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Improving the efficiency of a retail business’s accounting department – Part 1

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Improving the efficiency of a retail business’s accounting department – Part 1

retail accounting department

Over the past several months, we have met with many high street and sizeable retailers which operate multi site retail operations, this ranges from forecourt, high street, general retail, hospitality, and others – all had one thing in common, the poor efficiency of their accounting operation.
In today’s hyper competitive environment it is imperative that retail operations are utilising the generally accepted best practices and systems/software in their back office and accounting function. Below are the three worst enemies to progress (and hence profit!) in the retail environment.

  1. Old systems – we are obviously slightly biased on this subject, however using a legacy system which doesn’t meet the needs of the business must be addressed. The features and design of business systems from 10-15 years ago, even with all available updates, are unlikely to provide the connectivity and multiple platform integration required in a modern business environment. The system must meet the needs of the business today and continue to meet them in the future. One of the main barriers to introducing a new business system was the capital expenditure (capex) however with the growing popularity of deployment models such as SaaS and cloud, the capex and total cost of ownership is considerably reduced. Many multiple site operations are utilising onsite/on-premise accounting which reduces the management team’s ability to share information quickly and effectively while encouraging collaboration which is all possible with an online retail accounting system. We are also surprised at the number of extremely outdated POS/BOS still in use, once again, the functionality in modern systems has increased in all areas including reporting and data export functions.
  2. Manual input – with APIs (Application Programming Interfaces), importing functions and cross platform integration, manual inputting of high volumes of transactions should be a thing of the past. One of our clients, now only inputs 15% of all their data manually, the rest is seamlessly imported – this reduces costs and also increases the accuracy. By reducing the accounting department’s focus on data input, it allows the department to be reoriented towards “business partnering” which can have a dramatic impact on business decision making. For retail businesses, here are some suggestions (please note – that unless you have an online retail accounting system, some suggestions will have limited value):-Supplier invoices – many suppliers have the ability to provide electronic files which can be imported directly into the accounting system.
    POS data – depending on the age of the POS will depend on the system’s ability to export data and the functionality.
    BOS data – this will hold purchase invoice and stock information which can be imported.
  3. Inability to mine data – there’s the old adage “Garbage in, garbage out!” however, if you are importing data from a trusted source, this will reduce the margin for error. Importing accurate and comprehensive data allows you to use an accounting intelligence system to mine the data to assist in your decision making. For example it was common practice to input summarised monthly sales data into an accounting system due to time constraints inputting the data. It is now possible to import daily sales data automatically allowing the analysis of the data for spikes and dips on a daily basis. This is in turn allows better management of stock. Once again, this is only applicable to modern accounting systems which have databases to facilitate data mining and analysis.

Author: retailaccounting

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

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