In the world of fashion those who ‘walk’ or ‘design’ are often in the spotlight. But, one of the crucial gears that keep the industry running is accounting. And, The foundation of accounting, which is more strategic at its core, is ‘Bookkeeping’.
Bookkeeping is looking at a set of bank accounts and credit cards and categorizing the revenue and expenses correctly. This is needed so that a business owner knows what is happening in their business.
For fashion and apparel companies, financial precision is the key to sustainability. Efficient bookkeeping helps business owners manage their budgets, sales, and cash flow. This ensures that fashion companies can allocate their resources effectively. Organized bookkeeping prevents overspending on inventory, for example. And, although the importance of bookkeeping is a fact, many early fashion companies delay bringing on someone to help them with their numbers. The following list provides the areas where bookkeeping serves as a change-maker to early-stage fashion companies.
Bookkeeping for Inventory
Like any other inventory-based industry, the fashion industry's biggest challenge is the management of raw materials and finished goods. Bookkeepers work with demand planners and can help business owners understand how much cash they have available to order new finished goods.
For manufacturers, converting raw materials costing into finished goods with unit costs is a challenging process. A bookkeeper will do the basic managerial accounting. They will record the cost, and the unfinished inventory balance, and help a business owner understand the margin they’re making on each unit. This information helps an owner make decisions about how much to scale their marketing spend, as well as whether to diversify their product set.
Bookkeeping for Taxes
The fashion industry is confronted with various types of taxes: sales, VAT, etc. Business owners in the industry need to invest their time and energy in their creative processes – to build beautiful products. Bookkeepers with up-to-date taxation knowledge can work with a CPA to help business owners save and be in compliance.
Bookkeeping for Reporting
The fashion industry is constantly trying to please many stakeholders all at once. Bookkeepers must present accurate reports that reflect the actual progress of the business so that each of these stakeholders can understand what’s needed from them.
Whether it's a cash flow statement to plan a production order or a balance sheet presentation to secure credit, business owners can only make the right decision when they have the right reports that present the actual health of a business.
Use Bob’s Bookkeepers
Bob’s Bookkeepers understands the importance of strong bookkeeping and its impact on strategic decision-making. If you are facing challenges in your bookkeeping (the numbers don’t make sense) or you are unable to produce reports that can help you in your decisions (they make sense, but you don’t know what to do with them). We’d be glad to help you. Go to this link and contact us.
