In short

Retail accounting turns POS and inventory data into buying and pricing decisions: gross margin by department, inventory turnover, sell-through, markdown cost, shrink rate and open-to-buy planning. It includes cash forecasting around seasonal purchases, budget comparisons, vendor terms analysis and year-end inventory valuation support for the tax preparer.

Margin and turnover by department

A department with high margin but slow turnover may tie up more cash than it earns. We report gross margin, inventory on hand and turnover by department, so buying decisions balance profit and cash.

Markdowns and shrink

Markdowns and shrink both reduce margin, for very different reasons. Reporting each separately shows whether pricing, buying or loss prevention needs attention.

Open-to-buy planning

Open-to-buy is the budget for new purchases in a period, based on planned sales and target stock levels. We build a simple plan from your history so seasonal orders fit the cash available.

Vendor terms

Payment terms from suppliers are a source of working capital. We summarize terms and early-payment discounts so you can decide which to take.

Inventory valuation

The IRS explains inventory methods in Publication 538 and Publication 334. We document the method you use and reconcile year-end inventory for your preparer.

Reporting we prepare

Retail margins hide inside product mix. Our monthly reporting shows gross margin by department or category, inventory turnover, markdowns and shrinkage, and sales per labor hour. We compare inventory on the balance sheet with your point-of-sale inventory valuation each month and flag differences. Seasonal businesses get an open-to-buy style view of planned purchases against expected sales, and a cash forecast that accounts for inventory buys ahead of busy periods, loan payments and sales tax remittances.

Owners also see year-over-year comparisons by month.

Key terms

Definitions for terms used on this page:

  • Working Capital: Working capital is current assets minus current liabilities, the resources available to run day-to-day operations.
  • Balance Sheet: A balance sheet shows what a business owns, what it owes and the owners' equity at a specific date.

Retail Stores problems this addresses

  • Daily POS totals must be matched to card batches and cash deposits
  • Inventory is the largest asset and shrink is hard to see
  • Sales tax collected must be kept out of revenue
  • Seasonal buying ties up cash months before the selling season
  • Discounts, returns and gift cards distort reported sales