What Is Retail-Centric Accounting?
Retail accounting is more than just counting numbers. Managing a full-scale retail operation is not like running other businesses. There are specific accounting needs that must be addressed that other types of businesses do not have to encounter. Here are a handful of retail-specific accounting practices that every retailer must address:
- Expense allocation – Every business has expenses, but retail businesses have certain types of expenses that are shared among multiple stores or outlets. For instance, if your inventory and merchandising purchasing is done centrally, the expense for buying new merchandise could be shared among all the stores that benefit.
- Sophisticated lease management practices – Retail businesses may have specific property lease practices that applies to different locations. Triple-net leases are not unheard of, for instance. Or you might share space with another business and share in different aspects of maintenance for the property.
- Commission and sales tracking – Other sales organizations have to track their sales and commissions too, but your employees are likely to be hourly or salaried employees and commissions are on top of those. They may also be shared among store employees who participate in different parts of the sales process.
- Cash audits – Retail operations have a variety of payment methods, one of which includes cash. Cash audits look at your cash transactions and cash on hand for a specific period of time to determine efficiency, profitability, and other metrics.
Your retail operation may even have specific accounting measures that are unique to your industry or your chain. A good integrated accounting solution will take into account all the different ways that your business is unique. Besides centralizing your data, you need dynamic reporting that measures the right activities in the right manner. Otherwise, you could end up with an accounting nightmare. We don’t want that happen to you.