You have decided to open a retail store and it is logical to ask questions – how to organize the purchase and sale of goods, how to monitor demand, how to get rid of unscrupulous sellers. These questions from time to time arise not only for beginners, but also for experienced entrepreneurs. In any retail store the main thing – to organize proper control. So, we will talk about management accounting of retail trade – what it is and how to apply it.
Why do you need to keep management accounting in a retail store?
To begin with, we will understand what management accounting is and how it differs from the usual goods accounting. Management accounting is a continuous and orderly process for collecting, registering, summarizing and presenting information about all business processes in a retail store. The data obtained is necessary for the store manager to make management decisions. That is, it is not only the purchase, receipt, sale and return of goods – we are talking about all the activities of the trading company.
During the management accounting the head of the retail store must perform the following tasks:
- Analyze the state of material, human and financial resources – it is important to know how much you have purchased goods, how much is invested in the organization of trade.
- Analyze expenses and revenues and record deviations from the established norms – so you will see your losses in time, for example, if you are periodically robbed, as well as in time to respond to increased demand and make additional purchases.
- Calculate different indicators of actual cost of products (works, services) and record deviations from the norm – it is important to adjust these indicators so as not to go down.
- Monitor employee performance – you need to know how your salespeople are performing, who’s making the most money and who’s seeing the returns often. This last point is very important if your sellers’ salaries depend on the amount of goods sold.
- Plan any action in advance – it is important to make decisions based on past events.
- Keep management accounts.
Management Accounting Requirements
Every manager can set his or her own management accounting requirements at a retail store, because it is in his or her own best interest. Accounting helps to increase retail store efficiency, identify risks and losses, and find inefficient and costly processes. Try to be trustworthy and do your own accounting without relying on hired staff. You should do this on a regular basis. Monitor sales and purchase prices, trade costs, demand, competition and profitability. For ease of reference, you should prepare everything in the form of reports.
Software solutions for management accounting
It’s quite difficult to make a business fully controlled. Here, retail store managers are helped by commodity accounting systems with extensive functionality, such as https://precoro.com/to/procure-to-pay-system. It records absolutely all operations in a store (purchasing, inventory, sales, write-off, returns, inventory), performs automatic accounting, generates the necessary documents and, in general, the system not only provides an opportunity to assess the immediate aspects of your point of sale, but also in the future will help to properly plan the purchase budget of the store, optimize costs and increase profits.
For the store to bring results, you need to have sufficient information about all trading operations. Recording will help you get the data you need. In retail stores, the main object of accounting is goods. Therefore, it is important to keep records of all incoming goods, keep records in the warehouse, reflect all transactions related to the sale of goods and their return.