The accounting needs of your retail business are distinctly different from other professional services providers such as architects or lawyers. The most important difference is that you have to anticipate customer demand and order sufficient quantities of product in advance to satisfy that demand. If your demand forecasting is off and you buy too much of the wrong products, your retail business will not survive.
You may be thinking, “Doesn’t a CPA just produce quarterly reports of my income and expenses and prepare my tax returns?” That may have been true ten years ago, but not today. Today, a retailer’s CPA needs to be a financial futurist, able to provide not only traditional reporting and tax accounting services but also more advanced analytics such as cash flow forecasting, operational planning, and real-time monitoring of key metrics.
Modernize Retail Sales Forecasting
If you have not talked to your accountant about modernizing your approach to demand forecasting, you’ll need to add that on your to-do list. Industry experts report increasing use of multiple data types in retail demand forecasting models, including weather data, competitive pricing data, foot traffic trends, traffic-to-purchase conversion rates, and customer-level repurchase rates. Have you thought about asking your CPA to help analyze the data captured by your point-of-sale system? If not, add that to your to-do list as well.
Manage Cash Flow by Getting More Detailed
For a retailer, inventory usually has the biggest impact on your cash flow. How good are you at predicting which products will sell before the bill for that merchandise is due? A future-thinking CPA can help you get better at it.
If your current financial reporting is all at the “total store” level, getting more granular is the first step. That means looking at inventory and sales data by category and by item. For items that turn over more slowly, either buy fewer units at a time or negotiate with vendors for better “dating,” that is, more time to pay each invoice. Another strategy is to focus on vendors and items that can ship fast, so you can order less inventory and sell it through before the bill is due.
Monitor Your Retail Business in Real-Time
In the past, retail business owners made important operational decisions based on their monthly balance sheet and profit and loss statements. In today’s internet-speed marketplace, it makes more sense to monitor critical metrics that affect your cash flow—including inventory, customer sales, and invoice due dates—in real time. When you can instantly see the trends in your cash flow at any time, you can make better operational decisions with less risk.
Better Accounting Services for Your Retail Business
If you need a Naperville accountant who will help you take your retail business to new heights, call the financial futurists at Klein Hall CPAs at 630-898-5578. We provide comprehensive financial services including business advisory solutions and fraud detection/prevention. We are conveniently located on 75th Street, west of Route 59 and east of 34/Ogden Avenue.