Switching from QuickBooks to ERP

When managing a business, having the right kind of software is important as it helps you generate revenue, leads and helps you reach your business objectives. In this article, I am going to share with you details about QuickBooks and how switching from introductory accounting software to ERP is helpful for the growth of your business.

Let us have a look at QuickBooks software, to begin with.

What is QuickBooks

QuickBooks is an introductory accounting software developed by Intuit, which offers solutions for managing personal, business, and tax finances.

QuickBooks is one of the most popular?small business accounting software?businesses use to manage income and expenses and keep track of the financial health of your business. You can use it for invoicing customers, paying bills, generating reports, and preparing taxes. The QuickBooks product line includes several solutions that work great for people with introductory accounting knowledge. ?

What is Enterprise Resource Planning (ERP)

ERP stands for “enterprise resource planning” and is a business management system designed to manage all aspects of a company’s operations. This includes accounting, financials, order entry and processing, inventory management, contact management, and warehouse management. ERP software replaces the need to buy and integrate multiple standalone solutions and works best for growing businesses looking to automate processes, increase efficiencies and reduce manual work.

Why QuickBooks is Not ERP software

As mentioned above, QuickBooks is used by small businesses and startups for accounting processes only. QuickBooks lacks functionality for other areas of the business - such as inventory management, CRM, and Warehouse Management System. Since QuickBooks is only an accounting solution, it really can’t be compared to an ERP solution fairly. One may be missing out on advanced functionality only available in ERP that can help run the business which we will explore later in this article.

ERP, however, is specifically designed for companies looking to scale – and provides various features that can be activated as the business and processes change. Since ERP software includes functionality across all areas of the business, information is up to date in real-time, and you are able to streamline operations and minimize manual tasks. ERP allows you to automate many areas of your business, allowing your team to spend their time on more important tasks.

Instead of purchasing separate individual solutions to be integrated with QuickBooks, consider switching to an all-in-one ERP software. This helps to cut costs and streamline operations.

Pros and Cons of QuickBooks

Now let’s look at a few pros and cons of choosing QuickBooks over other introductory solutions or a more robust ERP software. While the survey in this post was conducted several years ago, based on additional research from more recent sources, a lot of the same pros and cons apply today.?

QuickBooks is preferred as the first software purchase for the need of managing accounting and financials, as it is easy to use, affordable, provides good accounting reports, and integrates with other systems. Hence, some people don't want to switch as they are quite comfortable with its ease of use and pricing. However, it is only as the business grows and the requirements become more diverse that, the limitations begin to show through.?

Replace QuickBooks with Distribution ERP

Businesses that use QuickBooks or other introductory software only face many business challenges?by having multiple disconnected systems resulting in numerous errors. Thus, having one system in place to manage all?accounting?and inventory tasks is key to eliminating these issues. Hence, it's important to keep an open mind about replacing QuickBooks or other introductory software with all-in-one distribution ERP software.

Interconnected Inventory Management and Accounting

Inventory Management Software helps to evaluate and maintain the health of your inventory. You can gain insight into the stock of your warehouse(s), the exact locations of the product, and be able to track where and to whom your inventory is going. However, without accounting and financial reporting functionality, it is very difficult to optimize that inventory and find opportunities to increase profit. The combination between these two allows you to not only verify the inventory asset value of what you have in your warehouse but can also easily pull real-time, accurate financial?reports?based on the inventory data stored in the system to make smart purchasing and pricing decisions for the business. Doing this with two separate systems only leaves the business at risk for manual error and missed opportunities.

Here are a few examples of how inventory and accounting functionality?work together in distribution ERP software:

• Tracking Profit - Having inventory and accounting information stored within one system allows for accurate financial statements, a clear idea of cash flow, liquidity, forecasting, and thus, improved organizational efficiency. Using?executive summary dashboards, one has insight into all aspects of your wholesale distribution business instantly on a daily basis.
• Ditch Tracking Invoices Manually - The idea is to automate invoicing as much as possible to avoid data redundancy and manual errors. Since inventory and accounting are tracked from one system, employees are able to see and add billing details and minimize time spent on administration and needless tasks.
• Employee Access – It is important that the right employees have access to both accounting and inventory information to aid in their daily tasks. The distribution ERP software allows the user and group permissions so that the right employees gain better insight into both accounting and inventory information without having to log in to multiple systems.
• Accurate?Financial Reporting - Ensuring the accuracy of the financial reports such as monthly?statements, tax returns, reports pulled for audits, etc., is vital for business growth. With all-in-one distribution software,?robust reporting functionality allows for real-time visibility into the status of accounts, orders, inventory, and sales all from one system.

Difference between ERP and QuickBooks

There are many differences between ERP and QuickBooks. For starters, while QuickBooks is designed as an accounting solution, ERP includes not only accounting functionality, but also website integration, inventory management, and POS, which allows for an integrated workflow. For example, the accounting department, salespeople, and warehouse employees ALL see the SAME information. ERP Software has added security measures that QuickBooks and other introductory software lack. With ERP you know who edited, deleted, or changed something at what time, so you have a clear understanding and view of who is doing what.

Therefore,?trying to compare ERP with QuickBooks doesn’t actually make sense. Instead, many ERP customers decide to move from QuickBooks to our software when they start to grow and require additional features, and want to automate processes. ERP Systems include all the same basic?accounting features?and more - such as accounts payable, accounts receivable, general ledger, and bank management.

Two big differences between ERP and Introductory software are transactional integrity and accounting methods.

Transactional Integrity

Entry-level systems are very user-friendly and forgive the users when errors are made. For example, QuickBooks allows almost any transaction to be automatically "corrected" as if no error ever occurred. This helps the users with no accounting experience but it's not good for auditing purposes.

With most ERPs, transactions are purposely not editable after the fact. This is a very good thing to support audit requirements, and any good ERP system will not allow retroactive changes to posted transactions.?"Instead, to “undo” a mistake, you have to make the proper correcting entries. This ensures there is always a complete audit trail of what happened in the system."

Cash Vs Accrual Accounting:

?Accrual basis

In this accounting method, the time when you enter a transaction and the time when you actually pay or receive cash may be two separate events. Accrual-basis accounting is made up of two accounting features: the revenue recognition principle and the matching principle. The Revenue recognition principle generally accepted accounting principle (GAAP) that stipulates how and when revenue is to be recognized and determines how to account for it. Matching principle?directs the companies to report?expenses?at the same time as the?revenues?they are related to. On the?income statement revenues and expenses are matched for a period of time.

Cash basis

In this method, you regard income or expenses as occurring at the time, you actually receive a payment or pay a bill. You only record when cash is physically paid, and it's easy to track cash flow. The cash basis method is not acceptable under GAAP and It is best suited for small start-up companies with no inventory.

Cash-basis accounting might give you an inaccurate view of your?real?profitability. As it might overstate the health of a company?that is?cash-rich because it doesn't record accounts?payables?that might exceed?the cash on the books?and the company's?current revenue stream.?As a result, during auditing, there could be errors as it might look like the company?is making a profit when, in reality, the company might be facing financial difficulties. Whereas, the accrual-basis accounting method provides a realistic view of income and expenses as it adjusts earnings over time since it accounts for all revenues and expenses?as?they're?generated. Thus, it?is the more commonly used method, particularly by publicly-traded companies and most ERP solutions use the accrual method. If you want to grow your business and if you get audited or ask for a loan then you MUST use accrual basis accounting. Hence it is important to switch to ERP solutions to reap the benefits when your business is growing.

About Blue Link

Blue Link Associates is a Canadian-based company located In Toronto. It provides enterprise level inventory and accounting ERP software to businesses across North America and the Caribbean. Blue Link is an owner managed company, Microsoft Gold Partner and have been in business since 1992. The software is designed specifically for businesses that buy and sell inventory, including wholesale and distribution businesses and those that sell through retail and eCommerce channels.??

How Blue Link ERP can Help: All-in-one Functionality

Blue Link’s distribution ERP is designed for wholesalers and distributors who are frustrated with multiple disconnected technologies to manage their business. The all-in-one system operates as a centralized hub for important data for departments such as accounting, inventory, CRM, warehouse, shipping, etc. This means one doesn’t need to switch back and forth through multiple systems to have access to real-time, accurate accounting and financial information to make smart inventory decisions. With Blue Link, you are only dealing with one team of experts for support, training, and other requests, meaning the people you speak to know you and your business inside out.

"Blue Link does all of it, it takes orders in, manages the inventory, processes the orders, does the invoicing, accounts receivable, accounts payable... it takes care of everything!"

-Melanie Beckett, SAGA Sciences

As you can see, while?QuickBooks?is great for small businesses for managing simple processes, it lacks the transactional integrity necessary for growing businesses that need to follow proper accounting rules. ERP is the solution for growing business and at Blue Link, we are here to help achieve your business objectives, so get in touch with us to expand your business.

For more information on replacing QuickBooks, download our Free Guide: Replace QuickBooks