E-commerce
Revenue is up. So where has the cash gone?
You buy stock before you sell it, pay for ads before they convert, and wait on payouts that arrive net of fees you never see itemised. Growth and cash pull in opposite directions. Here’s what online retailers ask us, and what we’d look at.
Your questions
The things online retailers actually ask.
“Which sales channel is actually making me money?”
Almost nobody knows, because the costs of each channel are scattered across the P&L instead of sitting against the revenue they belong to.
Report each channel separately with its own transaction costs, commission and advertising and the true cost of selling through a platform like Amazon or Etsy becomes visible, often for the first time. Sometimes the answer is that the marketplace is fine. Sometimes it’s that you’re renting someone else’s customers at a price you’d never have agreed to knowingly.
“Do I actually know what my products cost?”
Only if your landed cost is complete.
Freight, duty and inbound handling all belong in the cost of the product, not in a general overhead line. Leave them out and every margin you look at is overstated, every pricing decision is built on a wrong number, and the error compounds quietly until a stock count finds it.
“Is my advertising paying for itself?”
You can only answer that if the spend sits in the right place.
Direct advertising, the spend tied to selling a specific product on a specific channel, belongs inside cost of sales. Brand and marketing activity belongs below gross margin. Split that way, your gross profit is a real number and your contribution to overheads is honest. Lumped together, neither is.
“Why does reconciling take days every month?”
Because someone is unpicking each platform payout by hand, and a payout is gross sales less commission, advertising, refunds, shipping and reserves all netted into one figure.
Automate the sales feed from every channel into Xero and you get daily sales figures instead of a monthly archaeology exercise. That’s usually several days a month handed back to whoever was doing it.
“Where has my stock gone?”
Some of it is in a container. Some of it is at a fulfilment centre. Some of it was ordered nine months ago and quietly forgotten.
Stock reporting that includes stock in transit means nothing you’ve paid for disappears off the radar. Age it by SKU and you usually find cash sitting in a warehouse that could be released this quarter.
“Am I getting my VAT right?”
Selling across borders brings OSS and IOSS into play, and marketplace rules may mean the platform is accounting for VAT on sales you assume are yours.
Add postponed VAT accounting on imports and there are several places to go wrong, each of them expensive.
What we do
Books that survive contact with a platform.
Bookkeeping that reconciles
Automated sales feeds from every channel into Xero, payouts broken out into gross sales, fees, refunds and shipping, and stock valued at full landed cost.
Margin reporting
Gross margin by channel, brand and SKU with all selling costs included, direct advertising inside cost of sales, and stock and stock in transit tracked so nothing gets lost.
VAT and cash planning
UK VAT, OSS and IOSS handled properly, plus forecasting that models the gap between paying a supplier and being paid by a platform. That gap is what caps how fast you can grow.
Our background includes running finance across a group of e-commerce brands: the settlement reconciliations, the stock decisions and the cash forecasting behind them. Multi-brand and multi-channel is the day job, not a service line added because the sector looked busy.
Let’s talk about your margins.
We’re not taking on new clients at the moment. Join the waiting list and you’ll be first to hear when a place becomes available.