Global retail e-commerce sales amounted to around $5.2 trillion in 2021. This figure is projected to increase to $8.1 trillion in 2026.
With the constant rise of e-commerce sales, your e-commerce business must implement an efficient financial management system to meet the growing demand.
As such, financial management tools have become more significant to e-commerce businesses than ever. This guide will discuss reasons to use them and the types of solutions you need to simplify your financial tasks.
Whether you work with tons of paperwork or complex spreadsheets, ensuring accuracy can be challenging without a unified financial management system.
Here are the reasons to use financial management tools:
Errors are more likely to happen in manual calculations, mainly when working with multiple documents and data sources. With financial management tools, you input all financial data into one database and categorize them in just a few clicks, helping ensure accuracy.
Financial management tools have built-in features and formulas that help compute datasets, minimizing human errors. And if there are mistakes, you can easily find and fix them. This way, your team reduces time spent correcting miscalculations, helping them focus on and finish tasks efficiently.
Manual bookkeeping can make it difficult to determine your business’s cash flow. Thus, you may be unable to gather insights that provide income range and predictions.
However, when using a financial tool, you can see your business’s current financial situation from invoices, payments, transactions, and expenses in one dashboard. This comprehensive cash flow overview helps deliver quantifiable data that provides the foundation of projections and informed financial decisions.
Financial management tools use automation to simplify repetitive tasks and computations. For example, they automate invoice entry, financial reporting, and workflow processing. Your team won’t have to manually manage and enter these datasets, reducing their workload.
Moreover, financial management tools track sales and inventory changes and synchronize data from bank accounts and payment processors. This automation helps record and categorize every transaction accurately, letting your team focus more on business growth projects rather than the complexities of accounting and bookkeeping.
Taxes are part of your financial management. A financial tool can help you manage, prepare, and file online sales taxes by keeping accurate records and providing reminder alerts so you don’t miss the payment due dates.
At the same time, a financial tool helps you make informed personal financial decisions. Suppose you are considering refinancing student loans to reduce your interest rates and monthly payments.
In that case, a financial tool enables you to understand how this decision can impact and align with your business tax liabilities, deductions, and management, helping lower your bills and ensure on-time tax filing and payments.
Most financial management tools are accessible on internet-compatible desktops, web browsers, and mobile devices. This remote access delivers real-time data you can view anytime and anywhere.
Moreover, real-time access helps your financial team communicate and collaborate efficiently. Instead of toggling between multiple documents or spreadsheets, they can all view and edit data in a central database. Not only does this streamline the workflow, but it also ensures everyone is on the same page and working on the most current data.
Financial management tools provide different services based on their specific use. Here are the tools you should incorporate in your bookkeeping system.
Accounting tools are software solutions that record and generate financial transaction reports. These platforms also help retrieve old accounting data and simplify calculations.
Additionally, accounting tools offer data analytics for financial planning and forecasting. They help identify trends from historical financial data, helping you outline future expenditures and manage cash flow.
With artificial intelligence (AI) and machine learning, many accounting tools now deliver predictive analytics that can provide income and revenue projections. These integrations help you make informed decisions to drive strategic growth.
Suppose a customer orders a product that’s no longer available. You’ll have to tell them this bad news, making them disappointed. In the worst-case scenario, they might leave negative reviews stating you offer listings without updating their availability, tarnishing your reputation for future customers.
An inventory management tool helps you avoid this oversight. This type of financial software lets you know the status of your stocks in real time. It tracks orders, reordering, and the availability of your products to avoid overstocking or running out of items.
This software also has a process known as inventory control, which tracks items as they come into and leave your storefronts.
Conversion rate optimization platforms, or CROs, are solutions that help you increase your leads and conversions. These tools also help you create compelling user experiences that entice prospects to purchase your products or services or sign up for free trials.
CROs are considered financial tools because they can identify which strategies and sales channels generate high revenues, letting you scale these efforts to boost profitability. They help you make more money by making the most of website traffic without spending too much on customer acquisition.
Many accounting tools have invoicing features but aren’t sufficient to support invoice management. Hence, you might need comprehensive invoicing software that provides advanced support. This software streamlines invoicing by automating invoice creation and sending schedules for faster workflow.
Most invoicing tools have customizable, ready-made templates to create your invoices and reduce manual work. They also have features that let you send payment reminders to ensure on-time payments.
Payment gateways are software integrations that accept and process payments from customers. They encrypt your customers’ payment data, send it to the processor, and direct the customers back to your website when the transaction is complete.
If your payment gateway isn’t robust, prospects may opt not to continue the checkout process because the payment process is too slow. They also want to ensure data security, so you must choose the software that enhances user experience and protects consumers’ financial data.
Nowadays, developers equip financial management tools with cutting-edge technology to streamline business bookkeeping. These solutions help ease financial tracking, reporting, and analysis for e-commerce owners like you.
Investing in these platforms allows you to drive growth, create compelling user experiences, and scale your e-commerce services to meet customers’ and markets’ demands. Not only do these solutions enhance your financial management, but they also help strengthen your customer acquisition and retention.