The Boohoo Group purchase of Debenhams brand assets, e-commerce and website operation for £55million in January, signals a significant shift in the retail sector. The fact that the store element of Debenham’s trading has not been included in the purchase is telling of the shift in consumer behaviour towards online retail.
Away from the multi-national corporations, with Covid-19, we have also seen a sharp increase in business startups – particularly in the online shopping industry. As of June 2020 Companies House data, there was a 47% growth in business formations compared to the figure for 2019 – with the online shopping sector itself experiencing a 110% rise between the years in new startups (https://www.enterprisenation.com/learn-something/rise-in-startups-during-lockdown/).
There are many logistical challenges to face when running a startup business, and here we look at some of the accounting technology which can be incorporated to alleviate the stress and allow you to focus more time on your business activities.
Banking
One of the key fundamentals of your business is your bank. Many businesses choose a household Institutional Bank, which has various applications and can take weeks to process. This can create some issues in the initial set-up of a business, as bills still need to be paid – leading to expenses being paid personally and reimbursed at a later date, or even delaying business trade until the bank account is active.
An alternative to this route, and one which should not be discounted, would be to choose a Challenger Bank – where most of the banking interaction is done via an app. Providing your business is registered with Companies House, many of the Challenger Banks boast about the swift set-up of your accounts – with some citing times of under ten minutes.
Accounting software
It is important to have the correct accounting package set-up from the outset, in order to avoid spending additional time later collating backdated data. All the sales, purchase, inventory, and banking data can be seamlessly integrated, requiring less personal input in the long-term. The idea is to let data flow directly from things such as webstores to your accounting software, whilst correctly recording key information like VAT and selling fees incurred.
eCommerce Platform
Choosing an eCommerce Platform should be dependent on the needs of your business. The range of platforms can be anywhere from Shopify – where you can create an online store in a matter of minutes, to Wix – where the focus is to create a bespoke website with an e-commerce integration built in.
There are eCommerce Platforms available which are a hybrid of online selling, with the option to also sell in-person using an integrated card reader.
Most eCommerce Platforms have the function to feed in data to your accounting software automatically – where the order per the Platform is split to show the selling fees and VAT (if applicable). The software can also be configured to pull through the initial order information in a searchable format from within your accounting system.
Recording expenses
Some business owners still believe in keeping receipts in a shoebox, which creates a few issues:
- It takes time to record the expenses you are claiming for,
- It is easy to misplace receipts,
- If an audit is ever required, it can be difficult to locate prior year receipts,
- As the business grows, this becomes unmanageable with the volume of expenses incurred.
So, why not turn to technology, such as Invoice Automation, to save time and improve accuracy of data?
Invoice automation tools allow you to scan (or take a picture of, via the mobile app) a copy of an expense and upload it to the software. The software will then scan the invoice for key financial data (invoice date, VAT amount, etc.) and upload to your accounting software as a bill for payment. Over time the software also notes trends in where supplier expenses should be posted in your accounts, meaning the processing time becomes even quicker.
Inventory
In certain eCommerce Platforms you can use a built-in inventory system, which will help track your stock levels and assist with key financial indicators like your Gross Profit margin.
If your business begins to increase in size, there may be the option to switch to a bespoke inventory system with additional features such as:
- Component costings – where each part of a finished product is itemised in the inventory records, allowing you a complete breakdown of the costs involved and access to raw materials.
- Automated ordering – if your stock levels of a certain product drop below a set level, you can instruct the system to suggest a purchase of stock to maintain levels.
How can we help?
As always, with technology there is no universal solution to processes for all businesses, and so we aim to match the requirements of our clients to the technology packages to suit them, on an individual basis.
If you are interested in finding out more or for further help or advice, please contact our digital advisory team by emailing fintech@haroldsharp.co.uk or call 0161 905 1616.