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If dealing with money get as close as possible to double entry bookkeeping

That way you will be able to track incoming and outgoing from the start, immediately be able to reconcile, give finance a proper insight and make due diligence easier down the line.

Money is sensitive

The moment you start handling money, everything gets ten times more serious. Everything needs to be tracked and needs to tally.

So there needs to be a detailed income and expenditure statement for each entity

Essentially, a double-entry bookkeeping structure is ideal, but that often takes too much work. So, you should get as close as possible to that.

Not having this view in the application interface means you’ll have to reconcile things through the database manually.

It means no alerts for discrepancies, no reporting, no export.

It also makes your finance department’s job more difficult since they’ll have to be asking you for these reports.

And when you reach a stage where you have to provide reports for due diligence, this becomes even more important and complicated. It’s also too late to start building it.

Instead, the moment you start collecting money, you should make the interface to see the income and expenditure for every entity: supplier, buyer, order, and your business.

And break down derived values

Each of the derived values should be accompanied by the components as well.

An example result might be a report that lists orders with the following columns:

  • Order total (the amount the customer paid)
  • Supplier total (the amount from the total the supplier will receive)
  • Discounted amount (for instance, if the customer is using a coupon)
  • Store credit amount (for instance, if the customer got refunded in-store credit instead of cash)
  • Shipping fee
  • Your income
  • Any of your costs (for instance, if subsidizing with a coupon or covering the shipping charge)
  • Payment provider fee
  • Your profit

When calculating profitability, you can add the relevant columns such as gross and net margins to this report as well.

You’ll also have peace of mind because you’ll be able to verify your calculations.

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