Retail Accounting

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What accounting and IT systems does a retailer need?

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A shopkeeper from 50 years ago could easily mistake the modern day retailer as a James Bond maverick type regarding the abundance of technology at their disposal. This armoury of technology is growing by the day, from online retail accounting systems, paperless receipts to analytics software. Have a look yourself at the emerging technologies and their position in the technology adoption lifecycle – http://www.gartner.com/it/page.jsp?id=1763814
This article is intended to provide you with a summary of the systems which should be considered for the running of effective retail operation.

  • Accounting system –This will allow you to manage your accounts and produce management and financial reports. There is an ever growing range of systems for general businesses however one which is totally designed for retailing, from POS/BOS and electronic invoicing interfacing to reporting, is CounterBooks.
  • Stock management – You can quickly get a stock valuation or find out how well a particular item of stock is moving. Many systems include automatic stock monitoring, triggering orders when the re-order level is reached and automatic batch control if you produce goods in batches. Much of this functionality is now being included in even basic EPOS systems.
  • Business intelligence – Business intelligence tools are a type of application software designed to retrieve, analyse and report data. The tools are focused on “mining” data that have been previously stored from multiple databases/systems in a data warehouse or data mart. They are currently used by large multiples but we can expect cheaper and simplified versions to become available to analyse data at a single site level
  • Electronic Point of Sale (EPOS) – There are a vast number of EPOS systems, they can now be used either “stand alone”, connected to an in-house computer or through the cloud. An EPOS will generally offer three basic functions:-
    • A price look up facility
    • The ability to record information on the sale of the individual items
    • The capacity to print a till receipt that shows a shortened product description and price.
    • Additional modules for stock control, reporting, data export etc. are often available and are become ever more sophisticated.
  • Supply chain management (SCM) – for large retailers, supply chain management is a complex issue. Very often a supply chain management system will consist of sub-systems such as:-
    • Demand management – coordinating sales forecasts from all the players at the point of sale through production to raw materials suppliers, so that everyone is working to the same plan, rather than creating unnecessary safety stocks.
    • Distributions resources planning (DRP) – keeping track of the status of production and procurement of materials for each order, where the goods are in transport, what stock to keep and when to reorder.
    • Transport management system (TMS) – this system will determine the methods of transport available to the shipper, the costs and timings associated with each route, the order in which to load transport, optimisation of transport modes, and compliance with customs and shippers.
    • Warehouse management system (WMS) – systems to optimise the storage and picking of goods in a warehouse, including compliance with carrier and customer documentation requirements.
    • Supplier relationship management (SRM) – information about suppliers of direct and indirect materials, such as agreed terms of trade including delivery and price associated with them, records of status, records of contacts between the company and the various points of contact in supplies.

You can go deeper into more retail specific technologies such as basket analysis however; the main systems have been outlined above. The next step is how you pull this array of different systems into one cohesive, value adding retail system, there are two common formats outlined below:-

  • ERP/all-in-one – there is a growing trend to utilise one system which covers multiple disciplines such as finance/accounting, manufacturing, sales and service, customer relationship management, etc.
    • Advantage: one system.
    • Disadvantage: might not have all the feature for each area as it is a general system
    • Disadvantage: Cost. The systems are highly specialised with high setup and maintenance costs.
  • Best-in-breed – by adopting various systems which are best in their class, it allows the retailer to gain maximum value and utilisation of each system and through integration and system-to-system communication transparency can be achieved.
    • Advantage: you can use the best systems and gain the maximum value out of features.
    • Advantage: More systems can be added from different suppliers as the size of business increases.
    • Disadvantage: multiple systems to install and manage. Interfacing the systems may be difficult.

The level of technology required by each individual retailer will vary depending on whether they operate a single site, small chain or large multiple, but two things are certain:

  • The price of technology continues to drop and its sophistication increase.
  • Everyone needs to keep up to date with the latest developments and use the technology appropriate to their situation to maximise profits.

Author: retailaccounting

CounterBooks is an online retail accounting management suite which is used by retailers across the world.

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