Online retail sales are at an all-time high. In 2019, online purchases represented only 16% of the $3.76 trillion in total retail sales in the U.S. However, the COVID-19 pandemic has flipped the script on that narrative. 

U.S. e-commerce sales jumped to 33% by April. That’s 10 years of industry growth in just three short months. This paradigm shift has been detrimental to many retail giants as they’ve declared bankruptcy and closed more than 14,000 brick and mortar stores as of October.

If you’re not prepared to take your retail business online, you’re setting yourself up for failure. This dramatic change in how consumers shop has also created a lot of challenges in how retail ecommerce businesses complete their everyday business processes including their month-end closes.

Cash Is Of The Past: Stay Ahead of Three-Way Matching with Accounting Solutions Built for Growth

In 2018, cash was still a major form of payment representing 55% of transactions under $10 and 30% of all transactions. With the transition to primarily online sales, cash transactions are becoming a thing of the past. 

One retailer in the food service industry reported that prior to COVID, in-store transactions were almost 100% of their business with their stores only processing a handful of online orders from delivery service providers like DoorDash each week. However, beginning in March 2020, they saw a complete turn as their in-store transactions dropped to almost nothing while online orders rocketed to 97% of their sales. 

This means cash transactions (simple one-to-one reconciliations) have become a thing of the past. Instead, retailers are processing more third-party transactions with:

• • Credit card companies
  • Online payment applications like PayPal
  • Delivery service providers (like Favor, UberEats, and Instacart)

With these sheer amount of digital transactions, retailers balance the following within their three-way matching reconciliation process:

• • Different payment types 
  • Processing fees
  • Bank data

Being unable to reconcile cash in an accurate and timely manner can cause you to have an inaccurate picture of how much cash your business has on-hand. This inaccuracy can lead to poor business-decisions that could land your retail business in hot water.

The spike in online shopping has also created a strain on inventory and the supply chain. While many retailers stocked their stores with an abundance of goods, they simply weren’t prepared for the online demand for their products. 

The stock had to be 

• • Pulled from stores
  • Sent to newly expanded fulfillment centers 
  • Shipped directly from the stores to online customers

Keeping track of the inventory and reconciling the point-of-sale transactions has also been a difficult challenge to manual month-end close processes as the risk of errors and mistakes increases with each transaction.

How to Beat the Challenges of the Financial Close Process in Retail

As e-commerce becomes a much larger portion of your financial operations, you have to adapt in order to excel in this strange, new normal. Finding an accounting solution that improves your month end process and cash reconciliations while allowing you to meet the challenges of a new retail industry might seem difficult at first.

However, if you focus on these four core concepts, you’ll find that modernizing your accounting solution is actually quite easy:

• • Streamline and centralize your internal financial processes. 
    • By creating a dependency-based checklist template, you empower your team to take ownership of their tasks and reduce the risks of inaccurate data in your month-end close. 

• • Automate repetitive, low-risk tasks. 
    • Don’t waste valuable time inputting redundant data month after month. With automation that tracks and stores your consistent data in the cloud, you’ll minimize the chance of human error in simple accounting processes. 

• • Import new financial records to simplify matching.
    • Get accurate and reliable data by configuring your system to import and match audit-ready financial records. You’ll be able to adjust for three-way matching and external fees so you can track down the reconciliation discrepancies that need your attention. 

• • Configure custom accounting reports that give you transparency into your finances.
    • With endless reporting capabilities that give you the data you need, you can track specific data points over multiple periods, empowering your team to explore and correct inaccurate entries.

Evolve With A Modern Retail Accounting Solution

With the rise of online sales, non-cash transactions, and the impending holiday shopping season, the time to rev up your accounting solution is now. Take the same structure you’re used to and evolve your processes into a robust, adaptable, and modern accounting solution that increases your efficiency and productivity.  

Featuring an intuitive interface that empowers you to close more efficiently, accurately, and quicker, the Adra Suite of solutions include:

• • Adra Task Manager – Manage your month-end processes with this one-stop solution.
  • Adra Balancer – Take the repetition out of your balance sheet reconciliation.
  • Adra Matcher – Automate your transaction management.
  • Adra Analytics – Understand every detail of your financial close.

Not only does Adra modernize your financial close solution, but it also helps you reconcile three-way matching from:

• • Credit card processors
  • Bank data
  • Merchant data, which would include Shopify or Paypal 

Plus, the scalability of Adra and having a standardized process allows you to run your business more efficiently during the already busy holiday season. 

Regardless if you run your retail business traditionally or virtually when you’re ready to see how Adra can give you a modern accounting solution to a modern accounting problem, reach out to one of our experts to schedule a demo.