SOC 1 Type 11 Reporting


Do You Have The Right Financial Accounting Software For Your Warehouse?

Posted by Michael MacDonald

May 1, 2014

financial accounting for warehouseWhen they start out, light manufacturers and smaller distributors typically use a few Excel spreadsheets and QuickBooks to manage their accounting needs. And why shouldn’t they? These programs make it easy to manage customer accounts, track inventory and business finances, create forms and store customer information.

The only problem comes when the company begins to grow. Suddenly, your warehouse management has slowed down, plagued by picking problems and human errors. Invoicing is also on the slow side, leaving you with a lower cash flow. It seems that your trusty spreadsheets are starting to let you down.

Does this sound familiar to you? Here are several red flags that your distribution company has indeed outgrown QuickBooks and it’s time for an upgrade to more powerful financial accounting software.
  1. Your tracking capabilities are off: Your warehouse management system (WMS) needs to integrate with financial systems in order for the company to function properly. Financial accounting software systems are great for companies that have a need for sophisticated tracking because this integration is seamless. Your WMS indicates the stock levels and reserves any items that a customer may have ordered. Just like that, tracking becomes a dream.

  2. Your picking is slow: If a warehouse worker doesn’t have all of the information needed to pick something and must go back to the office for more details; precious time goes down the drain. Mistakes in picking mean you must wait for the customer to return the product and for a worker to restock it. System automation provides faster turnaround times because you have less potential for error.

  3. Shipping is complicated and expensive for customers buying multiple items: Some items in an order might ship immediately because they’re available, while other items ship at a later date. With the real-time capabilities of a financial accounting software system, four or five different items ship when they all become available. These solutions allow distributors to know what their customers should receive and when they should receive it. Your customers also have a better idea of how much shipping is going to cost.

  4. Customer service is lagging: If a customer returns an item and the transaction is logged into the accounting system, a CRM system uses this information to provide insight about the item and the customer. That’s great, but then the company still has to replenish that product information in the spreadsheets, which requires manual effort. However, integration between ecommerce sites and inventory systems eliminates possible errors and ultimately improves customer service. This is possible with financial accounting software.

  5. Increasing mistakes and manual work: With integrated systems, distributors gain productivity, reduce human error and achieve faster turnaround times. How? It’s because your accountants aren’t wasting time updating the same transactions on each and every system. These systems improve productivity since automation reduces (or eliminates) manual work.

  6. No real-time data information: If someone is online right now and places an order, how do they know what products you have in stock? If you’re selling on platforms like Amazon, you’re required to use a system that allows for real-time data. Integration between your financial accounting software and ecommerce applications offers real-time capabilities.

If your distribution company approaches the $2.5 million to $5 million range, it’s going to need more functionality than what QuickBooks and spreadsheets offer. Does your current accounting system leave room for your business to grow? If one or more of the above red flags resonated with you, it’s time to find the right accounting solution to fit all of your needs.