You have made your sales targets. You have opened two more stores, started selling through your new e-commerce website and the number of customers you have is increasing day by day. Everything seems to be going fine from an external perspective, but what is happening inside your finance department tells a completely different tale: your accountants are drowning. This is quite a typical retail conundrum. The success that has propelled your business ahead is precisely the reason why your back-end processes are getting bogged down. Scaling up a retail company brings about complexities that accounting processes aren’t designed for.
Symptoms of an Overgrown Back Office
How do you know when your team has reached its breaking point? Watch out for the following symptoms:
The Endless Month-End Close Process: If you receive financial statements that are always out of date by the time you get them, they serve no purpose at all for agile decision-making. The fact that the month-end close process takes you several weeks instead of just a couple of days means you operate on outdated data.
Inventory Issues: With the growth of your SKU list and multiple sales channels, manually maintaining the Cost of Goods Sold (COGS) records is virtually impossible. This leads to disconnected inventory and incorrect margin reporting. In many cases, it also means over-ordering of unsold items or even losing some sales due to the lack of necessary goods.
Unpredictable Cash Flow: You’ve just finished with a record month in sales. Then, you realize that there is not enough cash flow. Why? Because manual accounting can’t manage your delayed payments, holdbacks, and chargebacks from Shopify, Amazon, or Square.
Burned-out Team: Your excellent employees are spending 80% of their time on boring data entry and fixing errors.
The Problem at Hand: Systems, not People
Here is the cold hard truth: The problem usually has nothing to do with your team’s work ethic. It has everything to do with the systems.
When many retailers first start out, their technology stack includes a basic POS system, basic website, and basic accounting software. This works great when you have a single location making $1 million annually. But if you grow past that to $5 million, $10 million, or more, you’re trying to force a firehose of transactional information through a garden hose. It’s not a personnel problem; it’s a systems problem.
Upgrading to Drive Continued Growth
If you want to convert your accounting department from a bottleneck into an asset driving growth, it will take a modernization of your financial processes.
Automate the Data Flow: End the copy and paste nightmare. Build a real-time system for integration of your POS, e-commerce, payment gateways, and accounting software systems. Data flows should happen automatically and without any room for error or mistakes like in x2x RMH for QuickBooks Integration.
The Final Word
Growth is an amazing phenomenon, but it requires a solid base. If your accounting department is always trying to solve problems, it won’t be able to help you develop. Don’t wait for a problem to arise because of an expensive mistake or the resignation of your best controller due to fatigue. It is time to analyse your systems now because your accounting processes and department should not just keep up with your growth but accelerate it.
