A 3-step process for retail accounting success

As accountants, we can do more for our clients than help them avoid the pain of an IRS penalty, a lost bank loan, or unbalanced financial accounts. Sure, we can help them have peace of mind, but we can also make an impact on their businesses.

Being an accountant means diving deep into our clients’ financial data—that’s part of the job, but it shouldn’t be where we stop. We can be catalysts who help steer businesses toward growth.

That’s where Client Accounting Services, aka Client Advisory Services or Client Accounting and Advisory Services, can really make a difference, particularly when it comes to retail clients. Of course, these clients need accurate and complete historical data, but what they’re most interested in are timely, relevant, and accessible insights into the financial health of their business. They want to figure out how to create a better future.

Meeting our clients where they are

Many of you can probably recall a meeting with a client when the first thing they said was, “Just to let you know, I’m not good with numbers or math.” As accountants, we speak different languages, and often intimidate them with our talk of code sections, GAAP, and trial balances. We’re expected to be the numbers’ experts, while they’re the business-minded individuals. We might be financial experts, but we will never know as much about their unique business as they do.

We need to spend more time understanding the challenges they face—and many of these challenges occur in their operational systems well before a transaction even gets to the accounting software.

Understanding business from the client’s perspective

To help our clients move the needle forward, we need to know more about their current and long-term financial goals. How do they track progress in achieving them? Where do they typically look each day to assess their business' performance? Is it their bank account, e-commerce platform/solution, payment gateway, or perhaps their checkbook?

By asking different questions and speaking the same language, we can become partners in their business success.

3 steps to giving clients solutions they need

Once we understand our clients’ goals, we can help them document their current processes. And when we have a clear picture of the processes, we can help them identify areas where they might be stuck or have bottlenecks. Only then are we in a position to help them select the right software to meet their specific requirements.

Step #1: Automate detailed transaction data syncing in real-time

To be able to draw any conclusion about business, we need accurate, detailed transaction data that reflects the business’ health in real time.

Whether your clients sell products online, offline, or a mix of both, they need to be able to automatically sync different types of transactions, including orders, payouts, platform fees, shipping charges, refunds, discounts, taxes, and more.

One place to start is by automating the accounting process using Synder. In the QuickBooks App Store, this app works with online marketplaces, payment gateways, and even POS systems. It syncs all the complex retail transaction data straight into QuickBooks Online.

This can save you hours of work, while also creating a reliable base from which you can help clients understand their business’ health better and teach them how to monitor key business metrics. This takes us to the next point, key performance indicators or KPIs.

Step #2: Track more than just financial KPIs

There are various key financial metrics retail businesses should be tracking. We all know how important gross margins or average order value are; after all, it’s how they are making money. 

But what about other costs of running a retail business? How much of their margin evaporates due to transaction fees? If your clients sell across multiple channels, do they know how they compare?

There are marketplace fees or payment gateway fees, all eating away at profits. How do these fees compare to the revenue generated through each sales channel? How do platform fees compare to each other? These are all key questions our clients should be able to answer.

Bottom line: Clear reporting of their profits lets them see where they’re really making money, but to really change the results in a retail business, we have to start counting earlier in the process. Rather than considering what happens after sales are made, we need to help our clients understand the inputs that lead to future sales.

Measures that occur earlier in the process are called leading indicators and generally involve non-financial measurements. Consider the rate of email acquisition for your client:

• How are those metrics being tracked?
• How many new customers are acquired each month?
• How many items on average does each customer buy?
• How many invoices per month are we generating?

By starting to measure earlier in the process, we are more likely to be able to take corrective action. 

When analyzing product sales, consider which items a customer buys together. Do customers who buy one product also tend to like a different product? Offering those items as a deal can increase the average order value (AOV). By helping your clients dig deeper into the relationships between aspects of their data, you can help them make changes in the way they sell and market, which can influence their finances in a real and tangible way.

Synder Insights provides all those key retail metrics in real-time, which can help your clients move a step further in their business journey.

Step #3: Show the front line workers how they impact revenues

Let’s explore this question: If the AOV increased by $5, how much more revenue would that mean for the business?

That’s a place where I introduce my clients to the Profit Equation Planner, an easy-to-understand tool for frontline workers to grasp the drivers of their business goals. It follows a simple formula: If I change this metric by this amount, what will happen to my profit?

The Profit Equation Planner (created by Mentor Plus) is an interactive spreadsheet that lists the major retail drivers and their effect on profitability. So change a driver, such as the number of customers who buy, and you can see the impact on revenue. You can do the same with other drivers of profit or revenue. Break down high level goals into their individual drivers so that front line workers can see how they are connected to those goals. Only then can they come up with creative ideas and individual actions that support leadership goals.

This is a real game-changer for our clients. Not only does it connect the heart of accounting to business outcomes, but it enables owners to see positive movement in the direction of their goals.  

Wrapping it up

So that’s my 3-step recipe for retail accounting success:

1. Get reliable and detailed information across all your channels and payment gateways through automation.
2. Based on this data, track key financial and non-financial retail metrics.
3. Using a what-if tool, educate your frontline workers on the connection between their actions and company financial goals.

This approach is a win-win situation for all. We can empower our clients to propel their businesses toward growth in a data-driven, informed way. When we do that, it not only helps elevate the value of the services we deliver; it makes our clients feel like we are partners in their business success. Everybody wins.