Detail vs. Summary in Ecommerce Accounting: What’s Best for Your Business?

Quick note before we get started: There's a video with detailed examples. Jump to the end if you want to go straight there. 

I sort of threw myself into ecommerce accounting many years ago because I saw a huge opportunity. Every accountant or bookkeeper that I knew of who specialized in ecommerce accounting was up to their eyeballs and not taking on a single new customer. I even offered to split the work with one - let her work on the ecommerce accounting parts and I would handle everything else. She told me that she knew of me from my YouTube channel, and that she would love an opportunity to work with me! But even with all of that going for me, she just did not have the time. 

There it was. The writing on the wall. This was the exact moment I decided I HAD to get into ecommerce accounting. I remember it well because I was on a break from Jury Duty while I was on the phone with that accountant. This would be the first of many decisions I would have to make after learning all about ecommerce accounting.

I called my prospective customer back and told him I literally can’t find an ecommerce accountant with the bandwidth to take him on. So I would take him on with the understanding that I will be learning on him while charging him full price. He agreed. 

I was doing this long enough that I understood the accounting fundamentals very well. For me it was just a matter of putting the pieces together in the context of his business model in a way that made sense. 

As I dug in, I learned that he was using Webgility to capture all of his sales transactions and recording sales receipts in QuickBooks Online. 

Each order was processed separately. I noticed that Webgility gave us the choice to handle each order separately or summarize transactions. I stopped and considered whether or not I wanted to change this, and quickly decided not to. This proved to be the right decision. This was years ago and I believe there are even more reasons for this now.

Detail or summary: A high-level perspective

Let me backup for a minute and speak to this from a high level point of view first. Then I’ll bring it back down into the trenches. Accounting has always been about data and what I can do with that data, assuming it is reliable. For years we have been talking about moving to advisory type services and away from the compliance work of compiling books. Technology is getting smarter, especially with AI which in and of itself is getting smarter and more accurate. 

The shift in focus from the inputs to the outputs is increasing. It has to. 

This brings me to why I think it’s preferable to have the ecommerce accounting order level details and not just summary level information in QuickBooks Online. 

Let’s say I only have the summary information, and I am selling on three different channels. Then whether I am using Webgility or some other app, I’d better have really solid reporting in THAT tool. FYI Webgility does offer this, and with their new AI feature, it’s even easier to pull up SKU-level data to see what is working well and what isn’t?

You don’t have your “COGS” data in your sales channel aggregator. 

Even if you use an app like Webgility that aggregates your sales across sales channels, and assuming you have great reporting capabilities there, you still don’t have your cost data, so you only have part of the pie. So you need the detailed sales data in the same place as your cost data in order to see the whole picture in one place and pull reports. 

In short, if you have only summary level ecommerce accounting data in QuickBooks Online, then you can’t get the full picture that any ecommerce business critically needs in one place. 

As we shift to greater focus on the outputs, what we can do with them and the increasing need to do it quickly, we don’t want inconsistent systems that require consolidation of information from multiple sources. 

What we need is order level profitability in real time so we can be proactive and optimize our product lines, especially when we go into critical times like the holidays. 

The use case for summary level data and what you need to know

Some CPAs and bookkeepers I’ve talked to have told me they prefer summary level data in QuickBooks Online because all they really need is a reliable balance sheet and P&L. For a very small ecommerce business I would agree that this might be all you need. But I would certainly recommend choosing an ecommerce app that offers the flexibility to switch to detailed order syncing because as that business grows and scales they will need and want that data. And remember that your job is not to do what’s easiest for you as the accountant or bookkeeper. Your job is to do what’s in the best interests of your customers. 

If your ecommerce accounting customer starts off small and uses an app that only pushes summary level data into QuickBooks online, and then they grow to a scale where they need and want the detailed order information, it can be costly in terms of time, money, and the general disruption that comes with setting up and implementing a new accounting system. This is not good for your customer, and that is bad for your business. Imagine if at that crossroads, instead you could say to your customer, “that’s not a problem, that’s why we chose Webgility because we knew it could scale with you as your needs got more sophisticated.”

That is the sign of an accountant or bookkeeper who has their ecommerce customers’ backs. 

Will the details slow down my QuickBooks Online company?

I am only aware of one scenario where anyone has run into trouble with having order level details in QuickBooks Online, and it will only impact you if you happen to have a SKU with a ton of orders (like 25,000+). I go in depth on this issue in this article entitled, “Understanding FIFO Inventory Costing in QuickBooks Online: A Comprehensive Guide” I cover this issue near the end of the article. 

QuickBooks Online was not designed to do everything in one app. It was designed to be a solid core General Ledger Package that offers great reporting capabilities. It does that. QuickBooks Online Advanced does it even better. With light pivot table and grouping capabilities, I can get multidimensional reporting so I can give my ecommerce customers order level profitability in real time or as close as I can get. 

Whether you choose to start with detailed ecommerce accounting or go with summary level data, make sure you’re prepared to scale and that means having the option to pivot when the need arises. 

Now that you know what I think, let’s start a conversation. Let me know what you think in the comments - do you agree or disagree? Why or why not?

Final Analysis: Summary Vs Detail

Let’s see what this looks like in QuickBooks Online.