May 16, 2025
by Shauna Huntington
With the increasing volume of activity in e-commerce businesses, automating accounting tasks can significantly improve the timeliness and efficiency of financial reporting. However, automation, if not properly managed, can lead to inaccuracies such as duplication of revenue figures, incorrect margin calculations, inventory discrepancies, and tax reporting issues. So, how do you avoid the aggravation that automation can cause? Proper setup, adequate understanding and efficient processes.
The Importance of Proper Setup
Successful automation starts with a strong foundation. If incorrect data is fed into your system, inaccurate reports and poor business decisions will follow. Garbage in, garbage out.
A well-configured system begins with accurate mapping of revenue, sales details, taxes, and other information between sales platforms and accounting software. Mapping is the process of telling your systems where the data from each field (date, name, amounts, sales details, etc.) should be recorded in your accounting system.
For example, if you sell multiple inventory items, you need each line item in a sales transaction to be pulled over to your accounting system separately, so that the correct inventory item can be recorded as the sale and relieved from inventory. You also want to map the revenue accounts where you want the sales to be recorded. You might track certain types of product sales in one revenue line item, but other types of sales in another. Your sales system should identify which revenue account each item should be recorded to when sold.
Before full implementation, testing the import files or automatic syncing mechanisms is crucial to prevent errors and misclassification of transactions. Once automation is in place, regular verification of transactions ensures that data remains accurate as it syncs, reducing discrepancies and maintaining the integrity of financial records.
Understanding Your Financials
Listening to your numbers is essential to making informed business decisions. Accurate financial records go beyond tax reporting; they provide real-time insights into business health. Key performance indicators (KPIs), such as gross margin percentage, sales volume trends, average order value, and budget versus actual performance help ensure you’re running a sustainable business.
Without proper understanding and review of your financial metrics, you may be pursuing growth in a business area that is not good for long-term sustainability. Selling one more dollar of revenue is not going to do your business any good if it takes you $1.10 to produce that revenue.
If you aren’t reviewing your margins to understand the cost it takes to produce each inventory item, you won’t know where to put your marketing efforts, manufacturing adjustments that might need to be made, or other areas of focus to have positive impact. Reviewing trends is also important for understanding your business. Trends can help ensure you have proper inventory or staffing levels, where to focus your marketing efforts, and whether or not an investment is warranted in certain products or development.
It’s important to consider product pricing and cost structures, track month-over-month changes for seasonality insights, and understand performance. It’s also important to analyze your balance sheet, perform accurate cash flow forecasting, and keep reconciliations up to date. Proper accounting processes prevent misclassified transactions from skewing financial reports.
Developing Appropriate Processes
To ensure automation runs smoothly, it’s important to establish structured processes to monitor and validate data regularly. Daily or weekly processes help to catch potential issues as they occur, versus dealing with a larger cleanup project later. Monthly processes also provide the ability to close the period and review completed results.
Daily or Weekly Processes
• Reconcile sales, banking, and other integrations.
• Resolve any discrepancies in automated transactions.
Month-End Close Processes
• Reconcile all accounts to month-end supporting documentation (statements, reports, etc.)
• Review financial statements for consistency and reasonableness.
• Analyze month-over-month financial trends for growth insights.
Automation can be a powerful tool for e-commerce businesses, saving time and improving accuracy—but only if implemented correctly. To ensure automation works for you, make sure you invest appropriate time to setup and integration, understand how to review your financials for accuracy, and implement appropriate processes to keep everything running seamlessly. By proactively managing automation, you can prevent financial discrepancies and year-end accounting headaches.
Shauna Huntington is founder and CEO of The Small Business Bootcamp. She was a presenter at Prosper Show 2025 at the
Las Vegas Convention Center.
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