a clearer picture of financial performance on any given day.
The deposit schedule of a sales platform should be independent of your reporting or data. At Bookkeep, we book data in a way that keeps it attached to the time of the year, even the day of the week. That way, you can understand what motivates customers to buy and see what works for the business. Not to mention, we send a daily summary email with snapshots of information so you can quickly understand what is going on in the business each day.
When should I Implement This Process?
The time is now! Stop wasting time trying to learn the nuances of each connection and taking valuable time out of your day to key in data. Find the automation platform that works for you and your client. When you’re ready to make the move, consider platforms that can import historical data so nothing is lost. Revenue accounting is only growing and becoming more complex. Get ahead of the curve, use automation, and grow your business as an expert!
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