Accounting for manufacturing businesses is complex as it has a lot to deal with inventory valuation and costs of goods sold to determine the most appropriate value of the finished items.
Generic accounting software or spreadsheets do not have the capabilities to address such complex requirements. Therefore, manufacturers need dedicated accounting solutions to help them make sound business decisions.
Having the right manufacturing accounting system helps minimise unnecessary expenses by closely monitoring inventory and design optimised costs of finished goods.
Read more: How the right technology can help high tech manufacturers
Why do manufacturing businesses need an accounting system?
The short answer is: to improve efficiency. Imagine the accounting staff has to manually copy transactions from one spreadsheet to another. Not to mention, multiple spreadsheet files have to be sent back and forth before approval, which can lead to misinformation, dated and siloed data.
Without accurate, quality and timely information, manufacturers will not be able to gain a complete view of the financial health of the business. This is where accounting software comes in to automate various tedious and repetitive accounting tasks, thus increasing the accounting staff efficiency and productivity.
In addition to keeping finances organised, accounting software also helps businesses stay compliant with changing regulations and tax laws. Moreover, modern accounting solutions today, particularly cloud-based options, are highly secure and extremely user-friendly. Manufacturing businesses can quickly dive into using the software right after deployment.
Read more: 5 compelling reasons why you need cloud accounting software today
Must-have features for manufacturing accounting software
Manufacturers often invest in an all-in-one solution, which includes not only a module for financials but also modules for planning, production, administration and so on. This suite of modules is known as an enterprise resource planning (ERP) system.
If your firm decided to choose a stand-alone accounting solution, make sure that you select one that has capabilities to integrate well with other systems your plant currently housing. The seamless integration allows data to flow smoothly from the production belts or merchandise shelves to the back office. As a result, you always have in your hand real-time, accurate data.
There are many options for you to choose from when it comes to accounting software. Firms now have the flexibility to deploy their enterprise applications on-premise, in the cloud, or choose a hybrid option.
General ledger, accounts receivable, accounts payable are standard core features that come in all accounting systems. Some solutions also include project management, time tracking and payroll tools for higher-tier accounts or offer as add-ons based on specific business needs.
Below are several essential features that manufacturers should consider when looking for accounting software for their business.
Inventory management
Storing an excessive amount of unused inventory can crank up costs. The inventory management module allows manufacturers to optimise their inventory strategies, alerts users when the stock reaches certain levels so they can replenish. Manufacturers will be able to maintain an optimal amount of raw materials, work-in-process, and finished goods.
In addition to knowing what the business has in stock, the module also allows users to track inventory and each product life cycle, set targets and levels to prevent over/ under purchasing materials, and include stock locations/ images for easy identification.
Many accounting solutions offer integration with Bill of Materials (BOM) management tool to automate the process of updating individual component profiles, which further enhances the accuracy and consistency of production, so the finished product is precisely valued.
Order management
Order management module gives businesses the ability to process and track orders, payment statuses, and invoices using one centralised system.
Integrating order management into the accounting system removes the need for re-entering data. From processing orders to invoicing, payment, and transaction postings, all occur automatically and are reflected immediately in accounts receivable/ payable and General Ledger.
The automation creates a standardised process from one single platform, freeing manufacturers up to focus on other mission-critical tasks. Manufacturers are also able to gain a better view of the entire fulfilment ecosystems, quickly identify errors or customer dissatisfaction due to incorrect invoices or transportation errors.
Asset management
Manufacturers should also consider an accounting solution that integrates well with an asset management system or has a module specifically built to manage assets.
By closely keeping tabs of all asset life cycles, manufacturers will be able to identify wasteful purchases and invest more on pieces of equipment that are truly beneficial for the workers.
Read more: Overview of leading enterprise asset management software vendors
The module is particularly handy in helping accounting staff to accurately calculate depreciation. Moreover, a proper asset management module or integration can help management to:
- Maximise the return on assets
- Increase uptime and improve predictability
- Reduce total cost of ownership
Analysis and reporting
An analysis tool helps users to analyse where the money went, how price changes affect product costs and profits as well as identifying bottlenecks in the manufacturing process, and analyse the reasons behind the difference between the budgeted and actual amount.
A robust reporting tool can automatically generate reports on-demand, highlight trends, and present insights in an easy to understand way so managers can make informed decisions faster.
The software should also enable users to create and customise their reports with ease along with a function to remember last report edits so users can easily duplicate for future usages.
Many accounting solutions have built-in Business Intelligence (BI) capabilities, which helps users to further enhance their analytical ability. BI is a powerful tool that empowers users to drastically increase efficiency by equipping them with real-time insights, data that are otherwise impossible to extract on time if using normal spreadsheets.
Don’t overlook cloud-based accounting software
Many manufacturing businesses still choose to deploy enterprise applications on-premise, including the accounting function. For small to medium-sized businesses, you are better off using cloud-based accounting solutions as there is no hardware investment required.
Cloud accounting solutions are not only much safer, but they can also help you and your business by allowing you to:
- Collaborate in real-time with your accounting department. You can access, review, approve financial transactions at the same time as your staff, make strategic decisions faster, and eliminate information silos.
- Update your systems automatically, without causing any disruption to your business chain. Thus, you do not have to worry about downtime. The updates happen periodically, behind the scene, and in a much shorter time than you could imagine.
- Store and secure your data away from cyber-theft as well as natural disasters. Though there is no guarantee that data will be completely harm-free, the risk of a data breach or loss is substantially lower with cloud-based accounting solutions compared to on-premise.
At TRG, we offer Infor SunSystems, a comprehensive financial management solution built with security and usability in mind. The solution is deployable on-premise or in the cloud and is packed full of capabilities aimed at increasing your productivity.
With SunSystems, you can communicate and update tasks with ease via its built-in social collaboration platform, Infor Ming.le, automate workflow with Coleman AI, and integrate with Infor solutions or third-party applications through Infor OS (Infor’s very own operating system).
To learn how Infor SunSystems can empower you and your employees with its unprecedented capabilities, simply click the request a demo button below to talk to our experts today!
