I can’t tell you how many clients come to us and say the same thing; their CPAs recommend running the business using spreadsheets. For most businesses, this is bad advice. Now, don’t get me wrong, I love spreadsheets and we still use them for several things in our business. They’re just no longer an efficient or effective way to run a business.
Streamline Systems
While I appreciate spreadsheets for their utility, they cannot replace a true double-entry accounting system. The double-entry method, which has been in use since 1494, remains the standard because it is effective. It allows us to track debits and credits and reconcile them with bank or credit card statements, ensuring that our accounts balance.
For accountants, this meticulous process minimizes anxiety. Unfortunately, spreadsheets lack this level of rigor. It’s easy to forget to enter numbers, resulting in balances that may not match your bank statements. Even if managed perfectly, spreadsheets require a significant amount of manual data entry. In contrast, accounting systems like QuickBooks Online (QBO) or Xero automatically pull data from your bank. Additionally, using a system like Inventory Lab simplifies tracking your inventory through Amazon.
Software Saves Time
Why would anyone spend time on tedious manual entry when an automatic system can perform these tasks more accurately and efficiently? With automation, you can focus on analyzing information rather than painstakingly preparing it. Sadly, the spreadsheet advice had a ripple effect for one of our clients, leading to further complications.
Due to the labor-intensive nature of manual bookkeeping, it fell behind, and the client had numerous other tasks to manage her business. Consequently, her profitability numbers were not available, and she was unaware when they started to decline.
She began our call by admitting that her books were a mess, she wasn’t profitable, and she felt embarrassed. Frankly, I was the one who felt embarrassed. This woman had followed poor advice from a professional in my field. How could she trust my recommendations? Fortunately, she set her concerns aside, and now we can help her understand her numbers and guide her toward profitability.
Take Control of Your Finances
If you’re struggling with your finances, dedicate an hour each day to better understand them. Numerous free resources are available to help you. Start by visiting the bookskeep blog and exploring topics from the featured categories.
Everything we do for our clients is also available for free on our website. We don’t withhold any information from those who prefer to do it themselves. If you need support, don’t hesitate to reach out to us today!
If your ecommerce business isn’t where you’d like it to be in terms of profitability, check out my book, Profit First for Ecommerce Sellers. It answers important questions about how to implement Profit First in an ecommerce business. Take control of your money and your business, and put Profit First to work for you!
You can also sign up for the Profit First for Ecommerce Sellers Online Course. As a Mastery Level, Certified Profit First Professional, I will teach you why Profit First works so well for ecommerce businesses and the particular challenges for businesses that have physical products requiring inventory management. You will learn how your behavior drives your money management habits for your business and how you can set up your business bank accounts to work with your habits.
Check out all our ecommerce accounting and profit advising services here!
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