Accounting software and Enterprise Resource Planning are among the most common tools used by companies to streamline processes. It is common for managers to assume the two solutions offer similar plans for improving efficiency in inventory management. Some accounting software even touts inventory management among their features.
Implementing an ERP solution in your company will give you total control over your inventory from manufacturing to product delivery. Accounting software has responsibilities limited to the company\’s finance functions, neglecting other crucial departments. Here are some reasons why accounting software is not ideal for inventory management.
What Is an ERP?
Enterprise resource planning allows managers to track the company\’s tangible and intangible assets. The system extends its responsibilities to all departments in the organization, from order fulfillment, invoicing, job costing, order fulfillment, and inventory management. While accounting software focuses on your company\’s financial records, an ERP has comprehensive tools to streamline all business processes.
What Is Accounting Software?
Accounting software involves a set of tools used to manage your company\’s accounts. The system covers financial management responsibilities for your business while tracking and recording all business transactions, journal entries, and general ledger utilization. Companies find accounting software the best approach to achieve and maintain financial health.
What Can Accounting Software Do?
There are many tasks you can execute with accounting software. The tasks may indirectly relate to inventory management, but the system is not ideal for the function as it lacks comprehension. Most of what the software can do focuses on managing your books more efficiently while streamlining account functions.
Here is how accounting software will help your business:
Record Transactions: Your accounting department records all financial transactions of the company. The software allows your team to record the transactions, making tracking each expense, purchase, and revenue easy.
Create Financial Reports and Statements: Accounting software also helps generate and analyze unique and accurate reports using recorded transactions. It helps provide a clearer picture of your financial health and helps in making more informed business decisions.
Manage Customers: The software can help your business build stronger relationships with your customers by managing various bills and outstanding invoices. The system provides a comprehensive summary of each customer, including past-due balances.
Create and Send Invoices: You can create uniform and accurate invoices in minutes using accounting software. The system helps save time and money.
Accountant Collaboration: Accounting software does not replace the accountant but works to improve efficiency. The reports created will help your accountants with their financial tasks, allowing your team to avoid the tedious paperwork.
File Business Taxes: The software also helps with filing your business taxes. It can automatically locate the necessary data on your tax forms and calculate sales tax.
What Can\’t Traditional Accounting Software Do?
Unlimited Access to Information
Access to information when using accounting software is limited to the computers installed with the program. When the computers are not on a common server, sharing real-time data becomes more challenging. Data flow from device to device through USB or backup files increases the risk of unreliability.
Most accounting software does not allow multi-user access. The system locks you from updating specific modules when someone else is logged in to the file. It makes it more challenging for key users to access financial and client data when others are logged in.
Backing up data for your accounting software is not as straightforward as most may assume. It is common for clients to ignore making regular backups. However, not backing up your data will cause your business to lose a lot in case of a computer glitch or breakdown. Instead of closing more deals, your company will stagnate in recreating its accounting books.
What Is the Difference Between ERP and Accounting Software?
ERP and accounting software are different software. Accounting software focuses on your business\’ money flow, while ERP has a more comprehensive role. ERPs help track inventory management, invoicing, job costing, order fulfillment, and tangible and intangible assets. It shows an ERP includes accounting software features, plus more.
The software\’s ownership cost is another significant difference between the programs. Accounting software is generally less expensive to implement and maintain, which is why it is popular among small businesses. Implementing and maintaining ERP is relatively more expensive but offers a lot more.
The limitations of inventory control are also a difference worth mentioning. Accounting software often features restrictions towards inventory tracking and web-based add-ons. However, your ERP is more flexible and allows you to improve accuracy and customer service. It helps reduce stock carrying costs, labor costs, and inventory write-offs.
Why Is ERP the Ideal Solution to Track Your Inventory
Tracking inventory requires more than what accounting software offers. It would be best to have an ERP solution to achieve efficient and reliable inventory tracking as your company grows. ERPs like GoldFinch effectively control inventory across all production stages, allowing you to understand the actual value of stock tracking.
An ERP has several modules for different functions, from supply chain management to customer relationship management, when paired with Salesforce. It provides a quality solution for growing companies as tracking and accounting needs increase with company growth. Growing your business might prove more challenging if you still rely on spreadsheets.
ERP also gives you a comprehensive and integrated view of your business. Since all the company data is in a shared database, it is easy for the system to provide an integrated business view. You can use the information provided to increase efficiency and take advantage of automation.
Inventory is best handled by a high-quality ERP solution. Its integrated nature lets you see your business and its processes through one lens, facilitating several improvements. Enterprises are slowly outgrowing accounting software and understand that ERPs provide a more diverse management approach. Contact us today to get started!