QuickBooks + Manufacturing: It is possible!
All too often we hear from potential customers who have either purchased versions of QuickBooks that claim to handle manufacturing, or contracted with consultants who claim they can make QuickBooks fit their manufacturing processes. They all want to solve the problem of Manufacturing and QuickBooks
Needless to say, it isn't pretty, and its very expensive.
Manufacturing Software and QuickBooks
We have said before, QuickBooks is an amazing program, and that's why it doesn't work. It is perhaps the best small business accounting program out there when measured on several key metrics (things like cost, learning curve, support resources, code maturity etc . . .). But it has inherent design flaws when it comes to tracking manufacturing.
But that is not the end of the story.
Integrating the software IS the solution
When done right, integration between programs can be very effective. You get a "best of breed" concept, without compromising all the pieces. BusinessMaster, our Small Business Software Toolkit, comes already able to integrate with QuickBooks. And there is a lot of flexibility to expand on it.
We can bring data in from QuickBooks. That's a helpful element. However we push data back to QuickBooks, and thats where we see the most power.
Data FROM QuickBooks
When setting up BusinessMaster initially, importing QuickBooks data helps avoid some of the biggest difficulties in implementation: Data Entry Time, and Data Entry Errors. Simply importing Customers, Vendors, Items etc.... saves huge costs and hassle.
After setup, it is possible to import from QuickBooks to do advanced reporting and inter-relating data to the Manufacturing System.
Data TO QuickBooks
In the day to day operations, sending data to QuickBooks is a serious benefit. Here are some basic examples already available:
- Export of Invoices. When the customer is new, BusinessMaster will automatically add the new customer. Same with any new items.
- Export of Bills. When a new vendor is added, BusinessMaster will automatically add the Vendor to QuickBooks.
- Export of Payments Received against Invoices.
- Export of Journal Adjustments for Progressive Billing, including reversal of Deposits. These can be separate from A/R.
- Export of Labor Collection processed for Payroll.
Inventory: The big problem
Inventory is hard enough to manage itself. How much quantity on hand is one part of the problem, but how much it's worth is another. It's important to understand the function of Inventory Valuation within the accounting package, and then develop a process on how to handle it.
There are many ways to value Inventory on hand, and BusinessMaster provides 3 right out of the box:
- Standard Cost
- Current Cost
- Average Cost
Even these terms mean different things to different users. But at the very minimum, you can get a value of on hand inventory if you maintain your counts correctly. It takes some practice and tweaking, but you CAN do it.
The next piece is to update QuickBooks with the value. There are different strategies to do this, and it really depends on your financial reporting, your preferences, and your complexity. Essentially, we see most organizations boil it down to either of these:
- Purchase all goods to COGS(Cost of Goods Sold) and Expense accounts. When they are exported as Accounts Payable (Bills) one side of the accounting entry is A/P, the other COGS/Expense. Periodically, you count inventory, and make adjustments to the Inventory Asset accounts to the right value.
- Purchase all goods to Inventory Asset accounts. Then periodically you report on what you have used, and adjust the COGS/Expense accounts.
If the above isn't clear, trust us, we understand. We have seen very simple and very complex approaches, and they each have their merits. Any good accountant will see the issues and provide advice on how to handle it. We can adapt to how your finance team wants to run it. If your financial team doesn't know how to approach this, that is a bigger problem than HOW you track it. We aren't accountants, but we know how to work with them, and that's key.
In closing, we want to re-iterate. QuickBooks is a fantastic solution for Manufacturers, as long as they use it for the Accounting! When it comes to Item management, Inventory Planning, Production Planning, and other unique elements of the manufacturing process, stick to software designed for that. Then Integrate wherever needed.
Want to know more?
We are very interested in talking with you about your needs. We want to make sure we are a good fit, and understand what you are trying to accomplish, and the best way we know how is some quick discussion. Please contact us via the link to get the process started.