Multichannel has been a buzzword in the retail space for the past few years but taking this approach has unique implications for your accounting processes. At a high level, multichannel stores are those that use multiple channels to sell the same or similar products. Omnichannel stores do the same, however, put unified communication at the forefront of their strategy.
This article is relevant to both multichannel and omnichannel businesses, whether you have multiple digital channels or a mix of digital and physical. Now, what happens with your accounting when you have customers making purchases from different channels? We go through how to create a seamless journey for transactions and data to flow into your books.
What is a multichannel approach in retail?
A multichannel approach in retail involves selling products through multiple sales channels to target people at different stages in their buying journey and to reach more people. For example, setting up shop with brick-and-mortar stores, on a Shopify website, on social media and on marketplaces such as Amazon.
Though the terms multichannel and omnichannel are often used interchangeably, the main distinction with an omnichannel approach is the focus on creating the same experience for customers, regardless of what channel they’re shopping on. Both approaches involve having multiple sales channels and therefore, this article is relevant to either.
How does a multichannel approach impact your accounting?
Having multiple sales channels, whether that be Shopify, Amazon and/or a brick-and-mortar store, means having more to track. Inventory needs to be shared across channels but the different costs involved with actually selling products might differ. For example, Shopify fees might be different to POS system costs.
Hence, your accounting system needs to be able to seamlessly gather data across multiple channels, account for fees and taxes, and break down reporting insights appropriately. Not only is this important for compliance, having accurate and up-to-date data for all your touch points allows you to have better financial data and therefore, better insights for decision making.
Accounting tools you need for an multichannel approach
To ensure your accounting runs smoothly with a multichannel approach, you need to have a few tools in place to help you streamline and automate processes. The key tools you need are:
First and foremost, if you haven’t already set one up, using a cloud-based accounting software is absolutely necessary if you’re hoping to accurately track sales across multiple channels. You can have all your data in one, secure place, access it from anywhere and easily give your team access to it. Plus, you can add third-party integrations to add more functionality.
A cloud-based accounting software acts as the hub that can pull data from different systems into one place. By using accounting integrations, you can connect your e-commerce platforms, marketplaces and POS systems from your brick-and-mortar stores to your accounting software. Transactions are synced across automatically with fees and taxes accounted for.
On top of automating your data entry, you can integrate an inventory management system with your accounting software. With multiple sales channels all sharing the same inventory, this is essential for keeping stock levels up to date. By leveraging the system’s automation tools, you don’t have to worry about overselling or running out stock.
How to set up accounting integrations for multiple channels
Accounting integrations allow you to connect different sales channels to one accounting software. For example, you can set up Amaka’s Revel + Xero accounting integration for your POS system and then Shopify + Xero for your e-commerce platform. You can use these integrations on an entirely free plan, regardless of how many sales you make.
There are three setup options available; 2-Minute Express for quick, basic setup, Advanced for those with custom requirements and Guided for those who would like a 30-minute video call with one of our integration specialists. After it’s set up, the integration will run an automated daily sync of your data into a summarised invoice with a breakdown of all relevant fees and taxes.
Connecting your accounting and inventory software
There are now a tonne of sophisticated inventory management tools that you can connect to your accounting software such as Unleashed, Sellbrite, Ecomdash and Cin7. Before setting one up, it’s important to do a thorough stock take. Then, you’ll want to choose and set up a tool that connects to all of your sales channels and your accounting software.
An inventory management system allows your inventory levels to stay updated across every sales channel as well as in your books. This means your COGS are accurately recorded, you know when you need to order more stock and you can better forecast for future stock fluctuations. Strong inventory management is crucial to keeping a retail business afloat.
Key takeaways on multichannel accounting
Though there are a few complexities that come with managing your accounting when you have multiple sales channels, they’re quite easy to overcome with the right tools. Automation is the key to ensuring your retail business can scale successfully with a multichannel approach. It saves you time and keeps your data accurate all the time.
Accounting software, accounting integrations and inventory software are just the foundation of multichannel accounting and there are a lot of other tools that you can implement. As always, reaching out to an accounting professional experienced in technology can help you clear up what your business needs.