We have seen a huge growth in E-Commerce platforms in the past few years. This has been possible due to advancements in technology that have been made in the years past. The growth of the E-Commerce platforms was also possible because of the pandemic caused due to Covid-19. As the people were confined to their homes and even when the restrictions were relaxed, the people preferred to not move out in the open. This provided a huge opportunity for the growth of E-Commerce platforms.
In the United Arab Emirates, this opportunity became even greater as the economy of the UAE wanted as a source of income apart from the income from tapping into the Oil and Hydrocarbon industry. The country was also making laws and regulations which would support the setting up of business in the UAE.
Why is Accounting Important to E-Commerce?
Accounting and Bookkeeping can be very important to the E-Commerce industry as the E-Commerce industry can be a is a very quick and fast-paced industry. In such a fast-paced industry, it is very important to know the inventory and the income and expenses of the business at all times. Accounting and Bookkeeping will also help the management of the E-Commerce company to maintain proper accounting books which will be used for many different functions such as filing for taxes and making decisions that will pertain to the future of the company.
Accounting for the inventory will also help the management to have the knowledge of which products bring in the most revenue and which do not. This will allow the management to focus more on the products or services which will be more profitable. After consulting the accountants, the management will be able to take a decision regarding major business issues such as the acquisition of machinery and infrastructure, conducting Mergers and Acquisitions etc.
How Accounting can help E-Commerce Business?
- Track all your Cash Flows
The accounting function will help the business track all its expenses and gains. The management of the daily expenses is very much required by a business so that the business can increase its profitability.
- Manage the Inventory properly
Proper utilization of the resources of the company is very important. The inventory management of the company will allow it to make proper use of the resources of the company.
- Manage the Credit of the company and the Commissions given
In many cases, the business may give out a commission to certain entities for the performance of certain jobs. These can be properly tracked and managed so that they do not produce any adverse effect on the business.
- Managing the Logistics
An e-commerce business needs to have a good logistics presence so that it can move the goods from one place to another. Proper accounting and bookkeeping will provide the management with the details which will allow them to properly manage the logistics of the business.
- Tracking and Managing the Costs of the Company
How many funds are utilized to carry on the company should be known to a business. if the management allows spending of more than the breakeven point, then the whole operation is non-profitable.
- Maintain all the Financial Records
This is one of the biggest advantages of availing the services of an Accountant. By having the proper knowledge of all the functions of the business, the accountant will be able to provide a wholesome picture of the financial condition of the business. The data which has been accumulated can also be utilized for the purpose of filing for taxes and other business uses.
- Provide Insights about the Company as well as the Competitors
It is very important for a company to know about the business environment as well as its competitors. The different strategic moves of the competitors can be analysed to think of a move to counteract them. Also, the company needs to understand the business environment so that it can make the most of the situation.
These are some of the reasons due to which it is important for a business to avail of Accounting and Auditing services. These services will not only help in the growth of the E-Commerce business but will also assist in understanding the business environment as well as the competitors. To understand more about why a business should avail of Accounting and Auditing services, feel free to have a chat with our experts at JAXA Chartered Accountants.
JAXA is an ISO 9001:2015 certified Chartered Accounting firm and has experience of more than 13 years in the field of Accounting and Auditing. They also provide various other services such as Auditing service, Tax and Vat related services etc. To know more feel free to Contact Us. We will be happy to assist you.