Case Studies

Dive into detailed stories of projects and transformative journeys shared here.

Ecommerce Inventory Accounting (on-going)

Rebuilt Inventory Accounting and Profitability Reporting for a Multi-Channel US E-commerce Business

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Overview

The client is a U.S.-based e-commerce manufacturer and retailer. The business sells through multiple channels, including Shopify, Amazon, and eBay, while managing inventory through a dedicated inventory management system.

The company maintains a complex inventory structure consisting of more than 900 SKUs, assembled products and kits, component-level inventory, multiple sales channels, and in-house fulfillment operations.

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The Challenge

When the project began, inventory records in QuickBooks Online were inconsistent and unreliable. Duplicate SKUs existed, some SKUs were missing entirely, and inventory asset balances did not match the inventory system.

Cost of goods sold was not reliable because direct and indirect costs were not separated, assemblies and kits lacked accurate unit costs, and inventory shrinkage was not consistently recorded. The owner needed visibility into profit by product line and by sales channel, which the accounting system could not provide.

Approach and Implementation

Inventory Reset and Reconciliation:
All SKU items in QuickBooks Online were rebuilt using an updated SKU list from the client. Opening quantities and values were aligned with inventory system balances beginning January 1, 2025.

Product Line Profitability Structure:
Each product line was configured as a class in QuickBooks Online. SKUs were manually assigned to the correct product line in coordination with the inventory manager.

Sales Channel Accounting Structure:
Separate clearing accounts were created for each sales channel. Monthly sales summary entries were recorded using sales receipts based on SKU-level reports from Shopify, Amazon, and eBay.

Assembly and Kit Costing:
Using bill-of-materials (BOM) reports from the inventory system, assemblies and kits were recorded using zero-dollar bills to transfer component costs into finished goods inventory and assign accurate per-unit costs.

Inventory Purchasing Improvements:
Purchase transactions were converted from consumable expense entries into itemized inventory bills tied to delivered purchase orders.

Monthly Inventory Reconciliation:
Month-end inventory balances were compared between the inventory system and QuickBooks Online. Item-level adjustments (shrinkage) were recorded across the catalog to ensure accurate inventory valuation.

Results
The business began receiving clean monthly financial statements, reliable inventory balances, accurate cost of goods sold, and profitability reporting, P&L by both product line and sales channel.

Client gained clear visibility into product performance, channel performance, inventory accuracy, and the relationship between profit and cash flow.

Key Outcome
The accounting system evolved into a reliable profitability reporting system for a complex inventory-based e-commerce business.