In this article, we have summarised the common 4 mistakes that FBA Sellers commit when it comes to Accounting. Let’s learn how you can avoid these mistakes for your business. Let’s begin:
1. Focus on Revenue/Sales than Gross Margin
The majority of FBA sellers primarily incline towards call bank accounting. It simply means that sellers login to their Seller Central account. The first and foremost thing they check is if their sales are trending. Next, they check the bank account. And that’s it.
However, this is not quite the right approach. You have to be a strategist if you are an FBA seller. No matter if the sales are booming, however, your bank balance may stay constant or even declines.
This scenario generally occurs if you are focussing on sales and revenues instead of gross margin.
There’s a lot more to running a successful Amazon FBA business than merely growing revenue. Cost of goods sold (COGS), Amazon listing fees, sales tax, marketing expenditures, and paying your staff and yourself (as the owner) are just a few of the considerations.
Moreover, you’re headed for a bumpy road if your expenses are increasing faster than your sales.
2. Merging Personal and Business Finances
If you are paying for business stuff from your personal credit card or purchasing personal stuff from a business card. Then, you are committing the most critical mistake.
No doubt it is a tempting situation to merge your personal and business finances. However, if you want to lead a successful business then you definitely need to avoid this mistake. Moreover, merging personal and business finances will only cause issues for you and also will affect business.
Another reason to start separating your finances is if you plan to sell your Amazon FBA business in the future. You can’t have personal expenses clouding your financials in order to have seller-ready financials.
Transparency and organization throughout your figures can instill confidence in potential buyers. Higher multiples upon sale could be obtained by investing time or money in outsourced bookkeeping.
Scraps of paper and bank statements are no match for QBO or Xero’s professional-looking financial statements.
3. Avoiding Customer Acquisition Costs
What does it cost to bring on a new customer?
Amazon ads, for example, can be a cost-effective and profitable way to increase sales. They can, however, be a money pit.
Moreover, you could quickly erode your profit margins if you don’t keep a close eye on how much you’re spending. If you outsource your ad strategy and management to a PPC freelancer or agency, this becomes even more critical.
4. Not Using Cloud-based Accounting Software
The most significant benefit of using Xero is the ability to sync data between your bank accounts and Seller Central. This reduces the risk of error from manual data entry and spreadsheets while also speeding up the bookkeeping process.
Pro Tip: Using A2X, you can automate even more of this process, ensuring that your books are always up to date.
Another benefit is that it eliminates the shoebox issue. You can efficiently store and catalog your expenses when you use a tool like HubDoc, which comes free with your Xero subscription, to set up your chart of accounts and receipt tracking.
Although, you won’t have to spend hours frantically searching for receipts and remembering what you bought if you keep up with your bookkeeping on a regular basis (at least monthly).
An intelligent software tool—Asinwiser— is what you need as an Amazon. It is an impeccable solution for all your needs, including product research, competitor research, fba calculator, fba fee calculator and profitability calculator.