A2X Newsletter | Best practice accounting tips for after the holiday sales
You’ve heard plenty from me in the first two editions of the revamped A2X Newsletter, so this time, I’m handing the mic to our incredible community of ecommerce accounting professionals.
With the holidays fast approaching, your ecommerce clients are in the thick of it: Black Friday and Cyber Monday sales, increased ad spend, a spike in returns, and more. This is their make-or-break season.
But what happens after the rush, when it’s time to account for it all? In this edition, we’re sharing expert tips and insights to help you guide your clients through the post-holiday period — a time often overlooked but packed with accounting opportunities. Whether you’re an ecommerce business owner or the accountant/bookkeeper supporting one, this newsletter has something valuable for you.
As A2X partner Phil Oakley of Outserve puts it:
“The post-holiday season is often overlooked by many ecommerce businesses, who focus so much on the festive rush that they forget about what comes next. For ecommerce and retail businesses, it’s a crucial period to ensure financial health and long-term success. This is where accountants and bookkeepers can provide indispensable value by guiding clients through key processes.”
Let’s dive in.
✅ Recharge & reset
It’s okay to take some time to breathe!
“Wrap up Q4 and make sure you provide your accountants with the necessary data and documents to finalize your annual financials. Take some well-deserved downtime in early January. Once you’ve taken a moment to breathe, it’s time to refocus on business fundamentals. Review last year’s goals and performance, and start setting your sights on your 2025 objectives. Invest time in refining frameworks and updating processes or SOPs. Conduct a comprehensive tech stack review to identify opportunities for optimization. With everything in place, begin working toward your 2025 quarterly goals.”
– Scott Scharf, Scharf Consulting
✅ Review the right financial KPIs
There are your usual financial KPIs that you should review regularly, but there are a few that you should pay close attention to after the holiday sales season.
Contribution margin
“Understanding contribution margin is critical, especially during the holiday season when sales peak. It measures the revenue remaining after variable costs, like fulfillment, COGS, advertising, and payment processing fees. Contribution margin helps guide decisions on where to allocate funds, such as marketing or operating expenses.”
– Wayne Richard, Bean Ninjas
Segment margins for important insights
“Make sure you know your COGS for your products so you can accurately evaluate your margins on an overall level, but also on a product level. This is also a time where discounts and returns can have a big impact on your margins, so ensure you have your reporting set up to show your unit economics and segment your returns and discounts so you can properly evaluate how your margin has been impacted. We like to look at this as Contribution Margin (CM) 1, 2 and 3. CM1 is just your COGS, i.e., how much a product costs (raw materials and labor) including discounts and returns. CM2 is CM1 plus your fulfillment and selling costs (pick and pack costs, storage costs and payment processing fees). CM3 is CM2 plus your direct marketing costs. Looking at your margins in this segmented way really allows you to see where you can tighten up and save next time and is invaluable in assessing your performance.”
– Hugh Robinson, Flinder
Profitability by SKU
“Look at your numbers by SKU and specialize in understanding product profitability. This approach can help you make informed decisions on marketing and inventory.”
– Cyndi Thomason, bookskeep
Returns rate
“Review your returns rate. If you sold lots of stock, but lots has come back in returns, that is damaging for cashflow and also not good for customer satisfaction. It may be that discounts offered resulted in more speculative purchase patterns from customers and it is important to evaluate this so you can plan for next time round.”
– Hugh Robinson, Flinder
✅ Have a plan for cash flow
What should you do with the influx of cash from your successful holiday sales?
“My top tip for clients post-holiday season centers on cash management. This is often when cash flow is at its peak, so it’s a great time to pay down lines of credit and set aside funds for sales and corporate tax payments. Taking these proactive steps now helps avoid surprises later in the year when cash flow may be tighter.”
– Emily Cheshire, Director, Managed Services & Technology Practice, Aprio
“The end of the festive season can mean slower sales, but recurring expenses don’t take a holiday. Rent, wages, and other fixed costs still need to be paid. Accountants and bookkeepers like Outserve can play a crucial role in cash flow analysis. Using the data from the holiday period, we can help clients forecast cash flow to anticipate any potential shortfalls in the slower months. This often means helping clients analyze their sales trends, identify high and low seasons, and adjust their spending accordingly. By building a cash flow plan that takes into account sales fluctuations, clients can avoid cash crunches during the lean months – or even take advantage of opportunities for smart investments.”
– Philip Oakley, Outserve
✅ Check sales tax/VAT compliance
Extra sales might mean extra liability.
“Being a busy period, it may tip you over a threshold you were not hitting previously, resulting in the need to register for VAT or for sales tax in foreign jurisdictions. For UK sellers, it is also likely to result in an increase in your VAT payable for your next VAT return, particularly if you are on calendar year returns, as November and December sales will all be captured in the same return. So make sure you have enough cash to pay the extra liability that is likely to be due.”
– Hugh Robinson, Flinder
“This is also a prime moment for proactive tax planning. Christmas often sees a surge in income, which can affect a client’s tax liabilities. By examining the year-end financials early, accountants can ensure that clients make appropriate provisions for taxes and take advantage of any tax breaks or deductions that may apply — such as writing off unsold inventory or reinvesting in business assets. Tax planning now means fewer surprises when year-end tax deadlines roll around and helps clients use their earnings in the most strategic way possible.”
– Philip Oakley, Outserve
✅ Don’t forget inventory counts & analysis
It’s a key time of year to get a thorough understanding of your inventory.
“This might seem basic, but you’d be surprised how often it comes up. Don’t forget to take an inventory count as of December 31st – and avoid making it up just to finalize your taxes by September 15th! Doing an inventory count in early January will help keep your balance sheet accurate, and helps easily support your ending inventory value at year-end if the IRS ever decides to audit your business. It’s key for calculating cost of goods sold (COGS) and taxable income, staying tax compliant, spotting shrinkage, and setting up smart plans for the new year.”
– Chase Insogna, Insogna CPA
“The aftermath of the holiday shopping rush often leaves ecommerce businesses with fluctuating stock levels. At Outserve, we help our ecommerce clients assess inventory to avoid cash being unnecessarily tied up in unsold products or overstocking on items that are no longer in high demand. We use Inventory Management Solutions such as Unleashed, CIN7 and Finale Inventory to identify this stock.
We also encourage clients to categorize inventory into fast-moving and slow-moving items. With the right inventory management insights, they can identify which products need to be discounted to free up cash and which items might require restocking. Using cloud-based inventory management software can also make this process easier by enabling real-time tracking and smooth integration with accounting systems like Xero and QuickBooks Online. By understanding stock levels and balancing cash flow, ecommerce businesses can maintain optimal inventory and prepare for the quieter months that typically follow the holiday season.
– Philip Oakley, Outserve
“In addition to an inventory count, I would recommend an inventory analysis, both prior to the holiday rush and at year end. Look for slow moving, obsolete or impaired products. See what should be disposed of to clear shelf space or to reduce Amazon storage costs. On the slow moving items, can you reduce the sales price (thinking BF/CM) to move the product and convert to cash prior to having to dispose?”
– Jay Kimelman, High Rock Accounting
“Another thing to consider is returns. With the holiday season, you might expect a higher volume of them. Sometimes they need to be scrapped, but other times they can be donated – and what better time of year to give back than now?”
– Laura Pilkington, Accounting Elements
✅ It’s also a good time to…
Negotiate payment terms with suppliers
“Evaluate and optimize shipping and fulfillment costs. Off the back of a busy period, you hold more negotiating power than when times are quiet so get conversations lined up with your 3PL or shipping suppliers to make sure you are getting the best deal and value for money.”
– Hugh Robinson, Flinder
Start thinking about next year
“I would say there might be more to do BEFORE the big holiday push, like making sure you have all of your best sellers ordered and received on time. I would also recommend doing inventory counts twice per year – once in the summer, and once in the November/December time frame. And don’t forget about clearing accounts! We check clearing accounts monthly, but if you’re the type that doesn’t like to reconcile these every month, I’d sure do them before year end – we find all sorts of weird stuff in these accounts.”
- Laura Pilkington, Accounting Elements
Want us to dive deeper on any of the recommendations above? Email contact@a2xaccounting.com and let us know!
P.S. We’re hosting a webinar all about building an inventory accounting workflow with LedgerGurus’ Brittany Brown. Sign up here.
