Best Ecommerce Accounting Software (and How to Choose)

Chris Andreou

May 26, 2021

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Introduction

As an ecommerce merchant, managing your business finances can quickly get out of hand if you don’t have a proper system in place, and the right tools to support it. 

Perhaps you’ve experienced a growth spurt, and using spreadsheets to manage your accounts doesn’t cut it anymore. Or you've realised that you’re spending increasing amounts of time each week manually tracking your orders, inventory and accounts.

These are signs that it’s time to make the switch to an accounting software. If you’re wondering, ‘how do I choose?’, look no further. 

In our guide, we dive into: 

  • Key features you should look for
  • Question to ask (when choosing an ecommerce accounting solution) 
  • Best ecommerce accounting software   

Key ecommerce accounting software features to look for

1. Integrations with ecommerce solutions and payment processors

For time-pressed small business owners, the ability to integrate with ecommerce solutions and payment processors is possibly the most important factor when it comes to choosing an accounting solution. 

The last thing you’d want to do is to update your transactions and data manually; these are time-consuming tasks that are prone to human errors. 

You should look out for accounting software that integrates with ecommerce platforms like Shopify, WooCommerce and BigCommerce, as well as third-party tools such as payment processors, inventory management systems, CRM solutions, shipping software and more. 

2. Usability

There are several factors you need to consider when it comes to assessing the usability of a software. 

Level of accounting knowledge

First, think about your level of accounting knowledge. Do you have a solid understanding of accounting concepts and workflows?

Avoid falling into the trap of thinking that having an accounting software means you're all set when it comes to managing your business finances.

As business consultant Linda Pinson shares in an Inc. article, "One of the mistakes businesses make when they buy accounting software is in believing that they don't need to know anything at all about financial accounting because the software will just take care of it for you."

If you don't have at least a fairly good understanding of small business accounting basics, you could benefit from engaging a small business accountant, rather than managing your accounts independently.

Amount of time

Another important factor to consider is the amount of time you're able to set aside each week to handle your accounts.

If you're running a one-man show, chances are that you may not have sufficient time to dedicate towards

Needs and preferences

Next, think about your business needs and personal preferences. If you’re a solopreneur who’s constantly on the go, a cloud solution with an easy-to-use mobile app will be your best option. If you have a team, you’ll need a plan that offers multi-user access. 

You should also take advantage of free trials to get a feel for different solutions, and see if there’s a particular software that’s a better fit for you in terms of its user experience and design.

3. Customer support

There are bound to be teething problems when you’re transitioning from another accounting software, or using one for the first time. No matter how instructive the user guides and knowledge base resources are, you may need an expert to walk you through a solution from time to time. 

Here’s where the customer support team comes into the picture. Before you decide on a provider, it’s important that you check out user ratings and testimonials, paying particular attention to the types of support channels offered, response times and consistency.  

4. Comprehensive reports

Analysing your data is a crucial part of running your ecommerce business. You need to have a clear idea of how your company is doing, understand what’s working or not working, and analyse your business’ financial and growth patterns. 

Using a software that enables you to generate on-demand reports will help save you time, and allow you to easily monitor key performance metrics. 

Your reports should display growth metrics such as revenue, customer acquisition cost, customer lifetime value, average order value and conversion rates. Cost of sales, contribution margin, profit margins, repeat customer rate and refunds and returns rate are some examples of operational metrics you should be tracking. 

5. Frequent software updates

Regular software updates are an indication that a company is growing, and strives to stay ahead of technological developments, trends and accounting best practices. You can check out a provider’s website, blog, social media channels and product roadmaps for updates. 

Additional questions to ask 

While the features we’ve listed above will apply to most ecommerce merchants, there may be additional features you need to consider—depending on the nature of your business and its specific requirements. 

To help you along, we’ve included a few questions you can explore to further evaluate your business needs, and identify other features you may require:

  • What do I want to change about my current accounting process? What’s working for me, and what isn’t? Can the software help fill in the gaps?
  • Where do I want my business to be in a year, in three years, or five years down the road? Does the software offer adequate flexibility and scalability to meet my business needs as they evolve?
  • What are my must-have features? What features that are nice-to-have, but not mandatory?
  • Will my data be secure?

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Best Ecommerce Accounting Software

QuickBooks Online

It’s easy to see why QuickBooks retains the largest share of the pie in the accounting software market. Designed for small and mid-sized businesses, QuickBooks Online offers an impressive array of features, integrations with over 650 apps and comprehensive reporting capabilities. 

Shopify, PayPal, Square, GoCardless and WooCommerce are some of the ecommerce solutions that QuickBooks integrates with. The software directly integrates with Shopify and WooCommerce, and connects to other ecommerce platforms like Wix, Magneto and BigCommerce through third party connectors. 

See the full list of apps here.

Pros

  • Integrates with a large selection of apps used by ecommerce businesses. If a direct integration isn’t available, you can use an online automation tool like Zapier to connect additional apps to the accounting software. 
  • With QuickBooks Commerce, users gain access to additional features. Examples include order management, inventory management across multiple channels, automated order and shipping workflows and more. 
  • Offers over 80 reports, depending on your plan and add on features 

Cons

  • Lags behind Xero in terms of user experience. The software can be occasionally difficult to navigate, and requires a fairly steep learning curve. We found the interface to be somewhat unintuitive, as it isn’t always apparent how one can access certain features.
  • While users can reach the support team via phone or email, the level of support received is variable. Depending on the support staff, users may receive informative responses or obtain incomplete information/ inconclusive answers. It can also take days or weeks to resolve an issue.

Pricing

  • Simple Start: £12 per month for 1 user 
  • Essentials: £20 per month for 3 users
  • Plus: £30 per month for 5 users

Xero 

With its thoughtful design, user-friendly interface and extensive integration options, Xero proves to be a strong contender to its competitors.

Xero’s App Marketplace lists hundreds of apps targeted at small businesses. The software connects with payment solutions like Stripe, GoCardless, PayPal and Square, as well as ecommerce apps like Bold Commerce (through which you can create a Shopify store), BigCommerce and CS Cart. 

See the full list of apps here

Pros

  • Relatively cheaper in comparison to QuickBooks, as Xero supports unlimited users on all its plans
  • User-friendly layout
  • Good inventory accounting

Cons

  • Upgrades are required to gain access to Xero’s multiple currencies, time tracking and expense claims features
  • Lags behind FreeAgent in terms of customer support. Xero doesn’t provide inbound phone support. Instead, users can reach the support team via email or live chat (although it’s primarily used for sales enquiries).Response times can also be on the slow side; it can take up to a day to hear back from the support team.

Pricing

  • Starter: £10 per month for 20 invoices and five bills
  • Standard: £24 per month for unlimited invoices and bills
  • Premium: £30 per month for multiple currencies

Optional add-ons include: 

  • Payroll from £5 per month
  • Claim expenses from £2.50 per user
  • Track projects from £5 per user
  • Pay with Wise from £3 per month

FreshBooks

FreshBooks wins us over with its ease of use and reliable customer support. 

But depending on the needs of your business, there are a few potential downsides: if you have a team, you’ll incur additional costs for every user you want to add to your plan. With its rather limited inventory accounting capabilities, we think FreshBooks will be a better fit for ecommerce merchants with a small inventory.   

FreshBooks integrates directly with Shopify and Squarespace. Other ecommerce solutions, including eBay, WooCommerce, Magneto, BigCommerce are available via third party connectors. 

Refer to the FreshBooks website for the full list of ecommerce and payments solutions available.  

Pros

  • User-friendly interface
  • Offers informative help articles and good phone support
  • Frequent updates with new features

Cons

  • The plans support a limited number of billable clients
  • Limited inventory tracking capabilities
  • Each plan supports one user. Team members can be added on at £7 per user.
  • The Lite plan doesn’t support double-entry accounting

Pricing

  • Lite: £9.90 per month for 5 billable clients
  • Plus: £17.10 for 50 billable clients
  • Premium: £27.00 for 500 billable clients

FreeAgent

With its easy-to-navigate dashboard, great user interface and stellar customer support,  FreeAgent proves that it measures up to the competition against larger players in the market.

The software integrates with ecommerce and payment solutions such as Stripe, PayPal, Sellwire, Shopify and GoCardless, as well as online automation tool Zapier. See the full list here.

Pros

  • Easy-to-navigate dashboard
  • Outperformed QuickBooks Online and Xero in terms of customer support. Users can reach the support team via email, booking a call or calling in directly. Plus, the customer support team is responsive and provides informative replies. 
  • Frequent updates with new features

Cons

  • Lacks depth of reporting. FreeAgent offers nine reports in total. While the essentials are covered, this can be limiting for some businesses.

Pricing

Sole traders:

  • Monthly: £9.50 per month + VAT for your first six months. £19 per month + VAT after your first six months.
  • Annual: £95 per year + VAT for your first 12 months. £190 per year + VAT after your first 12 months.

Limited company: 

  • Monthly: £14.50 per month + VAT for your first six months. £29.00 per month + VAT after your first six months.
  • Annual: £145 per year + VAT for your first 12 months. £290 per year + VAT after your first 12 months.

Download our Ultimate Expenses Guide

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