Selling on Amazon is challenging. This is especially true if you are a small business owner who does all the work. There are tasks that you enjoy performing and others that will test your limits. For most sellers and entrepreneurs in general, bookkeeping falls into the “test your limits” category.
But the good thing is – while bookkeeping is essential to run a business efficiently, you do not need to do it by yourself. Instead, you can appoint an outsourced bookkeeping service provider to do it for you.
In this article, we will share some of the advantages of outsourced bookkeeping for Amazon sellers. And how this service can help you organize and keep accurate records of your financial data while you manage your business.
The Benefits of Outsourced Bookkeeping
Why outsource bookkeeping when you can do it by yourself? To better explain our answer, we will discuss scenarios that are true to life.
These are challenges that each Amazon seller is facing or may encounter in the future. As a seller yourself, you may even be experiencing them right now. After each point, we will then present the advantages of hiring outsourced bookkeeping services and how they can positively impact your business.
1. Cost Reduction
A major upside to outsourced bookkeeping is that you do not have to pay for salaries, training costs, employee benefits, taxes, office supplies, and all the other expenses incurred by hiring a full-time or part-time employee. You only have to pay a monthly fee for the services that you will need.
Some sellers consider outsourced bookkeeping as an additional and unnecessary cost. That is why they would rather do it by themselves. While this may be strategic for newbie sellers, it is the opposite for sellers with more on their plate.
Seasoned sellers generally have a higher net worth and so their time is expensive. And we all know that bookkeeping is a task that requires a hefty amount of time – especially when you are not skilled enough to do it with speed and accuracy. That is why paying someone with lower labor costs and proven expertise will not only save time but also save money.
Additionally, the firms offering outsourced bookkeeping services use automation software to streamline their accounting processes. This lets them quickly access and share data with you. These tools are expensive, but you may not have to pay for them because they are part of the service that they provide. You will be able to gain access to leading bookkeeping software and best practices without bringing in the big bucks.
Getting a third party to perform the task for you can reduce your Amazon selling costs and expenses without reducing the quality of your financial records.
2. Product Research and Sourcing
Product research, sourcing, and bookkeeping are all tedious and time-consuming. They also require more effort as your business develops. While it would be impressive to be able to keep up with all those tasks, it may not be very strategic. Doing everything by yourself will eat up your time and may lead you to burnout.
And we all know that a burned-out entrepreneur lacks focus. When you don’t have the right amount of focus, your business could suffer. Your judgment for identifying and analyzing winning products could be affected as well. What’s worse is, that you may end up investing in products that will make you lose money.
With outsourced bookkeeping services, you can free up your time and you can direct your attention to income-generating opportunities. This is especially important for sellers that are practicing the Amazon arbitrage business model. As this method requires plenty of time for constant research, verification, product sourcing, buying the item, listing it, and then shipping it to Amazon’s warehouse.
By outsourcing your bookkeeping tasks, you will have more time to discover profitable products to sell. Rather than getting lost in the details of a seemingly never-ending series of financial records.
3. Flexibility and Scalability
One of the most significant highlights of doing business on Amazon is the limitless opportunities for growth and expansion. As your business grows and expands, your need for more bookkeeping support will increase. When this happens (if you are not outsourcing yet), you may be necessitated to hire an additional bookkeeper to help you with the increased volume of financial data.
If you have outsourced your bookkeeping tasks and you require additional support, all you need to do is to update your contract. And the Bookkeeping firm will give you the support that you need. If you want help with complex tasks, they can also do that for you since they have highly trained accountants that are experts in their field of work.
In a different scenario, if times are rough and your business has to scale down, you do not have to go through the stress of letting go of a team member. You can temporarily downgrade your contract and upgrade it again when your business has recovered.
Outsourced bookkeeping services can easily adjust to the needs of your business. This flexibility is pivotal because it lets you smoothly scale your business with minimum impact on your costs and operations.
4. Inventory management
Your inventory is a physical representation of your investment. Hence, you should manage it well. Handling your inventory the right way means more opportunities for profits. And handling it poorly means monetary losses or a decrease in your profitability.
Inventory management can be demanding, especially when you expand your operations. You will have to oversee the acquisition of new inventory, restock replenishable items, store them, mind the limitations, fulfill orders and take care of the returns – All of these may sound simple, but it is really not. It is actually very hard to do them all together. All of them require focus, analysis, lots of effort, and most especially, time.
If you are already extremely busy with juggling inventory, how much more if you also need to do the bookkeeping? Will you still be able to take a day off from your business? I don’t think so. You will be swamped!
Don’t let yourself get swamped! Ask for help. A properly managed inventory is just as important as accurately recorded financial records.
When you outsource your bookkeeping, you can spend more time focusing, strategizing, and being efficient. You can also have a working environment with less stress. And that improves the accuracy of handling and forecasting your inventory.
Expert bookkeepers can also advise on several aspects of inventory management. Their insights can help you take your Amazon business to the next level. With outsourced bookkeeping, you will be able to stay on top of your financial records, keep up with the requirements of your inventory and meet customer demand without exhaustion.
5. Data Privacy and Confidentiality
Your bookkeeper handles financial data that is crucial to your business. They record your financial transactions, make invoices, handle the receivables and payables, manage the payroll, take care of your taxes, reconcile your bank accounts plus maintain and balance the books.
That’s a great deal of confidential data. And with all that sensitive data at risk, you should at least be able to trust that your records are always secure. Because the last thing that you would want to happen is to let them get leaked or maliciously mishandled.
Hiring an in-house bookkeeper means putting a significant amount of trust in a single individual or a team while maintaining a long professional relationship with them. If you are among the lucky ones who are fortunate enough to have a skilled and trustworthy bookkeeper, then this would not be a problem for you.
But what if it were the opposite? What if you were exposed to a dishonest or irresponsible employee? It could spell disaster. Flawed bookkeeping practices could lead to inaccurate reporting, investment losses, and tax problems. Even worse, you could be exposed to embezzlement and theft.
It is essential to handle your financial data with the topmost privacy and confidentiality. Your records must be secure and protected at all times.
One of the best ways to reduce confidentiality risk is to take advantage of outsourced bookkeeping services. Why? Because highly reputable accounting firms are experts in keeping their client’s data private. It is one of their best practices and it is the backbone of their business.
Firms that specialize in outsourcing bookkeeping services are also well-versed in a variety of top-quality accounting software and tools that let them securely communicate and store financial information.
Additionally, because a third-party bookkeeper does not directly take part in your day-to-day operations, they do not have access to your actual cash flow. While it is impossible to eliminate all the risks in business, you will be able to mitigate the risk of embezzlement and theft.
Knowing that you can trust that your financial records are always secure is a big benefit that is sometimes overlooked.
Bookkeeping is a critical component of every successful Amazon business. And it will hinder your success if it is not given enough importance or when it is done poorly. But being a successful Amazon seller also means that the demands of the business are extremely challenging.
So, what should you prioritize or let go of? You can’t handle everything by yourself. Or maybe you can – for a start. But after a while, it will take a huge toll on you.
Understanding that bookkeeping is essential for your business to thrive is the first important step. Acknowledging that you do not have to do it all by yourself is progress. And recognizing that you should take advantage of outsourced bookkeeping services is the key. It will give you the value that you need for less than the cost and equal (or higher) the quality.