Streamline Your E-Commerce Finances with Xero

Streamline Your E-Commerce Finances with Xero

More than ever before, businesses are migrating from brick-and-mortar shops to embracing the digital ecosystem in the form of e-commerce. According to online statistics, revenue in the e-Commerce market in Hong Kong is projected to reach US$5,078 million in 2024 with an annual growth rate of 8.8%. 

The widespread popularity of e-Commerce is not without good reason, as it offers:-

  • a quick buying process for customers
  • incredible scalability for business owners
  • options of payment methods which suit regional systems like cardless payments and e-wallets
  • digital product catalogues that can be easily updated and changed according to inventory status
  • lower overheads and costs that are typically associated with manpower and location
  • affordable marketing in digital and social media compared to traditional billboards and radio space
  • access to a truly global customer base with virtually zero geographical limitations

That being said, e-Commerce also has its own fair share of challenges that many digital entrepreneurs and migrating business owners might be less aware of, including: 

  • Growing Competition: Not just with local sellers but also with foreign counterparts and international brands. 
  • Increased Customer Expectation: Customers expecting higher quality products, cheaper prices, and a superior shopping experience given the wide range of options available online. 
  • Learning Curve: Need to adapt to popular and trusted e-Commerce platforms that many individual shoppers and businesses are gravitating towards. 
  • Compliance with sales tax regulations: Vary drastically given customers are now coming from all corners of the globe. 
  • Inventory Tracking: A hectic environment where hundreds to thousands of products are rapidly sent out and returned on the very same day. 
  • Monitoring Business Performance: Business owners are having trouble tracking the profit and performance of potentially hundreds of items in their digital catalogue.

Challenges in Managing Finance for Online Stores

These challenges inevitably add complexities to the management of finances for online stores:-

  • Cross-Border Transactions: As sales come from different countries, there is a need to not only manage multiple currencies, but also the tax implications of each country.
  • Inventory Management: Need to ensure inventory records match with sales data to prevent out-of-stock situation, as well as for efficient stock management and use of capital.
  • Customer Refunds: Most e-Commerce platforms allow refunds, which requires detailed reconciliation with financial records.
  • Cash Flow: With sales coming from different platforms and/or countries, cash flow management becomes a complicated task, requiring constant close attention.

The above are some of the reasons why as many as 90% of e-Commerce businesses fail after 120 days or almost four months, of competing in the global market, according to online surveys

In this challenging environment, Xero emerges as a powerful ally with its tailored solutions that streamlining operations for e-commerce businesses.

Platforms Integration Made Seamless

Be it individual shoppers on their next impulse purchase or large businesses looking to link up with their next major supplier, both groups of customers tend to congregate towards the most trusted e-Commerce platforms. 

To help online businesses connect with the online marketplace, Xero can seamlessly integrate your business with platforms such as Taobao, Carousell, Amazon, and WooCommerce, facilitating a smooth and hassle-free shopping experience for individual shoppers. Likewise, Xero can also integrate your business with trusted B2B platforms such as Shopify to better facilitate a long-term business relationship between company and supplier.  

Here’s how Xero helps you in integration with various platforms:

  • Sync sales across all your e-Commerce platforms directly into Xero 
e-Commerce platforms
  • Receive automatic settlement summaries in your Xero account detailing the who, what and where of every transaction
  • Full visibility of inventory value right down to profit and loss and balance sheet levels

Sales Tax Made Simple

Managing the finances and sales tax for a local land-based business can be tough enough. Now imagine the significant order of magnitude when this is now applied across an online marketplace consisting of around 200 countries, each with their own individual sales tax rates and compliance requirements. 

What if we told you that managing all this would be easy, with Xero’s sales tax features :- 

  • Default Tax Rates for each country: Customise sales tax rates by adding or amending default tax rates, set up as many tax rates as required, and even alter tax rates on any individual item if needed. 
  • Automated Calculations: Automate sales tax calculation in your invoices, quotes, purchase orders and bills by simply selecting any tax rate. Sales tax on transactions can also be tax inclusive, exclusive, or no tax whatsoever. You can also set up default rates for specific contacts, inventory items, and accounts. 
  • Prepare Sales Tax Returns: Let Xero work behind the scenes to create a comprehensive sales tax report based on information from completed sales tax forms within a given tax period. The report will also contain a summary of taxes by rate, component, or account type, which can be viewed with sales tax software to see individual transactions. Sales tax figures can also be generated using the cash or accrual basis.
Sales Tax Returns

Inventory Tracking Made Easy

When you run a fully online business, you will undoubtedly save money on renovating and furnishing a physical shop for your customers to visit. However, your warehouse behind the scenes can be equally or even more hectic, with hundreds or even thousands of inventory items moving in and out every day. 

According to a Gitnux Market Data Report, around 30% of all products ordered online are returned, as compared to 8.89% in brick-and-mortar stores. Out of a wide range of online sellers, online clothing shops bear this burden the most with 56% of their ordered products being returned on a daily basis. 

Furthermore, there are certain online shops that run on a 24/7 basis, which makes inventory tracking and stock level management a virtual nightmare. That is, until Xero’s inventory management software enters the equation. 

  • Inventory Tracking: Take your mind off manually counting delivered and returned parcels as Xero actively tracks your stock levels for up to 4,000 finished items with our inventory management system, automatically updates the quantity of available items, and also displays the value of stock on hand.
Inventory Tracking
  • Efficient Templates: Create templates and add items like reusable texts for item descriptions and prices to be used in your future quotes, invoices, and purchase orders. This helps you save time when reordering new items when you can simply select items and add them into your bills. You can also amend pre-populated descriptions with new prices or sales tax when the need arises. 

Reporting Made Insightful

With its seamless platform integration and efficient inventory management, Xero can run customised reports and detailed analytics to  provide you actionable insights that guide your decision-making, notably for the below:-

  • Detailed Product Analytics: Xero’s reporting capabilities allow businesses to analyse sales by product or product line, identify bestsellers and underperformers, notice trends, and adjust strategies based on performance data.
  • Marketing Spend Analysis: By integrating financial data with marketing expenditures, Xero helps businesses track the ROI of various campaigns and adjust strategies to maximize effectiveness.

Transform With Xero

The online marketplace is an arena ripe with opportunities and rewards for businesses that are smart and daring enough to brave it. Be it integration with the right e-Commerce platforms that your customers flock to, looking into the nitty gritty of sales tax matters, generating quick and comprehensive performance reports that satisfy audit firms and help you make more informed business decisions, or monitoring your stock levels to ensure your business can continue to supply your customers with the happiness they desire, Xero is absolutely the best tool you need to conquer the e-Commerce space. 

By adopting Xero through its trusted advisor FastLane, you will receive all the guidance and support your e-Commerce business could possibly need to get up and running from Xero to a thousand!

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