How A2X helped husband and wife duo get a handle on their business finances
Peter Richardson and his wife have been running their ecommerce business for three-and-a-half years and currently make an annual revenue of approximately $750,000. Like many ecommerce businesses, they operate in a highly-competitive industry so understandably, they like to keep their playing cards close. But they’re unafraid to admit that before A2X, they were essentially running their business blind - something that could have been detrimental to their growth.
The Canadian duo primarily sell through Amazon Marketplace in the US, with plans to further expand into Canada this year. They source their products from China, with the introduction of their own brand lines sourced from Canada due to hit the market later this year, and the largest source of their income comes from Amazon FBA sales.
Peter remembers clearly when they made the decision to get a better handle on their finances - at the end of the financial year in 2018. A2X was the obvious choice for them and is now critical in how they manage their bookkeeping system, export business management reports and long-term strategy for growth.
“Amazon notoriously makes it difficult to pull data and reporting from their system. With A2X, there’s a whole new level of clarity to how Amazon pays us out as sellers and helps us to see where our business is headed.”
Spreadsheets only get you so far
Up until a certain point, they were able to manage - or stumble as Peter puts it - their way through business using only spreadsheets. When they started selling in excess of 4000 units per month, it was obvious how much of an impact their bookkeeping and overall accounting was having on them being able to efficiently manage logistical operations like replenishment.
On top of this, Amazon’s fortnightly deposits from sales into their business account made very little sense until they integrated A2X. From there, Peter was able to understand how the business was performing on a month-to-month basis with useable sales data and reporting.
Peter describes their business as being an awkward teenager - not quite big enough for a high-value ERP system but too big to continue with spreadsheets alone. A2X is an affordable option for them that does exactly what it says it will do.
“When a tool functions correctly, you don’t even think about it. I think about so many other things every other day, but bookkeeping is no longer one of them”.
Cash crunch almost the end of business
Before A2X, Peter would project their revenue three to four months in advance as best he could based on his own estimations. When they decided they had enough money to test and launch new products, they did so. But when it came time to reorder their “superstar” product, which drives approximately 70% of their sales, they didn’t have enough cash for replenishment. With a 100-day lead time for more product, this was a dangerous situation to be in.
Basically, they had taken their capital and used it to develop new products - without putting money aside to replenish current stock when it came time. It’s something Peter believes could’ve crashed their business.
Peter realised they needed sales data and good bookkeeping to be able to forecast for replenishment, growth and new products. This information exists within Amazon but it’s labour-intensive, which is why they started looking for a piece of software that could pull data from Amazon into QuickBooks to generate fast and comprehensive business management reports.
The only challenge Peter had when integrating A2X was not with the software, but his own knowledge of bookkeeping. Once he’d invested time in learning the fundamental basics of accounting, he found A2X very easy to use.
“There’s no limitation to A2X. I don’t have a background in finance, so I had to learn a lot quickly. Once I had all those things worked out, I was able to do the rest myself.”
“A2X integrates flawlessly with QuickBooks and technically was very easy to set-up. If I needed clarification on anything, the comprehensive documentation you’re provided with was helpful.”
Immediate and long-term improvements
When Peter implemented A2X in July 2018, he was immediately able to export accurate sales and expenses reporting. He finally had visibility of their gross sales and an understanding of cost breakdown coming from Amazon.
After almost a year of using the product, they’ve been able to implement a long-term growth strategy - something they could not have done without A2X.
“We now use the A2X cost of goods sold functionality to off-set inventory month-to-month, so we have a strong set of business reports for how much profit we’re making each month. We wouldn’t be able to do that manually in any reasonable way.”
Having access to monthly data that’s easy to interpret - income and revenue, expenses, costs of goods sold - gives Peter the ability to identify whether they’re spending too much money, he can use the data to build monthly management reports, project sales and cash flow reports - ultimately knowing where their business is going.
When asked what the end of the financial year was like this year with the help of A2X, Peter describes the difference like night and day.
“We’ve just completed our end of tax year and it couldn’t have been easier. I’m excited to see how A2X continues to grow because it does what it’s supposed to do extremely well.”