Whether you use cloud-based accounting or Epos systems, getting the numbers right will add up to a healthy business.
Gone are the days of ledgers filled with handwritten stock and colour codes. Today, independent fashion retailers face the daunting task of sourcing software systems that can analyse sales, manage stock and record customer behaviour across a number of channels, all in one fell swoop. Making the right choice is essential and making the wrong one can be a costly mistake. So what are the options?
Cloud-based accounting systems let retailers access their data online without having to download or install any software. Data is stored and accessed over the internet rather than on a computer hard drive, leading some to question the security of their sensitive information. The cloud, however, has the same level of security as online banking, so a robust password should be sufficient.
Developed for small and medium-sized businesses, the Sage One accounting suite can be accessed via mobile, tablet or computer. Costing between £5 and £20 a month depending on the sophistication needed, the system enables users to manage income and expenses, as well as run profit and loss reports. Accountants can also log in to view the data.
Within this suite, Sage One Cashbook is designed for sole traders and cash-based businesses and is linked to the retailer’s bank account allowing them to manage cash flow. Sage One Accounts is intended for start-ups and small businesses submitting VAT returns directly to HMRC online. Companies looking to trade abroad often opt for Sage One Accounts Extra, which produces invoices in foreign currencies, automatically adjusting to exchange rate movements.
Employers can link their accounts with Sage One Payroll, an online service that manages wages for up to 15 people, and Sage Pay, a service that takes Chip & Pin payments in store, online or by phone.
“Our payroll is run separately on Sage, as are our supplier records, invoice payments and management accounts,” says Hilary Cookson, owner of occasionwear independent Maureen Cookson in Whalley, Lancashire. “The system is extremely user-friendly.”
Blair Daniel, menswear buyer at young fashion retailer Concept Clothing in Aberdeen, uses Sage Pay for all online transactions. “The system makes life a lot easier as we can refund people and track any fraudulent transactions from overseas. There is a small management fee per month, but it’s definitely worthwhile,” he says.
Alternative cloud-based systems include packages from Quick Books and Xero. Ranging from £7.20 to £17.40 for a premium package, Quick Books lets retailers create invoices and pay bills automatically. The integrated payroll system also calculates national insurance and PAYE tax.
Xero enables store owners to manage bank transactions, produce invoices, view expenses and share reports. The system has recently integrated payment provider iZettle, which allows businesses to accept secure card payments on their smartphone or tablet.
Priced at £9 to £25 a month, Xero can be accessed via tablet, computer or mobile using the Xero Touch smartphone app. Data is continuously backed up on multi-location servers, meaning if one server fails services are unaffected.
The system links directly with the user’s bank or through Yodlee, a third-party aggregation service that uses online banking systems to obtain bank statements which are then fed into Xero.
“Cloud-based accounting systems like Xero help small, independent retailers by allowing them to be mobile,” says Xero managing director Gary Turner. “With cloud accounting, you can manage your accounts from any location - whether that’s in your store, at your dining table or local cafe - as long as you’ve got internet access.”
Constanza Di Gennaro, operations manager at designer independent Wolf & Badger, which has two stores in Notting Hill and Mayfair in London, agrees it is vital to access information on the go to make quick decisions. Wolf & Badger uses Xero to issue invoices, reconcile bank, Paypal and credit card payments, and keep track of transactions on different accounts.
“As an independent fashion retailer we don’t want a really expensive system that takes you weeks to set up, but at the same time in a growing company, you fear you might outgrow certain systems,” says Di Gennaro.
“Xero works well with small companies to accommodate their growth. You don’t want your accounting system to be the limiting factor in the growth of your company. A clear overview of accounts is key. When checked regularly, a good dashboard can allow you to spot issues quickly.”
Electronic point of sale (Epos) technology lets fashion retailers manage stock, purchasing and deliveries, as well as analyse sales, profit and loss, margins, sell-through and brand or supplier performance. Such systems provide an accurate view of inventory, helping retailers gauge stock levels, and track customer engagement, offering data for targeted marketing campaigns.
Some systems run off Windows on a computer hard drive, while others are linked to the cloud, meaning the system is stored online.
An Epos system can have a one-off cost of between £2,500 for a single till and back-office workstation, to £25,000 for a 10-till single branch installation, according to Grant Goulding, systems analyst at AC Plus Business Systems, a Colchester-based developer of retail software solutions for SMEs. Whereas some suppliers charge for upgrades to a basic system, others offer free modules for the first year.
Both Daniel and Cookson worked with Fashion E, a retail software specialist in Chorley, Lancashire, to develop bespoke modules for their Epos systems. “We use the Epos system to load our orders as the buying season progresses, which lets us keep up to date with our spending in all categories, by suppliers and buyer,” Cookson explains.
“We start each day with a stock floor replenishment report from the previous day’s sales. We also manage the customer loyalty system, returns, alterations and stock enquiry via the till system.”
The modular structure lets retailers select the level of functionality, offering flexibility to independent retailers who represent around 85% of Fashion E’s customer base. Indies can keep tabs on purchasing and deliveries or track stock throughout the season. Sales reports give a clear view of margins, sell-throughs and brand or supplier performance, identifying slow- or fast-moving items.
According to Fashion E business development manager Paul Parker, a basic single till stock system costs £2,200, rising to £2,875 for a single till with order management and the ability to capture customer information. The price rises to £3,000 for a single till including multichannel or website platform integration. This cost is of course higher if the retailer wants to put the system in multiple shops.
“Generally indies need to anchor down on seasonal budgets that produce a more profitable return on the brands they stock,” says Parker. “You have to remember floor space is more important to a boutique, they have to maximise the profits on every square foot.”
Daniel chose the Fashion E system for its ease of use, especially when training new staff. “At our cash desk we have two computers. On the first we use the Epos system to process all transactions, while the second computer stores the back office for the Epos system, where we add and edit stock, and print off reports on sell-throughs and best or worst sellers.”
All staff at Concept Clothing use the transactional Epos, while the back-office functionality is reserved for the management. “If you can afford an Epos system, get it,” Blair advises. “It makes day-to-day running of your shop much easier than manually changing Excel spreadsheets.”
After much research, footwear independent Tower London, which has two stores in Wood Green and a third in Walthamstow, opted for Epos technology from Cybertill of Knowsley in Merseyside to manage transactions, stock and sales reports. “The system does require initial training, but once a user is familiar with the software it is relatively easy to use,” explains Rink Bindra, Tower’s head of ecommerce.
“It is of paramount importance to research the pros and cons of each platform, as well as being mindful of hidden costs like training and software upgrades. It does take a considerable amount of time to enter inventory and sales information, but having accurate data is a necessity.”
Priced from £39 a week, the cloud-based programme allows users to assess stock levels, sales and orders. Cybertill technology can automatically raise purchase orders once stock drops below a minimum level, using algorithms to calculate how many units are needed. The system also logs customer transactions and returns, visible to staff at point of sale.
“The software monitors product life cycle, so retailers can plan how many weeks they have to sell a product before they need to start marking down,” explains Cybertill chief executive Ian Tomlinson. “Getting the analysis right means retailers need to mark down less stock and can sell more lines at full margin. It also helps identify the best opening times based on sales patterns and when additional staff will be needed.”
Cookson underlines the importance of carefully reading the figures generated by the Epos system, as they may differ from what your gut is telling you. “This analysis has to be an absolute priority from beginning to end. But, always remember that the computer can’t spot a winning style.”
Thanks to cloud-based accounting and Epos systems retailers are no longer chained to their desktops. Such systems are freeing up business owners to send invoices on their mobiles or track consumer behaviour with a swipe of the till, while simultaneously offering them a clear overview of their business.