Why Finaloop is the Best Bench Alternative for DTC Businesses

Key Takeaways for Ecommerce Brands:

1. With Bench's shutdown announcement and ensuing fiasco surrounding its apparent sale to a new company called employer.com affecting thousands of online sellers, ecommerce businesses need a specialized accounting solution that understands the complexities of ecommerce brands.
2. Traditional bookkeepers often struggle with ecommerce-specific challenges like accurate COGS calculation, landed costs per SKU, and timely reconciliation across multiple platforms.
3. Finaloop offers seamless migration from Bench, providing real-time financial data, automated reconciliation, and deep ecommerce expertise - making it the ideal solution for DTC brands and Shopify sellers seeking stability and growth.

Businesses seeking Bench.co alternatives for eCommerce righty now - timing is critical. Now that Bench's death as a trusted, stable provider is final, and the wake process is commencing, former Bench customers are a) scratching their heads (how did this happen) and b) trying to land on their feet and figure out what to do. The Bench shutdown and ensuing Bench acquisition by employer.com drama has left many wondering about their next steps, especially in the fast-moving ecommerce space.

Amid all that uncertainty, one thing's clear: when it comes to ecommerce brands, there really isn't too much of a dilemma here - one of your go-to moves should be to seriously look into Finaloop, the fastest-growing ecommerce accounting service in the US.

This assumes you want real-time, fully reconciled financials that you can trust (if you don't, we have quite a few recommendations). But as businesses explore each eCommerce bookkeeping alternative to Bench, the choice becomes clearer.

Before we dive deeper, let's establish why we emphasize "ecommerce accounting" and why you don't want to use a generalist bookkeeper when you have an eCommerce brand. With many companies now looking into Bench accounting alternatives after Bench closure announcement, understanding these distinctions is crucial.

Starting out is the sales side. eCommerce brands can have sales on just one channel (let's say Amazon or Shopify), multi-channel (Amazon and Shopify, for example), omnichannel (a combination of on- and offline), and any combination between retail and DTC. All of that sales data must be pulled, somehow, into the financial statements. In this reality, finding the right ecommerce bookkeeping solution for DTC brands has never been more critical.

The Challenges Facing Generalist Bookkeepers in Ecommerce

Running an ecommerce business without ecommerce-specific bookkeeping and accounting service supporting you leads to several challenges:

1. Making sure that the bookkeeping team has access to all of the data from all of the seller's channels.
2. Making sure that the data is accurate. To properly account for the data, your bookkeeper can't (and shouldn't) take the bottom line of net sales that pull from some of the data sources but, instead, needs to provide a breakdown of what exactly that data is composed of. This means total sales, minus refunds, returns, discounts, and promotions, finally giving you your net sales.
3. Ensuring that the data is timely. These days, in business in general, and especially in eCommerce, when timing is of the utmost importance, having timely financials is crucial to making sure that you and your business can make the most informed decisions possible.

While businesses consider how to save Shopify financial data from Bench Accounting, a generalist bookkeeper may not have sufficient access to your various data sources, stores, and other tools. Even if they do, they likely do not have the know-how or integrations to pull that data accordingly.

Lastly, even if they pull that data, they probably won't know how to segment gross to net sales or how to pull that data in a timely manner that will give you real-time financials.

As companies prepare to migrate from Bench Accounting to ecommerce-specific services, the second main challenge is inventory and COGS accounting. The ecommerce migration from bench accounting makes this particularly relevant. As opposed to other business models (like SaaS), which have minimal inventory and COGS, eCommerce, as we all know, is inventory-heavy.

A lot of generalist bookkeepers will only give you cash-based (and not accrual-based) books. While this may be easier, and perhaps a little cheaper, it will not give you a good picture of your company's health.

That's becasuse in months where you purchase inventory (let’s say July/August), you will have a huge expense, as opposed to months in which you mostly sell (BFCM/holidays, etc) - where you will have a huge uptick. This will not give you any idea of your profitability or pricing strategy efficiency.

Several challenges exist when calculating the landed cost in bookkeeping that uses accrual-based accounting. Chiefly among them is the need to calculate the landed cost per SKU. Because, in order to provide comprehensive inventory and COGS accounting, your bookkeeper needs to know exactly what each SKU comprises.

Simply put, the bookkeeper needs to know the landed cost per SKU to a tee - all manufacturing costs, shipping-in costs, tariffs, insurance, transfers between warehouses, etc. - all costs until the final warehouse. That cost is booked initially to inventory, and recognized as COGS upon sale.

This raises two challenges:

1. Understanding the landed cost: this gets exponentially more complex when the landed costs are composed of a complex recipe and compilation methodology. You could order ingredients from various suppliers, compile them at one warehouse, and then ship them to the next warehouse.
   To deal with this complexity, most bookkeeping firms ask the customer to estimate the landed cost per SKU and use that figure for inventory and COGS accounting.
   Alternatively, they could use inventory management systems, which (presumably) integrate with POs and other expenses, and calculate the landed COGS per SKU.
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2. Understanding how many units per SKU were sold. In other words, to calculate the COGS, the bookkeeper needs to understand how many units to decrease from the inventory (and correspondingly increase to COGS).
   This may sometimes be taken from the sales channel (such as Shopify or Amazon) or, if the sale is to wholesale or another channel, uploaded by the client, letting the bookkeeper know exactly how many units were sold.

For those undertaking Bench Accounting migration for ecommerce sellers, it is likely that your generalist bookkeeper doesn't know how to do accrual accounting that is tailored to eCommerce, DTC, pr multichannel. Even if they know how to account for your COGS/inventory, the complexities regarding SKUs and units sold will make it very difficult to account for this properly. Not to mention the scale of online businesses.

So, we've established that industry specific ecommerce bookkeepers are definitely the way to go. For those looking to switch from Bench Accounting to ecommerce-specific services, now you may be asking yourself…

Why Finaloop?

Besides being recognized by many as the best Bench migration option for Shopify and DTC brands, along with the affordability vs competitors and immaculate and cool UI, Finaloop provides two main advantages that are unmatched and unrivaled in the ecommerce bookkeeping and accounting industry:

1. Real-time financials: Finaloop is a company built of software engineers and top-notch accountants. Many of our proprietary APIs know how to pull data from the source in real time, which means that instead of waiting two weeks for the Amazon data to clear, you will get access to this data immediately in your Finaloop account.
   So, instead of getting your financials by the 15th/20th of the next month, you will have constant access to your financials on a real-time basis. Having real-time financials is key to gaining insights into your business's health and profitability.
   This will allow you to make real-time decisions related to your pricing (am I discounting too much? Perhaps not enough?), your total pricing vis-a-vis your gross margins, your Opex, etc. This is unmatched in the market.
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2. Accurate financials: Finaloop’s financials are not only timely but also accurate. Using our proprietary technology, we automatically reconcile your online shops, payment processors, and banks, allowing us to match every transaction fully and ensure nothing falls between the cracks. This methodology also allows us to provide granular cash flow statements, which take undeposited funds into account.

Bringing everything to a wrap - eCommerce is not an easy business to run and grow. Getting hit by Bench's closure and ensuing drama right before year-end is tough, but with quick ecommerce bookkeeping migration after Bench shutdown becoming a priority, migrating over to Finaloop will provide you with real-time, fully reconciled financials, that you can actually trust and use to grow your business.

Finaloop is here to help clients affected by the Bench.co closure:

• Building (as you're read this) a dedicated Bench-to-Finaloop migration tool
• Offering you 2024 catch-up services FOR FREE
• Guaranteeing 1.5-week delivery time for full-year financials (cash/accrual accounting) with a money-back guarantee

Talk to one of our ecommerce finance experts to get all the support you need - with our dedicated onboarding experience to ex-Bench clients.