Bookkeeping Basics for B2B Ecommerce

As B2B businesses pivot to online sales, a solid grasp of your financials can be the difference between thriving and merely surviving. 

But fear not! Whether you’re a seasoned pro or new to this digital arena, doola Bookkeeping is here to demystify the numbers behind your business. 

We’ll walk you through essential concepts, tools, and practices that will empower you to take control of your finances like never before. 

Get ready to unlock the secrets to smart bookkeeping in the fast-paced realm of B2B ecommerce!

Key Bookkeeping Terms Every B2B Ecommerce Business Owner Should Know

Bookkeeping might seem overwhelming at first, but it’s actually quite simple once you have a grasp on all of the bookkeeping terminologies. 

We’ve compiled an easy-to-follow glossary to help you actually understand what this stuff means and how it actually matters to you.

1. Accounts Payable: This term refers to any money that your business owes to suppliers or vendors for goods or services that have been purchased but not yet paid for.

2. Accounts Receivable: Accounts receivable refers to any money owed to your business by customers or clients for goods or services that have been delivered but not yet paid for.

3. Cash Flow Statement: It tracks and reports the movement of money in and out of your business over a specific period of time.

4. Balance Sheet: A balance sheet provides an overview of a company’s assets, liabilities, and equity at a specific point in time.

5. Income Statement: An income statement shows a company’s revenues earned and expenses incurred during a specific period, usually monthly, quarterly, or annually.

6. Collected vs Uncollected Revenue: Collected revenue refers to income received from customers, while uncollected revenue is income that has been invoiced but not yet received. 

7. Assets vs Expenses: An asset is something your business owns that has value, while an expense refers to costs incurred in running your business, such as rent or employee salaries.

8. Chart of Accounts: The chart of accounts is a list of all the financial accounts used by a company to categorize its transactions accurately. 

9. Accrual & Cash Accounting: Accrual accounting records income when earned and expenses when incurred, regardless of when cash changes hands. 

Meanwhile, cash accounting records income at the time it is received and expenses at the time they are paid.

Bookkeeping Software Recommendations for B2B Ecommerce

When it comes to bookkeeping for B2B ecommerce businesses, having the right software can make all the difference. 

However, with so many options available on the market, it can be overwhelming to choose the right one for you. 

So, we have brought you our top recommendations for bookkeeping software for B2B ecommerce businesses:

1. doola Bookkeeping

On top of the list, we have doola Bookkeeping, an all-in-one bookkeeping software for ecommerce store owners who want to streamline their bookkeeping process and save time and effort. 

It has a user-friendly interface, perfect for novice entrepreneurs, and comes loaded with everything needed to automate mundane bookkeeping tasks. 

You can create invoices, track income and expenses, reconcile bank accounts automatically for reconciliation, and generate monthly and yearly statements like profit and loss reports.

This keeps you prepared for tax season with a year-end package that makes it easy to file taxes and takes advantage of deductions for extra savings.

However, combining technology with human expertise gives us an edge over the competition. We’ve got you covered with personalized support from certified bookkeepers and CPAs.

2. Bench Accounting

Bench Accounting is a cloud-based bookkeeping software designed for small businesses and freelancers who want to streamline their bookkeeping without hiring a full-time accountant. 

It automates tedious tasks, provides real-time financial updates, and offers personalized support from a team of in-house bookkeepers.

This is great for those who do not have the time to manage their books or need an expert who can give their time and expertise to help them streamline finances and file taxes.

You also get access to accurate financial reports and personalized support from certified bookkeepers for peace of mind.

3. Bookkeeper360

Bookkeeper360, a comprehensive bookkeeping system, provides a streamlined bookkeeping experience that gives you complete control over your financial status at any given moment. 

It automatically imports all sales transactions, expenses, and other financial data in real time, eliminating the need for manual data entry. 

You can track financial transactions, reconcile bank accounts, and prepare monthly statements to manage your finances and be ready for tax season.

Moreover, its user-friendly interface and powerful features make it a suitable choice for startups and growing online stores. 

Tracking Revenue and Expenses in B2B Ecommerce

Tracking revenue and expenses allows businesses to monitor their financial health, make informed decisions, and identify areas for improvement. 

Accurate data on revenue and expenses enables businesses to make well-informed decisions about budgeting, pricing strategies, investments, and more. 

For example, if a business notices that certain products are not generating enough revenue but require significant resources to maintain inventory levels, it may decide to discontinue selling those products.

This information can also help you pinpoint areas where costs can be reduced, or processes can be improved for increased efficiency and profitability.

Invest in doola Bookkeeping software designed explicitly for B2B ecommerce businesses, as it will streamline the process of recording transactions, both revenue and expenses.

Managing Accounts Payable and Receivable in B2B Ecommerce

For B2B ecommerce businesses, AP and AR are crucial aspects that need close monitoring as they directly impact the overall financial health of the company.

One key best practice in managing accounts payable is to have a streamlined process for invoicing and bill payments. 

This involves setting up clear communication channels with your suppliers or vendors, using electronic invoicing, and tracking all incoming invoices and payments.

It’s also important to keep track of payment due dates so that you don’t miss any deadlines, which can result in interest charges or damage to vendor relationships.

Similarly, promptness is key to managing accounts receivable. The quicker you send out your invoices, the sooner you can expect timely payment from your customers. 

Follow up regularly with customers who have outstanding balances past their due dates with a well-defined and consistent collection process to avoid late payments and improve cash flow.

Inventory Management and Its Impact on Bookkeeping

Inventory management is a crucial aspect of running a successful B2B ecommerce business. It not only ensures that you have enough products to meet customer demand, but it also has a significant impact on bookkeeping.

Therefore, it is essential to understand how inventory management affects bookkeeping to maintain a healthy balance for your B2B ecommerce business.

Accurate inventory records allow bookkeepers to track the cost of goods sold (COGS) accurately – an essential element in determining profits and tax obligations. 

COGS represents the direct costs associated with producing or acquiring products that are ready for sale. 

Incorrect COGS figures due to poor inventory management can result in inaccurate profit calculations and tax liabilities.

Additionally, reliable inventory records help identify slow-moving or obsolete products that may need markdowns or write-offs. 

Without proper documentation of these items, they might remain on the books longer than necessary – affecting profitability figures.

Holding excessive stock ties up valuable resources and can result in cash flow shortages, hindering a business’s ability to invest, expand, or meet financial obligations.

Reconciling Ecommerce Transactions with Bank Statements

As a BB ecommerce business owner, it is essential to keep your books accurate and up-to-date. by reconciling ecommerce transactions with bank statements.

This process ensures that all transactions are accurately recorded and any discrepancies are identified and resolved promptly.

The following steps will guide you through the process of reconciling your BB ecommerce transactions with bank statements:

You can start by comparing the transactions on your bank statement with those in your ecommerce platform or books. Ensure that amounts match on both ends and that there are no duplicates or omissions.

Next, check for any transactions on the bank statement that have not been recorded in your accounting system. Make sure to add these transactions to your records.

If you find any discrepancies, such as incorrect amounts or missing transactions, be sure to investigate them further so they can be corrected.

However, if there are still differences between the two sets of records, you will need bookkeeping software to make adjustments to correct any errors or omissions identified automatically.

Preparing Financial Reports for Your B2B Ecommerce Business

As a B2B ecommerce business, it is crucial to have a strong understanding of your financials, which require accurate and comprehensive financial reports. 

These reports allow you to track performance, identify areas for improvement, and demonstrate credibility to potential investors or partners.

Several types of financial reports are crucial for a B2B ecommerce business. These include income statements, balance sheets, and cash flow statements.

In addition to these primary financial reports, other supplementary reports can provide further insight into the performance of your B2B ecommerce business. 

For example, an accounts receivable aging report shows how long it takes for customers to pay their invoices, which could indicate potential credit risks that need to be addressed.

Reporting tools like doola Bookkeeping can help simplify the process of organizing and analyzing your financial data, reducing human error and saving time. 

In addition, it provides you with monthly statements and a year-end tax package with detailed information about all your financial transactions.

So, you can efficiently manage and analyze your finances to make informed decisions that drive growth and profitability.

Common Bookkeeping Mistakes in B2B Ecommerce (and How to Avoid Them)

Due to the complexity of B2B transactions, bookkeeping for ecommerce can be challenging and prone to errors. 

So we have listed some common bookkeeping mistakes in B2B ecommerce and provide tips on how to avoid them.

❌ Mixing Business and Personal Expenses

The most frequent error made by B2B ecommerce businesses is mixing personal expenses with business finances. 

This could result in skewed financial statements, which you could prevent by opening a separate business bank account with Mercury for business-related transactions.

❌ Not Reconciling Bank Statements

Failure to reconcile bank statements with financial records can create discrepancies between a company’s actual financial position and what appears on its books. 

This makes it challenging to identify potential fraud or accounting errors. That’s why you must reconcile your bank statements regularly, or in real-time with doola Bookkeeping software.

❌ Not Tracking Accounts Receivable Properly

In B2B ecommerce, businesses often extend credit terms to clients instead of receiving immediate payment at the time of purchase. 

Use doola Bookkeeping’s Invoicing tools to accurately track and manage accounts receivables that can lead to inaccurate cash flow projections or missed customer payments.

❌ Misclassification of Assets or Transactions

Misclassifying assets, such as inventory or fixed assets, or transactions can result in incorrect financial reporting and tax implications. 

It is essential to categorize transactions with doola Bookkeeping correctly from the start and keep track of any changes to avoid costly mistakes down the road.

Cover All the Bookkeeping Basics for B2B Ecommerce with doola Bookkeeping

Since bookkeeping should never be overlooked in the world of B2B ecommerce, doola Bookkeeping comes in handy.

Our bookkeeping services cover all the basics that a B2B ecommerce business needs to ensure smooth operations and growth. 

From recording daily transactions to preparing financial statements, our team of experienced and dedicated bookkeepers will handle it all with accuracy and precision.

Our team of dedicated bookkeepers and accountants ensures that every sale, purchase, payment, and expense is accurately entered into your books. 

Our bookkeepers are well-versed in handling inventory management through proper record-keeping techniques such as FIFO (First-In, First-Out) or LIFO (Last-In, Last-Out).

They also have a keen eye for details and prepare these reports on a monthly, quarterly, or annual basis, depending on your business’s needs.

Book a demo today to know how we can handle the bookkeeping tasks so you can focus on growing your B2B ecommerce business with peace of mind.