E-commerce accounting challenges and digital solutions: the case of Lithuania

Abstract

<p>E-commerce, one of the fastest-growing business sectors both in Lithuania and globally, poses complex accounting and tax challenges. It is important to identify which digital technologies are or can be applied to address these challenges and to determine which areas require improvement. This study examines the challenges faced in e-commerce accounting and how digital technologies can help solve them in Lithuania. The study applies methods such as related scientific literature analysis, interviews, and case studies. Interviews with accounting companies highlighted the practical challenges of e-commerce accounting in Lithuania. A case study of Lithuanian accounting software examined which digital solutions are applied to tackle e-commerce accounting challenges. The study revealed that the main accounting challenges in Lithuania’s ecommerce are related to the different value-added tax (VAT) rates when trading in various countries, real-time inventory tracking, revenue recognition in multichannel sales, accounting for various payment methods and currencies, and integrating and aligning different e-commerce platforms. Accounting software in Lithuania provides digital solutions like application programming interface (API) solutions, synchronization of data with trading portals, and importing large volumes of reports. However, most existing solutions are expensive and require customization, limiting their accessibility to smaller businesses. In Lithuania's e-commerce sector, more accessible and universal solutions must be developed. There is a need for standardized reports from trading platforms, improved capabilities for data import and exchange, and the integration of artificial intelligence (AI) for accounting data processing. These solutions would help ensure more accurate and efficient accounting, positively impacting business process efficiency and overall competitiveness.</p>