As we live in times where e-commerce is blooming, I decided to entertain some thoughts on a particular key-aspect that occurs often. As a base, I will use the Greek market context for example purposes.
According to latest reports (ex: ELTRUN report on e-commerce), online sales keep a steady growth. Even in Greece with it’s ongoing crisis, there was a 10% increase for 2015 and the estimations for 2016 are more than ambitious, for various reasons.
Implementing accounting standards
In Greece (as in every country), accounting and tax rules often are particularly specific. That makes the implementation of accounting standards into your platform, a key decision. It is a basic challenge to manage, if aiming for a successful and reliable e-shop, not only for the developer, as for the client as well (#true_story).
The reason why
It’s impossible for e-commerce platforms, to analyze and successfully develop platform support for all possible accounting standards. That’s why, even powerful platforms (ex: such as Magento) include basic accounting functionality to support large markets (like USA or UK).
And another reason now that I’m thinking it , is of course the complexity of some cases. Especially for companies that are large in size, or happens to perform very rare accounting operations, accounting turns out to be a highly customized case, not only to address that extra complexity, but to adapt the platform to an already existing set of procedures that the client is used to.
That’s simple to decide (at least from a consulting perspective)! Keep your accounting off-platform as you did before or make sure you invest correctly. And by investing I don’t mean expensive necessarily, but it’s a part that must be estimated wisely in terms of both budget and client-side availability.
How to decide
The factors are typical as to any investment of resources:
- Good chance for ROI increase.
- It will automate procedures, save work-hours and decrease human errors.
- It will increase reporting capabilities and help make useful decisions.
Example #1 - The lovely VAT
Now the Greek context comes in place :-) So, you need to incorporate taxation rules. Here are a few things you might need to adapt:
- Different VAT for sales abroad if they are wholesale customers, but basic VAT if they are retail customers.
- Different VAT if the business is established in special locations.
- Independent VAT calculation for order shipping costs and in general, third party costs.
- Different VAT for some product categories.
- Specific rounding to the VAT value (yes, some popular platforms round always up).
- For some wholesale customers, provide the option to include VAT payment on initial payoff, or separately (not usual, but there are cases).
Example #2 - The billing habits
Most platforms, generate simple details on their documents, such as order ID and date. And of course, many accountants have different interpretations on several small details and that’s not necessarily for legal reasons. Here’s an indicative look of what you could take into consideration:
- Because many platforms consider a receipt and an invoice almost the same thing, they don’t provide customization options per document type. Inside the Greek context though, an invoice should have much more additional details. For example: the title text of the bill or the VAT analysis.
- Other than order ID which might appear with random intervals, you might want to add invoice ID which will be maintained absolutely sequential. If that’s your case, you will need in total to have different and independent ID sequencing for a) credit memos, b) shipping slips, c) receipts, d) invoices.
- And after you do that, multiply it again by 2, if you will have sales abroad :-).
- In many cases, a typical and quite valid interpretation on invoice details, is to have VAT values analyzed by category, percentage, value and source, into a separate table.
- In case you would like to avoid sending a hard-copy of order documents each time, you would have to decide on: a) buying and setting up a tax printer (it generates unique ID to validate the document as official) and b) integrating the tax printer with your platform.
- Also one cool option could be to avoid creating shipping slips, as long as your database keeps accurate stock of your products. And to be precise i should clarify that by shipping slip I was referring to what normally accountants refer to as “consignment note”.
Example #3 - The (sometimes) unexpected legalities
One common reality when your business grows, is the acquaintance of certain legalities that previously didn’t need to worry about. For example:
- Bills may need to display the initial country the products originated. Thus having to customize product structure, in order to have a required “country of origin” field.
- Frequent updates on respective laws, where business get a deadline to embody them into their processes (and usually into their business documents, such as bills).
Again, this is under Greek context, but from the -indicative- examples mentioned above you can see the level of detail that should be considered.
If your business is ready to incorporate that kind of functionality into its online sales, go for it. There is a lot of experience out there and a lot of well-tried solutions. A structured approach, including good analysis with your developer and your accountant, will be critically helpful.