Flawless DTC/ecomm real-time bookkeeping & tax using Finaloop
38 6th Ave Brooklyn, NY, 1121
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Tired of late and inaccurate accounting?
It’s time for a change. It’s time to get smarter.
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1/Call it supply chain, call it value loop - one thing's for sure: today we announce a $35M Series A funding led by @lightspeedvp thanks to the ecosystem’s belief in our mission to help DTC founders become financially savvy, profitable, and FINALLY trust their numbers.
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We manage bookkeeping for hundreds of DTC brands.
These 6 common accounting mistakes may be costing you millions:
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You might know Matt Kelly (@Matthucius) as the founder of @Spacegoods.
But before Spacegoods, he scaled another brand to €10m+ in just 18 months.
Then he lost it all.
The mistake?
Not understanding cash management.
Here’s the story and 6 of his hard-earned lessons:
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We’ve reviewed 200+ ecommerce brands’ bookkeeping.
We’ve seen the good, the bad, and the ones that should be sued for negligence.
Here’s a real-life example from a brand we audited:
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If your business is an LLC or LP, you can save tens or hundreds of thousands of $$ by converting to an S corp.
Made $500k in net income?
→ You can save about $50k/yr
Made $1m in net income?
→ You can save over $100k+/yr
Here’s what you need to know:
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Your P&L is crucial to knowing how well your business is doing.
We’ve seen the structure behind the brands that scale to 8 figures and beyond.
They all include a well-defined Chart of Accounts.
Here’s how the best structure theirs:
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Let's recap.
How to avoid losing money through accounting errors:
1. Focus on net revenue
2. Track your variable costs
3. Properly calculate inventory costs
4. Understand the cost of financing
5. Simplify sales tax compliance
6. Use a Chart of Accounts specific for ecommerce
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Just remembering how @obviceo said 2023 is the year of Finaloop.
Let's goooo.
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How fast can you turn your inventory into sales?
Your cash conversion cycle (CCC) says more about your brand’s health than the $XX millions you made in sales.
Here’s why: 🧵
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This mistake costs brands MULTI-MILLIONS in taxes:
Brands that operate using the wrong entity type.
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GoDaddy Bookkeeping discontinued...Finaloop is a great, affordable alternative: software + FULL accounting service 100% for ecommerce brands
Never deal with bookkeeping again!🚀#ecommerce #Shopify #dtc #amazonseller #ebayseller #ecommercebusiness
Here 👇
piped.video/watch?v=YoM2B4gx…
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If you’re an S corp and don’t want to be audited by the IRS, read this 🚨:
One of the TOP causes of IRS audits for S corps is not paying yourself a high enough salary. Here is what you need to know to stay off the IRS’💩list.
A thread 🧵
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Financing options like Merchant Cash Advance (MCA) are popular with ecommerce brands.
But many have no clue how they *actually* work.
Some brands even end up paying fees equivalent to 299% APR 🤯
Here’s the truth about these kinds of ecommerce "loans":
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There’s an easy tax benefit that you can implement TODAY for free and it will give you huge tax savings.
This is the #1 tip often forgotten by S and C corp owner-employees. The result? Leaving easy money on the table.
Here’s all you need to start saving:
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@oliverbrocato scaled Tabs Chocolate to $11 million in sales in less than 18 months.
... but
There was one thing holding him back from scaling it further.
In this thread, we'll dive into the one thing that was holding him back and how he solved it
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BIG NEWS: Inventory chaos costs you time & money.
So we fixed it.
Meet InventoryIQ, the 1st inventory solution built into an ecommerce accounting software.
@Lioranpi’s thread breaks down how it can completely transform your business.
Ready to fix yours? Our lines are open.
1/ 🚨THIS ONE IS BIG🚨
You see, we never planned to build an inventory management solution.
We were forced to. 🦾
And not only because every other brand operator wanted it badly.
But also because all the tech companies that have tried to solve inventory for multi-channel consumer brands thus far have done so by building standalone systems that externally integrate with operations and accounting. It’s a solid attempt.
Which always ends up complex and messy.
Simply because inventory was never supposed to be adjunct to your financial ledger.
So you end up using spreadsheets. Or, buy a sledgehammer to crack a nut... in the form of an ERP.
This made us realize: Finaloop is in the perfect position to solve it.
And the opportunity to make a huge difference for founders was just too big to pass on.
That’s why…👇👇👇
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We’ve handled $100,000,000+ in transactions for DTC brands.
9 things every early-stage DTC founder should know about accounting:
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🚨stop scrolling now 🚨
You're not gonna want to miss this! Real-time COGS for Shopify is finally here. Check it out!
If I told you, you can see your Contribution Margin in REAL-TIME, you'd say IMPOSSIBLE right?
I get it, it's probably because:
You don't really know your COGS 😱
Or your Gross Profit 😡😡
Or Contribution Margin 🙀
Or Operating Cash Flow💀
Until it's TOO LATE!! 💩💩
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ROASTING ROAS.
A must-read for DTC marketers, founders, and finance folks, too.
Thanks, @souravghosh, for a fantastic first-person account and an insightful piece!
finaloop.com/blog/cmo-master…
6/6 Want to know how a marketing expert went from "growth expert" to actually driving profitable scaling?
Full story - a fantastic first-person guest post from Sourav - is here (warning: contains financial real talk)👇
finaloop.com/blog/cmo-master…
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There should be a support group just for talking about the finance side of scaling a brand.
Would you join?
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🚨 New Video:
How Obvi scaled faster using real-time financials
In this video, we dive into how @obviceo utilizes real time cashflow to successfully grow and scale their business.
piped.video/djbqU9MTpuI
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Trying to keep track of all the different state sales taxes should be classified as an Olympic sport
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3. Poor inventory management
Managing multichannel inventory is one of the biggest pains for brand owners.hard.
So, understandably, brands often miscalculate inventory costs and COGS.
(Honestly, this can’t fit in one tweet so… another thread coming soon!)
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6. Using a generic Chart of Accounts
A CoA is essentially the breakdown and structure of your finances. It shapes how you view and think about your finances.
The one you use should be specific to ecommerce in order to give you the info you actually need.
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If you can't look at your financials and immediately know your:
- sales
- COGS
- ad spend
You’re making miscalculated decisions.
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1. Focusing on gross revenue
Planning to raise capital in 2023?
You need to know your NET revenue.
Not just your top-line revenue.
Things like refunds, promotions, and sales tax easily bloat your gross revenue.
Investors will want to see what’s coming in after all of that.
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Plan to eventually sell your business?
Even if it’s just a thought, there’s a way you could save MILLIONS.
Most brands don’t know about it:
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6/@LindsayVeseyVC @yairwein @yoavnaveh @jackybh @JeffLow791 @JonAlbertBlair @ImChaseMohseni @ShaanVP @AriSavitsky @obviceo @RomeenSheth and the Twitterless Martin Gibson
So many tags, so much work ahead!
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Bookkeeping can be done by machines
Bookkeeping can be done by machines
Bookkeeping can be done by machines
Bookkeeping can be done by machines
Bookkeeping can be done by ma...
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4. Not understanding the costs of financing
Ecommerce financing has different rules.
Merchant cash advances from companies like Shopify Capital, Clearco, Wayflyer, etc. are different from a traditional loan.
You need to understand the APR and how they work for books and taxes.
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With such a strong network of DTC finance experts, we thought - hey, why won't we bring their voices all into one place, for you to easily consume golden nuggets of actionable knowledge?
No reason. Besides the possibility of otherwise taking longer coffee breaks, maybe.
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Which would you rather have?
A - 30% profit margins, but low LTV
B - 15% profit margins, but high LTV
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We
really
really
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really
really
really
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really
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want you to fully understand your financials
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CAN CONFIRM: another thread is incoming 👀
Follow along if you want to make 2023 your brand's best year ever
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2. Miscalculating your contribution margin
Variable costs quickly eat at your profit margins.
Consider your product COGS:
- Freight-in
- Product manufacturing
- Supplies & materials
You should also include your other variable costs:
- Shipping-out
- Merchant/processing fees
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Here is what you can deduct when traveling for business....don't miss out on any of these deductions!
🛫 Flights
🚕 Cabs, Ubers, Rental cars
🧳 Baggage fees
🛌 Lodging- Hotel & Airbnb
🍔 Meals
🧦 Essentials- dry cleaning, laundry, wifi feed,etc
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It's real. And it's Spec.Ta.Cular.
finaloop.com/inventory-iq-pr…
"That's just a tool that just doesn’t exist.”
He wasn't wrong. When @ramongberrios said it - on episode #270 of DTC Pod back in April 2023 - it was a 100% true statement. Cut to right now - that statement is 100% wrong :)
Because, as some of you already know, last week the amazing @FinaloopTeam released an inventory management solution that was built right into an accounting software.
Back when I discussed the vision of doing so - molding inventory and accounting natively into one platform - I was especially excited by how Ramon and @bbols4 immediately - instinctively, inherently - understood why it's such a game changer.
“That gets really interesting because you can start getting into better and better forecasting with your cost of raw materials," Ramon said, and continued: "Are you forcing a change in inventory prices for the future? What if volume is X? What's going to be the exact profit margin? Etc."
All of these are critical questions any DTC and multichannel brand founder should be asking themselves, and their (usually fractional) CFOs on a regular basis.
That's the kind of thinking and strategizing needed to succeed nowadays. That's what we're here to help you all achieve.
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👎🏾 The Problem With Traditional Bookkeepers
We sat down with @oliverbrocato , the founder & CEO of Tabs Chocolate to understand why he moved away from traditional bookkeeping.
What has been your experience with traditional bookkeepers?
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Reminder to every founder
There is no strategic benefit to being the second cheapest in the marketplace, but there is for being the most expensive
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Federal taxes are a headache for DTC brands.
Every year they become more complex.
So, here are 9 rule-of-thumbs & important dates EVERY business needs to know.
Bookmark this...
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If you're a DTC founder and not following @TaylorHoliday, then... what do you do on Twitter*? :))
* (excuse us. "X")
CEO's you need to become OBSESSED with understanding your P&L.
Here are 5 red flags to send back to your accountant to fix...
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📝 Sales Tax is NOT Revenue!
Don't include sales tax as revenue—it's a liability owed to state taxing authorities, not part of your earned revenue.
Is sales tax recorded as a liability on your balance sheet?
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82% of small businesses fail due to cash flow problems.
Okay, so, why won't brand founders, for example, just take better care of their cash flow?
Oh. It has to have something to do with, you know, knowing what's happening in their financials.
finaloop.com/blog/eroded-pro…
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Want to make our New Year?
We're 6 people away from 200 followers.
You'll want to follow us if you:
- Eat, sleep & breathe DTC finance
- Care about having accurate books
- Plan to completely dominate 2023
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👇🐐 🙏
great job @Lioranpi - Been a finaloop user and investor for a few years now.
Awesome product, I recommend to any DTC founder.
Finaloop >> quickbooks
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🤔 How cashflow impacts decision making
Cash flow is a vital aspect that significantly influences decision-making in various aspects of life, be it personal finance, business operations, or investment strategies
How is cashflow impacting your decision making?
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PSA: There are more important metrics than those you'll find on your Shopify Dashboard
... and if you're not tracking them
You're NGMI
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Subscribing is easy as…
1. Finaloop >> lnkd.in/dQZcJgwn
2. YouTube >> lnkd.in/d8Ap-FHV
3. Spotify >> lnkd.in/diJNuNFu
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What's worse?
A - Shipping delays.
B - The costs of overstocking.
C - Other... (so many options here)
Whatever your poison is, one thing's clear; subpar inventory mgmt is a pain almost all DTC founders feel daily. Ugh, if only there was a solution...
finaloop.com/blog/the-true-c…
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Sunk cost is a fallacy.
If something is not working… it’s not working
You need to be brave enough to say: We messed up. Now it’s time to pivot
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🔑 This is key to running your ecom business!
An ecommerce focused chart of accounts enables better decision-making and the ability to reach your goals.
Do you have a comprehensive chart of accounts for real-time data and informed decision-making?
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Shoutout to every founder and CFO working to finish 2023 budgets before the holiday.
We see you 🫡
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If you’re trying to raise money
The worst thing you can do is scare off your investors by showing them you don’t have your finances in order
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Great product ✅
Great website ✅
See the full site here:
finaloop.com/
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This is your reminder to stop tasking a fractional CFO with doing your bookkeeping.
Their time (and your money) is better used planning for the future of the business.
Automate the bookkeeping part.
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Whoow, team is on fire 🔥🔥🔥
- @Bench to Finaloop migration website ✅
- Dedicated onboarding, connection and migration process ✅
- 2024 FREE books close for Bench ecommerce customers who prepaid and got left out of pocket ✅
finaloop.com/migrate-from-be…
#ecommerce
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You spend hours trying to reconcile your financials.
I track financials in real-time. We are not the same.
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Reading long-form tweets is nice and all but...
I don't need 4,000 characters to tell you generic bookkeeping is killing your business.
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Founders need to know how to be hands on @Lioranpi and @Imchasemohsen
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Did you know that in 2022 - Amazon’s average cut for each sale on Amazon was 50+%.
Meaning, for every $100 you sell on the platform, it costs you about $15 in selling fees, $20-35 in FBA fees, and about $15 in advertising costs.
Is it too much, or is it justified by the reach?
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There are two types of ecom CFOs in the world:
Ones who rely on old school bookkeeping firms
Ones who use Finaloop for accurate, on-time reporting
I know which one I want on my team
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If they mighty - think, Peloton, Beyond Meat, Rent the Runway, Allbird, and even Walmart - can screw up their DTCs because of subpar financial precision... surely the rest of us can't afford such slips. Right?
finaloop.com/blog/financial-…
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