E-COMMERCE AND ACCOUNTING

Opportunity for Accountants

To work with E-Commerce clients/ Check list

Run a cloud-based practice.

Embrace all technology the e- commerce clients work with(the shopping carts, payment platforms, inventory management system)

Continually learn about evolving e commerce market place

‘Fintelligent is fully immersed in providing real-time financial metrics and insights for their e-commerce clients generated through platforms they’ve developed with third-party applications.’

• Move their practice to the cloud, where e-commerce businesses are

• Understand the relevant technology beyond the accounting platform.

• Be able to seamlessly integrate their client’s technology.

Suggestions given to accountants

E-Commerce

Friendly Practice

Top Obstacles E-Commerce Clients Face

1. Choosing the Best Technology2. Breaking Out of the Back Office

– Make accounting painless for the owner– Make sure the client’s entire technology platform are

fully integrated– Ensure it all works together seamlessly to eliminate

inefficiencies and redundancies.– Reduce the time spend on back office tasks

3. Turn Data Into Insight

4. Insist on a Business Plan

o Create a solid business plan to help define e-commerce clients’ a unique value proposition

o Build short- and long-term budgets

o Develop cash flow projections.

o Develop customer growth strategies.

5. Get on the Growth Bandwagon

• Help clients develop a growth strategy to address this issue.

• Understand the nuances of client retention and loyalty as they relate to e-commerce, and address the issue in your clients’ business plans.

• Address e-commerce marketing strategies, such as social media marketing and other outreach campaigns

Pricing and Profit• Break out the merchant processing fees• Pull out the appropriate data to calculate an

accurate cost for every product the business sells. • Track down the inventory in all locations to track

the cost of all inventory, in transit, in a complex e-commerce business.

• Post the relevant summary, useful information into the accounting system versus trying to accomplish the impossible task of posting and managing every e-commerce transaction..

The Consultant to E-Commerce

• CA’s can serve as consultants to offer value added services on the financial aspects of Internet business. By industry comparisons to help businesses analyze their sales and other financial benchmarks against industry peers or within geography

INVENTORY MANAGEMENT • Inventory management is the process of

ordering, storing and utilization of the rawmaterials needed during manufacturing and theprocess of monitoring and controlling the finalproduct that is ready for sale.

• Due to significant investment in the inventoryitself as well as in storage, tracking andinsurance becomes vital, else it leads to‘Bullwhip effect’.

IMPORTANCE OF INVENTORY MANAGEMENT

Providing Supply and Demand Balance: This includes ensuring that consumed items are replaced, and seasonal items are cleared out.

Providing Safety Stock: Safety stock or a buffer exists, in case of any unexpected delays in new inventory or more sales than a forecast

Providing Geographical Specialization: A company can make use of the particular aspects of a location when it comes to inventory management.

MANAGING INVENTORY• Try to Keep Core and Non-Core Products Separate: A clear

distinction between products can prioritize and organize items betteraccording to expected demand and ensure that no core items runs outon any channel.

• Leverage JIT Inventory Management: JIT or Just-In-Time isan inventory management strategy used to increase efficiency anddecrease waster. This is achieved by receiving required goods onlywhen they are needed in the production or sale process.

• Improve Forecasting: Accurate forecasting is the key to successfulinventory management. When a retailer knows that the customerneeds, where it is needed and in what quantity, they will be in a betterposition to meet the customer’s expectation without needing tostockpile beyond a certain point.

Sales Tax Compliance

E commerce business will regularly seek advice of a qualified CA, to help them avoid fines , penalties, and back taxes. if both the parties work together proactively, and use technology to streamline the process, they can significantly lessen the business owners’ sales tax compliance burden.

1. State consideration2. Inappropriate tax laws3. GST advantages

GST AND E-Commerce

1. E-commerce sector dealing in trading of goods have experimented with various business models.

2. the e-commerce sector is having a hard time categorising their offerings into 'goods' or 'services' for charging either value added tax (VAT) / Central Sales Tax (CST) or service tax.

3. Inter-state movement of goods from one state to another is a nightmare for an e-commerce operator.

4. The tax laws in India have also failed the e-commerce sector by not providing enough clarity / guidelines on taxation and documentation management for typical e-commerce sector

Conclusion

• The e-commerce industry is expected to 4% of GDP by 2020

• The industry will prove to be a significant source of employment in the country

• E commerce has become a key component of many organizations.

• Its important to strategically plan for this dynamic evolving medium.