Inventory & Accounting ERP Software Blog

How Secure is Your Wholesale Inventory Software?

If you’re in the wholesale business, it’s not ghosts and ghouls that are spooking you this Halloween but something much more frightening — unsecure wholesale inventory software.

From confidential customer and employee information to real-time inventory data, orders, accounting and banking information— your entire warehouse and business operations data lives in your software. So, it’s not surprising that one of the most common concerns when evaluating wholesale software is if company data is safe and secure.

When many think of the safety of wholesale inventory solutions, they primarily worry about system failures, malware, and hackers. However, it’s also important to think about your day-to-day activity in the software and the potential risks to your internal operations.

If confidential data gets into the wrong or unqualified hands, it could turn out to be a horror show for your business with scares such as missing inventory and supplies, fraud, warehouse management errors, unrecoverable loss of data and damage to your reputation.

But, before you write-off wholesale inventory software entirely, there’s good news! There are numerous security features that you can implement in wholesale software to prevent these nightmares and it’s important to not let the lack of knowledge of these features deter you from buying the right system. An even scarier situation is your business missing out on opportunities to save time and money due to improper systems.

Instead, educate yourself and make sure to ask vendors to go over specific security features with you, and teach you how to get the most use out of them.

User Permissions

Depending on the vendor, you will easily be able to conduct the important administrative task of setting role-based permissions or restrictions of activities in the system.

Taking the time to evaluate who is qualified to perform certain tasks in the software based on their roles and skill set can save you a lot of trouble in the long-run. For example, you can set user permissions to only allow access to specific areas/screens of the software, or you can restrict what employees can do in each area of the software, such as setting permissions to “read –only”.

By creating these internal controls of data, users only see what’s relevant to their individual role, minimizing the risk of data exploitation that could be detrimental to your business.

Some other benefits include:

Limiting unnecessary exposure to sensitive data in order to reduce accidental or malicious activity.
The ability to monitor user activity in the system.
The ability to track suspicious activity such as incorrect inventory counts and pricing changes.
Preventing incorrect management of warehouses and order entry by restricting unqualified users from making changes to management screens.
Helps you build and maintain trust with customers and vendors by adhering to customer/vendor privacy guidelines.
Avoid employees creating their own tracking and reporting systems outside of the software that can’t be monitored.

Track User Activity

Have you ever wondered who updated contact information for a vendor, or who deleted a stock item in your software? Robust wholesale software allows you to set specific internal controls to track user activity.

It’s important to monitor and track user activities in your wholesale business so you can have a chronological view of the sequence of events taking place for an operation and detect any red flags before it’s too late. If errors do arise, you can track what went wrong and the users involved. It’s vital that you assign users an individual login and encourage them not to share their logins so you can accurately track who did what in the system.

Maintenance and Monitoring

It is tempting to set these security guidelines and forget them, however, continuous monitoring and maintenance are vital to the effectiveness of these features. You should be evaluating your security on a quarterly basis at the least.

Employees come and go. Make sure you retire their logins to ensure that they no longer have access to company data. You should also change passwords in the event of a security breach.
Employees may also change their roles within the company. When this happens, it’s important to get in the habit of adjusting permissions to suit their new job responsibilities.
Keep on top of security compliance regulations and update your system accordingly. If you choose to go with a cloud-based solution, your vendor will typically offer system updates. They may raise any potential red flags that you or your IT team may not be aware of. Take these suggestions seriously. Operating on outdated software can open your company to extra risks.

Implementing security permissions will not only help you increase the level of safety but it will also improve the accuracy and quality of your warehouse and business data since only qualified individuals are conducting specified activities, resulting in fewer errors.


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5 Tools for Wholesale Inventory Management

As a wholesale company, inventory is your livelihood. What inventory to buy, where to source product from and how to sell product to customers are all important factors to consider in managing your business for growth.  In order to sell inventory, you must also properly track and manage inventory. Streamlined picking, packing and shipping processes, and multiple warehouse locations and sales channels are just a few factors that can help make sure you provide customers with the product they want when they want it.

The best way to manage your wholesale business? Use the right inventory management tools. If you’re not sure what tools are available and which ones are appropriate for your business, look no further than this blog post. We’ve compiled a list of some of the most important tools for wholesale inventory management.

(1) ERP Software

Let’s start with the basics. Inventory management software provides functionality for managing inventory from purchase through to sale.  Although solutions will vary in the functionality they provide, watch for features to handle multiple units of measure, serialized items, re-order points based on lead times, inventory counts, barcode scanning, warehouse transfers and bin and shelf locations.  Consider inventory management software with built-in accounting functionality such as an ERP system so that you can also create purchase orders for new product, manage backorders, process RMAs and create sales orders.  ERP software also allows you to report on information stored in the system across departments, such as sales by customer by product or sales by product by date. As you will see from the functionality below, ERP software is the backbone of inventory management in which all other functionality can integrate for complete control over your inventory and business.

(2) Wireless Barcode Scanning

With a large warehouse space, it is important to organize product by bin and shelf location for easier picking.  To further simplify the picking, packing and shipping process, wireless barcode scanning enables users to scan items at the source.  Barcodes get scanned during the picking process so that users can identify and correct inventory shortages or picking errors immediately. In certain cases, users can pick substitute product or flag items for backorder.  Since you can integrate wireless barcode scanning with your ERP system, the order gets updated in real-time.  An added bonus? Wireless barcode scanning works on iOS devices such an iPod touch or iPad – often cheaper alternatives to traditional handheld scanning devices.

To learn more about inventory management, download our eBook on Inventory Management Techniques.

(3) Mobile Sales App – RepZio

Inventory management is an important aspect of the sales process, especially when selling through multiple sales channels. For companies that employ outside sales reps or frequently attend tradeshows, it is important to use a system that has the ability to manage inventory in the field.  For example, mobile sales applications such as RepZio can help you take orders and scan inventory in the field.  Inventory information is live linked between this system and your back-end ERP solution so that inventory information is available in real-time.  This means orders placed in the field do not have to be re-entered when back in the office and product gets shipped quicker.  This also means that you’re able to sell inventory from multiple sales channels at the same time – no need to worry about inaccurate inventory levels when away from the office and warehouse.

(4) Lot Tracking

Although not required in every industry, in those that it is, lot tracking is an integral part of inventory management.  Lot tracking or batch tracking allows a business to track specific lots (or batches) or product from the supplier through to the customer.  Lot tracking records which customers received specific lots of product, and when they were received.  Lot tracking also records the date and supplier in which the items were purchased, and manages product expiry dates. As you can tell, this type of wholesale inventory management functionality is very important in specific industries and when dealing with products such as food and pharmaceutical. Lot tracking also helps reduce the impact of a product recall in that only affected product – identified by lot number – gets recalled.

(5) Document Management

Document management is an important part of wholesale inventory management in order to easily record, store and retrieve documents related to specific inventory items.  This includes spec sheets, warranties or maintenance documents. Essentially document management allows users to scan documents and gathers information in order to fill fields within your system and generate specific workflows. Users can easily retrieve documents from the system while in the field or in-house while speaking with customers and suppliers.  This eliminates the hassle of managing paper documents and ensures all information relating to an inventory item is available at your fingertips with the simple click of a button.  The idea is that users process and store documents through a document management system and then access the information within the ERP.

As you can see, ERP software is a great starting point for wholesale inventory management.  As an all-in-one system, it allows businesses to manage their processes from beginning to end, streamlining operations and automating workflows. Other specific functionality for inventory management will vary by company and industry, but look for ERP that includes these additional features in order to implement a complete solution.

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Does ERP software play a role in boosting employee engagement?

As a business frontrunner, you spend a lot of time thinking about ways to improve your profitability. Advancing services, improving customer satisfaction and reducing costs all take the head table when it comes to strategic business planning. But have you considered the state of your employees? How committed are they to company objectives? Do they value your customers? And, why should you care?

For those of you who are also wondering what ERP software has to do with any of this, we’ll get to that shortly…

But first, consider this quote from Former CEO of Campbell’s Soup, Doug Conant:

“To win in the marketplace, you must first win in the workplace.”

These words hold true for many businesses today that are discovering a direct correlation between customer satisfaction, profitability and employees’ satisfaction in their work. Simply put, when employees are engaged, they are more productive and willing to go the extra mile resulting in increased customer satisfaction and profitability.

So, how can you create a sustainable foundation for employee engagement for your business?

It is crucial to provide your employees with the right tools, resources and training needed to do their job well and in turn, provide customers with the services they expect.  When employees are confident in their tasks, the more enthusiastic and inspired they are to put in the extra effort that will help set your business apart from the competition.

This is where Enterprise Resource Planning (ERP) software comes into play. With the right ERP software, you are able to take a more employee-centric view of your workforce taking into consideration the entire ecosystem of your business from your accounting and sales teams to warehouse managers and operation teams.  A sophisticated ERP system will improve processes and workflows throughout a variety of departments. Employees will feel empowered and confident with the capability to:

Streamline inventory management, accounting, customer management, warehouse management and order entry and processing with an all-in-one solution.
Have easy access to information stored in a single database for quick information retrieval and lookup.
Share real-time data that is essential to their job functions with the right stakeholders.

However, it is also important to keep in mind that the key to achieving employee engagement is in selecting the right ERP package for your business and then successful implementation and training.

Some steps to consider:

(1) The buy-in. 

Before you invest in ERP software, it’s important to sell the value of a sophisticated ERP system to your team. At the end of the day, it is your employees that will be using the software so you need to get them excited and help them understand the impact on their roles.

Paint a picture of the benefits of ERP at a granular level. Illustrate how the software will impact day-to-day tasks— sales teams interact more effectively with clients, warehouse employees can easily track down product, accounting personnel can automate reporting etc. Clearly defining how their roles and functions will be enhanced with software will build confidence and encourage employees to adopt a new way of completing tasks.

(2) Breaking habits. 

Evaluate processes of roles during the ERP software search to address any pain points or concerns employees may have adapting to a new way of tackling tasks. For many, a multi-purpose system will be a welcomed implementation, however, others who are used to doing things a certain way may need a bit more convincing.  Challenge them to think about why they’re performing tasks in a certain manner. Is it because it’s the best way, or because that is the way it has always been done? For example, you may ask employees if they’d rather spend hours manually entering data into Excel sheets, or if they want to automate data exports.  Let them know you’re there to meet their needs, make their lives easier, and improve their satisfaction in their work.

And lastly, one of the most important steps…

(3) Training, training and more training!

ERP software training is vital for the success of the implementation and overall satisfaction of employees using the software. The better trained and confident your employees are with the system, the more use they’ll get out of it.  Proper training reduces costs, saves time and decreases human error resulting in employees having time to concentrate on skill acquisition which improves job satisfaction.

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How ERP Software Helps Streamline Processes

When a business first starts to evaluate software as a tool to help manage its processes, it makes sense to look at introductory solutions.  Introductory software is designed to be the first system implemented in a business as an alternative to entirely manual processes. For most businesses, the first software purchase made is in order to manage the company’s accounting and financials, and in general, introductory software provides functionality to manage one specific aspect of a company’s operations. Introductory accounting software is frequently used in conjunction with manual processes or other simple business tools like Excel in order to manage inventory. Introductory software and manual processes work best when order volume is low.

As a business grows, and order volume increases, it becomes more and more difficult to manage processes with introductory software. Although each business will differ, there are a couple of good indicators that it’s time to start looking for more robust software:

The business has reached transaction and data volume limits within its existing system. Many introductory software solutions have limitations on the number of transactions it can process, the volume of data that it can store and even the number of user licenses available.  When a business operates above these limits it can result in system crashes, corrupt databases, slow run times and messy workarounds.
The business requires additional functionality. Introductory software provides functionality to manage specific processes within one department as opposed to across departments.  As a business grows, it will require additional functionality to handle previously manual tasks. Examples include functionality to manage inventory, customers and multiple sales channels such as eCommerce.
Employees are performing a lot of manual tasks. When a business only has a small number of orders it can be fine to manage processes manually.  However as the business grows, automating these tasks can save hours of manual work, even if it’s just a few seconds at a time.
The business lacks tools for robust reporting. Although introductory software will provide access to some reports, it can be difficult to extract the information and see data in real-time.  In addition, it does not allow a business to easily amalgamate information across functional areas to understand how the company is performing across departments.

If a business experiences any of the above, it is time to start looking for more advanced software.  For many wholesale and distribution businesses specifically, a need for better inventory management as additional functionality is what prompts the search for a more robust system.  Although in this situation a business can purchase additional inventory software to integrate with its current accounting solution, taking a piece-meal approach to software can lead to manual processes re-keying data between systems, resulting in extra work and more room for error.  This, in turn, can lead to incorrect business information and data loss, which impacts customer satisfaction and hurts a company’s bottom line.

Instead, a true ERP solution will provide functionality for managing inventory, accounting, contact management, warehouse management and order entry and processing as an all-in-one solution. ERP streamlines processes across departments from beginning to end and will include additional functionality to meet the specific needs of each individual business.  With ERP software, a company has the ability to:

Receive inventory into its warehouse with barcode scanners
Convert a quote into a sales order without having to go into multiple systems
Create a purchase order for inventory items not available from within the sales order screen
Automatically email customers invoices
Automatically generate reports based on specific pre-determined criteria – these reports then get emailed automatically to the appropriate team members
Create a sales order in which inventory is automatically allocated to that order
Use verification scanning at packing stations to scan items picked and check against the sales order
Track and monitor receivables with the ability to have automatic notices and updates sent out in order to shorten receivable cycle and increase cash flow
Generate reports based on information pulled from different departments – for example, users can set up a report detailing information on product sold by sales rep by territory
See notes kept on customers and suppliers from multiple screens and areas of the software
Review sales orders from various sales channels in one screen

The above functionality is just a sampling of how ERP can help streamline operations.  With an all-in-one solution, data is stored in a single database which makes it easy to quickly lookup and enter information in one system from a variety of departments.  Training employees is simplified as users only need to learn one system interface and support done through the same vendor.

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Managing Multiple Companies with Wholesale ERP Software

There are many factors to consider when you evaluate wholesale ERP software for your company, such as functionality, on-going support, industry experience, costs and deployment method.  If you have an ownership stake in more than one company, another important consideration is whether or not you need the system to help manage each business and whether or not you deal with inter-company transactions. If you do require multi-company functionality, there are other factors to take into consideration, such as:

What information do you need to see for each company?
How do you need to see this information? Do you need to access information from multiple companies within the same screen? Through specific reports?
Are the companies in the same industry and does it make sense to use one system to manage them all?

The answer to the above questions will help dictate what software solution you implement, and whether or not you need a solution with inter-company functionality.  For the most part, your business will benefit from inter-company functionality when you complete a significant volume of transactions between companies.  There are a number of different transactions that will flow between companies, including the following:

1. Expenses

Expenses are a common type of transaction when dealing with multiple companies.  The idea here is that there are certain expenses that get paid on behalf of each company, but instead of dividing these expenses between companies and writing separate checks, one check is used to pay for all the expenses.  A great example of this type of expense would be rent.  One building may house 3 separate companies, each taking up different amounts of space.  Instead of each company writing a check for their percentage of rent, one company will write the check on behalf of all the others.  From an accounting standpoint, each company still needs to record their proportion of the rent expense.   Wholesale ERP software and inter-company functionality will streamline this process so information is automatically populated across companies.  This eliminates the need for entering data multiple times and reduces the errors associated with doing so.

2. Inventory

Inventory is another common inter-company transaction in which one company either sells or transfers inventory to another. In this situation, you record a transaction for the movement of inventory, but you also have to update inventory quantities.  With inter-company functionality, the system allows you to update inventory quantities on behalf of multiple companies and then recognizes that a corresponding accounting transaction needs to take place.  Proper functionality also accounts for the landed costs associated with actually moving inventory between companies when they are in different locations.

3. Transfer Pricing with Certain Inventory Transactions

Another aspect to consider is the possible need for transfer pricing when dealing with certain inventory transactions.  Transfer pricing refers to the price set for goods and services sold between two related companies, when for any reason the goods cannot be transferred at cost price. The transfer price is then the price paid for by the company buying the product.  The actual transfer pricing rules would depend on several factors, such as laws and regulations and ownership breakdown. There are different ways in which software can address this type of transaction, depending on which company records the transaction and when it gets recorded. For example, does one company create a purchase order, or does another company create a sales order? Do you record the transaction upon shipment of the goods or upon receipt of the goods?

It is obvious how inter-company transactions complicate business processes.  Proper wholesale ERP software and inter-company functionality helps you save time entering transactions across multiple companies and reduces the instance of human error when doing so. Depending on the group of businesses, there are several other factors to consider when evaluating software. Before you start speaking with vendors, consider the following:

Ease-of-Use: How easy is it to switch between companies within the software? Do you have to log out of the application each time and then log back in as a different company?

Inventory Availability: Are you able to see inventory availability for each company easily from within the screen? What if a customer wants to order product that is out of stock at one company and in stock at another – are you able to see this information?

Customer Information: If you have a customer with bad credit history, do you want them to be able to purchase product from one of the other companies? Will you need to look up customer information in the system for each company? Do you need the ability to copy contact details across companies?

Financial Information: Do we need to consolidate financial information across each company? Do you want to pull information from each company into one Profit and Loss statement? Will you have the same chart of accounts structure for each company?


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What is an API and How Does it Apply to Business Management?

API is a term frequently used when discussing integration between software applications. Even if you’ve never heard the term before, you’ve certainly been affected by API technology in some capacity – such as when ordering product online from Amazon or accessing information on certain websites. But what exactly is an API and how does it apply to business management? To explain the answer, let’s start from the beginning.

API stands for application program interface and is used to describe a means for systems to interact with one another.  Specific protocols, routines and tools that make up APIs help programmers build software applications and dictate how multiple applications will talk to one another. APIs provide limited information about a system’s internal infrastructure so that outside developers can use the information to build new applications that work with the original system. By limiting outside programmers access to specific information, businesses can integrate with other solutions without providing access to their entire data set/code infrastructure. APIs are typically divided into two categories, public and private. Public facing APIs expose data to the outside world and are readily available to all programmers, whereas private APIs expose data only to applications where specific access has been granted and where there is a relationship between the companies. APIs save businesses resources and time and eliminate the chance of legal ramification when information is not properly shared.  APIs reduce the need to build applications from scratch where the specific functionality or information already exists in some capacity.

The way in which APIs work may sound similar to how EDI works, but the two are quite different.  EDI allows businesses to transact electronic data between members of the supply chain, whereas APIs allow systems to retrieve, change and submit data within applications. APIs provide access to system data and system logic.

With EDI, information is electronically exchanged between systems in a universally understood language. In this situation, information is simply being shared between applications. For example, Walmart can send a purchase order through EDI for an order of product from one of its suppliers.  Both Walmart and the supplier have different formats for reading, writing and storing information based on the specific back-end ERP software they use to manage their inventory and accounting.  With EDI, information sent from Walmart is generated according to EDI standards, and then the supplier can retrieve the information and translate it back into a format that works with their specific ERP system.  This type of workflow will typically will involve the help of middleware to automatically read and translate the information sent via EDI in a format that is readable by both Walmart and the supplier’s specific software. This eliminates the work involved for both companies to send information in different formats depending on the partners in the supply chain.

With APIs, information can be retrieved, stored, changed and submitted depending on the specific communication set-up. In the example above, once the supplier receives the purchase order through EDI and it has been translated accordingly, an API can then populate that information into the supplier’s software system, automatically creating a sales order and also allocating the inventory where possible. Without the help of an API, these steps would be a manual process. In this example, EDI allows the transfer of information whereas APIs take action with the information received.

An API specifies how software components interact and allows two separate systems to communicate and share information with one another. This helps facilitates seamless integration with 3rd party applications and means that once a specific integration has been built, it can be reused over and over again following the same format.

A quick Google search for API provides public API information from a variety of popular platforms such as Google Maps, Twitter, and Instagram.  The idea being that when a system provides developers with API information, those developers can then go and build applications off that technology.  A good example would be how Yelp will show you the location of restaurants using Google Maps.  Yelp developers used Google Maps’ API to integrate maps into their website so that the technology did not have to be developed from scratch. In this situation, Yelp is accessing data exposed by the API.

As discussed above, it is obvious how APIs can be beneficial in a business setting to help facilitate integration across a variety of applications and to share information. Another common business example is eCommerce integration.  Let’s pretend the distribution company mentioned above also sells product online through Amazon. In this situation, APIs are used to dictate how much information and how often that information is shared between the distributor’s back-end ERP solution and Amazon. The ERP solution provides access to its private APIs so that Amazon can call information from within the ERP and then share information back.  In this situation APIs help share information both ways and also manipulate the information being shared.  Information is passed and manipulated from the ERP system to Amazon in terms of inventory availability, pricing details and product descriptions, and then from Amazon to the ERP in terms of order information, shipping details and payment information. When information is shared in this way, and API logic is accessed, information from both the ERP and Amazon gets automatically updated and populated within each system, eliminating the need for manual data entry. An API can be set up so that changing the description of a product in the ERP system automatically triggers an event to change the description of that same product on Amazon. When dealing with eCommerce integration between an ERP system and online store, there is frequently involvement from a 3rd party integration company to set this up.  This allows both the ERP vendor and eCommerce company to focus on their core competencies, and leaves the integration to a company like Virtual Logistics that specializes in integration across platforms and applications.

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Pharmaceutical Accounting Software for Start-Up Distribution Companies

If you want to start a pharmaceutical distribution business you must first purchase a license to sell product.  After you’ve acquired your licenses, you are then responsible for following specific guidelines in accordance with industry regulations around product traceability, supply chain management, and reporting. The licenses you acquire dictate what type (class) of product you can sell, and to what geographic location, and then the guidelines in place will vary depending on this information.  In general, regulations are based on specific types of products such as over-the-counter drugs, prescription drugs, and controlled substances.  Agencies such as the FDA are responsible for monitoring licenses and ensuring that each distribution company adheres to the proper regulations.

So, how does a company ensure they comply with regulations? The best solution for managing these requirements is to implement pharmaceutical accounting software as soon as possible.  Pharmaceutical accounting software not only helps your business comply with regulations but also provides tools for managing all other aspects of the business, including accounting, order entry and processing, customer relationship management, warehouse management, inventory and more. Given the nature of the industry, it is important that any system you implement is supported by a vendor who actively monitors changes to regulations in order to add new functionality as needed.

As a start-up business, finding the funds and resources necessary to implement software can be difficult, but the idea is that the right solution will help your business grow and reduce costs in the long term. It is important to compare any costs associated with the software against the costs of manual processes – in terms of the effort it takes to comply with regulatory requirements and the potential consequences in the event of human error.

Once you have applied for your licenses it can take a while before they are approved. However, this waiting period is the best time to start searching for appropriate software, so that you have a solution in place as soon as possible after you receive your licenses.  Ideally, you want a proper solution in place before you purchase product and receive items into your warehouse.  One of the biggest mistakes companies make purchasing pharmaceutical accounting software is underestimating the time it takes to evaluate, select, and then implement the software. Even as a start-up business, this process can take anywhere from 3-6 months which is why it is important to start extensive research and engage in discussions with vendors while waiting on your licenses to come through.

As soon as you receive inventory into your warehouse, regulations come into play. Once again these regulations will depend on the licenses you have, but requirements from a functionality standpoint center mostly around product pedigree, traceability, reporting and customer license management. At a minimum, you want functionality to track lot numbers and expiry dates of products, identify vendors along the supply chain to track the specific product back to the manufacturer, automatically generate and send reports to specific governing agencies and ensure that your customers have a valid license to purchase the product being sold.

Keep in mind that it is hard to coordinate the timing of receiving your licenses with implementing software and purchasing inventory.  This is especially true given that software implementations do not happen overnight.  However, even if you have to manually manage processes in the beginning, the sooner you get a new system in place the better.

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Hosted and On-Premises Software: Total Cost of Ownership

When your business decides to purchase inventory and accounting ERP software, the great debate remains: should you implement a hosted solution or on-premises?  For smaller organizations, the answer is obvious – when you compare the total cost of ownership per year, hosted software will almost always end up being the most economical choice (as shown in Graph #1).  Some software vendors do not even give you the option, but instead only offer hosted/cloud-based solutions. However, there are some instances where a cloud-based solution is just not feasible – for example, businesses in rural locations without a reliable internet connection, and for larger organizations, on-premises solutions can be the better option. Either way, it is important to fully understand both options and the implications they will have for your business. Hesitation regarding hosted software frequently stems from a lack of understanding and concerns regarding data security issues. However, even though data security will vary by the software vendor, the security and provisions put in place by vendors in general will be more than what you can provide in an on-premises environment.

Although “small business” is a relative term, it is often used to describe companies with a small number of employees, limited resources, low order volume and moderate revenues.  For these types of businesses, a simple comparison of costs will almost always show cloud-based solutions as the more economical choice, but let’s break down exactly why that is.

When you compare hosted and on-premises solutions, it is important to include all costs associated with maintaining the system year-over-year, and it is best to track the total cost of ownership over a 5 year period.  Evaluating the costs after year one is not a good assessment of which is more economical as it does not take into consideration all the costs associated with maintaining the system in the long run.  Given that software is designed to be a long-term investment, it is important that the costs are evaluated as such.

Hosted Costs

For hosted software, year 1 costs will typically include initial implementation and set-up, monthly license fees and support.  On-going costs are then made up of licenses fees and support, as maintenance fees for warranty issues and access to regular upgrades are built into the monthly fees. Under this model, IT maintenance and data backups become the responsibility of the software provider and powerful server hardware is not required. A subscription-based cost structure is beneficial for small businesses as it allows it to gain control over its software expenditure. Instead of a large initial investment, the costs of the system are broken down into a one-time implementation and set up fee and then on-going monthly fees. This allows businesses to plan and implement a predictable schedule of monthly payments.

On-Premises Costs

With on-premises software, year 1 costs will typically include initial implementation and set-up, license fees, support, and hardware and equipment purchases and management. On-going costs are then made up of managing the system infrastructure, support, and maintenance.  It is frequently these on-going costs that are not accounted for properly in the long run, but they have a huge impact on total cost of ownership.  One of the more costly aspects of on-premises implementations is server and equipment purchases and maintenance, especially for small businesses. Even if you don’t originally need to update your servers when you purchase new software, this equipment will need to be replaced give or take every 5 years and doing so can be very expensive. There are also costs associated with managing these servers, such as data backups, performance monitoring, patch installation and other software license purchases. Software maintenance is another on-going cost associated with on-premises solutions.  Implementing the right software system is a long term investment and maintaining an active warranty with regular access to upgrades will help to ensure that it is.

For those smaller organizations that choose to implement on-premises based software, the management of servers is frequently outsourced to a 3rd party IT company or someone is hired for the role.  This adds extra costs to an already expensive project and takes resources away from growing the business and managing existing customers, to managing IT.  For larger organizations, there is frequently already a team of in-house IT personnel who are able to dedicate their time to server and equipment management.

Technology and the business environment are two of the fastest changing aspects of our world and so it is increasingly important to make sure that your business is always taking advantage of the best that your software has to offer and that your software matches the business requirements of the time. Trying to save money by not upgrading your hardware or system on a regular basis can affect company performance and your bottom line.  When used and maintained properly, software becomes a strategic investment to help run and grow your business. As a small business it is especially important to invest in a system and software vendor that can become a trusted business partner, offering expert advice to help your business save costs, increase efficiency and take advantage of new opportunities.

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3 Types of People that Impede Accounting ERP Software Training

Software training is one of the most important aspects of the accounting ERP implementation process and is also one of the most costly and resource-intensive. This is especially true for businesses that transition from introductory software such as QuickBooks, or manual processes, as there is a significant learning curve when it comes to using true ERP software.  Unlike introductory systems, accounting ERP is designed to manage all aspects of a company’s operations from accounting, inventory management and order entry and processing to contact management and warehouse management.  As an all-in-one solution, accounting ERP is designed to automate processes and increase efficiency.  To best take advantage of the advanced functionality available, your team will be required to have a better understanding of accounting principles and good business practices.

The costs and resources required to properly train your team of employees will be worth the productivity gained from a successful implementation. When employees have received sufficient training and feel confident using software they will rely on it more to complete their tasks.  This will result in less time wasted learning how to use the system every time a new task needs to be performed, and can help automate previously manual processes, reducing the instance of human error. With all the benefits to be gained from properly training employees, it is important to identify and plan for issues during this process.  Every company is made up of employees with different personality traits, learning styles and attitudes, so it is important to develop the plan for training that will work best for everyone involved. Even when you have provisions in place to help make the training process as smooth as possible, you will still receive some negative push-back from employees.  Below we have outlined certain personality types to watch out for during training in order to make the process as successful as possible.

Negative Nancy

We all know a Negative Nancy who always sees the glass half-empty, seems to complain about everything and is never content.  This type of person can dramatically drag down company morale, stall projects and suck energy from a room.  If you’re dealing with a Negative Nancy during an ERP training session it can add to the stress of an already high-pressure situation, ultimately hurting the outcome.  However, Negative Nancy can also force you to remove any rose colored glasses and address issues head-on.

Although resistance from employees is a natural reaction to business change, when you have a Negative Nancy on your team the amount of resistance can become amplified. People with this mindset will not only strongly resist changing their processes, they will also complain about learning new technology and not make a conscious effort to learn the new system.

In order to avoid any issues when dealing with a Negative Nancy during training, it is important to first address all those involved with the accounting ERP project to review the plan for implementation. Make sure everyone on the team understands their responsibilities during the implementation and ensure that they have the resources in place to learn the new system while still keeping up with their regular responsibilities. Acknowledge the fact that there will be a significant learning curve involved with the new system, and come up with a plan that allows employees to voice their concerns in a constructive way.  Create a process for employees to document any issues they experience, but only if they also recommend a suggestion for dealing with these issues.  This ensures employees think of the solution and not just the problem, and will force them to think more critically about their comments.

Analytical Anne

Those we refer to as Analytical Anne are characterized by their attention to detail, analytical way of thinking and interest in technology.  These people are great to have on your team but can sometimes get too caught up in the details, which can ultimately delay and hurt the software training process.

Analytical Anne has very good focus in order to complete tasks and never misses a detail. This type of person understands complex processes and systems and can help train other employees from your company.  They have a very curious nature and will want to ask a lot of questions of the software vendor to make sure they fully understand the system.  However, their interest in every minor detail can lead to schedule delays and general irritation from other teammates.  Analytical Anne can get too caught up in the details and will want to know and understand every aspect of the software right away.

In order to keep implementation training on schedule, only involve Analytical Anne personality types when necessary, and make it clear that additional training can be provided at a later date as required. It is impossible to learn all the nuances to a new software solution in the short amount of time dedicated to initial training, and employees will only be able to take in so much information at once.  Set a specific schedule for the initial training process with the most critical tasks, and ensure you stick to it – even if this means not allowing Analytical Anne employees to ask all of their questions.  Most vendors will provide additional training resources in the form of video or written tutorials.  Have Analytical Anne review these resources after initial training, making note of any questions as they arise, to be answered after Go-Live.  Often these questions will be answered from reviewing the available material, or after employees have started to use the system on a regular basis.

Defensive Dave

Defensive Dave is the non-management employee who got assigned the task of managing the accounting ERP implementation project.  They have been at the company for a long time and know the ins and outs of each department.  They have a good relationship with everyone on the team, and will frequently volunteer to help with special projects. However, due to the magnitude of any ERP implementation, Defensive Dave will quickly become overwhelmed with the project assignment and the resulting defensive attitude can cause issues for the project as a whole.  This issue is magnified if the management team and owners have taken a hands-off approach to the implementation and Defensive Dave does not have anyone to turn to for help.  Because Defensive Daves do not want to look bad when the project starts to get off schedule, they will frequently place blame on the vendor and software system itself.  This will increase resistance to change from other staff members and give the new system an unwarranted bad rap.

To avoid creating a Defensive Dave, form a team of people responsible for the entire implementation process and involve as many owners and members of management as possible.  Have a team lead in place, but ensure the responsibilities of each team member are clearly outlined and accounted for.  Stick to the original implementation plan set out and agreed upon by the team and vendor, so that employees and Defensive Dave do not become overwhelmed with new information and processes.  Remember that additional training and consulting time can always be scheduled after Go-Live.

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Wholesale Distribution Software: Implementation Wish List Process

When you implement new wholesale distribution software, it provides a great opportunity to also evaluate existing processes with a view to increasing efficiencies and reduce costs.  This is especially true for businesses moving from introductory software and manual processes, and for those who lack specific functionality such as inventory management.  The first step in identifying process improvements will start during initial sales discussions – assuming each vendor takes the time to understand your existing processes and business requirements. A vendor with experience in the wholesale and distribution industry will then use this information to help identify specific opportunities for improvement based on their industry expertise.  This information will also help provide a benchmark for measuring ROI once a new system is up and running, in terms of certain advantages such as number of hours saved performing a task and number of errors reduced. However, during the actual implementation process, it is easy to get caught up trying to use a new system with old processes.  Although there will always be certain processes that get performed the same way, it is important to be open to change as to best take advantage of the functionality offered by the new software.  If there are certain processes or features you would like to see emulated within the new system, consider creating a Wish List during the implementation and then following the Wish List review process as outlined below.

Step 1: Work with Employees to Improve Processes

First and foremost – and before you even suggest creating a Wish List during the implementation process – it is important to define the project’s objectives for the company as a whole. As with any major organizational change, when you implement new wholesale distribution software, this will cause push-back from some employees. If employees are used to performing tasks a specific way, it is often difficult to get them to change and break their habits.  To mitigate this resistance, it is best to involve employees throughout the entire software search process to collect feedback and get input on specific functionality that will help improve existing processes.  The idea is that the right system will not replace existing employees, but will automate specific tasks so that they can focus on more productive work and less on mundane tasks.  This, in turn, will provide employees the bandwidth to take on a heavier workload, without having to hire extra staff in the future.  Once a system is selected, continue to involve employees in changing processes and using software to automate procedures.

Step 2: Document All Non-Critical Functionality Requirements on a Wish List

Now that you have made it clear that part of the software implementation plan is to improve upon existing processes, it is time to introduce the idea of a Wish List.  Even though employees should be open to changing their processes as per Step 1, it is still common for them to become frustrated during the implementation as they see how certain tasks will be performed differently. This can then lead to them asking for specific functionality or reports as part of the new software.  When this happens, it is common to immediately involve the software vendor in creating a work around or customizing the system, however, this is not the best approach.  Instead, in this situation have employees write down these ideas and store them as part of a Wish List for later review.  This allows the software vendor to focus on the core aspects of the implementation – which includes training and set-up – without getting pulled away to work on other projects. To best manage this Wish List, have one employee take ownership of storing these ideas and encourage all employees to make note of all requirement requests, no matter how big or how small. The idea is that the items put onto the Wish List are for non-critical pieces of functionality. Unless the required functionality being sought physically prevents someone from performing their job, it goes on the Wish List – no matter how important an employee believes that specific piece of functionality to be.

Step 3: Review Said Wish List 1-2 Months after Go-Live

After the business has been up and running on the new system for 1-2 months, it is then time to go back and review the items from the Wish List.  In most cases, you will find that the majority of the items on the Wish List are no longer relevant.  Employees have become familiar with new processes and the software has started to provide automation opportunities across departments.  If there are still items on the Wish List that you would like to have implemented, speak with your software vendor to schedule a time to review the specific requests.  Two of the major benefits to following this process are:

Software vendors are able to focus on training and implementation during the time they are on-site with your team. This ensures that employees feel comfortable using the new system to complete their tasks and improves the implementation process.
Extra work is not being performed that is unnecessary. During the implementation process, employees can become obsessed with using the software in order to perform their responsibilities exactly as before, however, this defeats the purpose of implementing a new system.  Frequently, a couple of weeks using a new system and adjusting processes is all it takes for employees to be productive on a new system.  Time is often wasted on what employees believe to be crucial processes during the implementation, but most of these requirements are usually dealt with in a new system or end up being unnecessary.


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5 Things to Know Before You Speak with Distribution Software Vendors

Evaluating software is a time consuming and resource-laden task.  With so many options in the market, it can be difficult to narrow down your search and distinguish between all the systems available. When you do finally create a list of potential distribution software systems to evaluate, you must then dedicate hours of time to actually speak with vendors and watch demos in order to make a decision.  Although the search process will always require significant work, to make conversations with vendors as productive as possible, do your homework beforehand. Many distribution type businesses will require similar functionality, however, it is important that you have a good understanding of how your company operates in order to have meaningful conversations with each vendor.  What might be an obvious piece of functionality or requirement to you, could be unique to other distributors in the industry.  The more information you can provide each vendor upfront, the easier it will be to narrow down your options throughout the process.  The right vendor will spend the time to get to know you and your company in order to make their own assumptions about whether or not the system will be the best fit for both parties.  You want to find a vendor who has experience working with distribution businesses, but also spends the time to learn about your specific requirements and processes.  In order to best prepare ahead of time for each software discussion, consider the following:

Number of Users

Certain introductory systems set costs and limitations based on transaction volume, number of workstations and data file size, however, as you begin to look at middle-tier software these restrictions and cost structures no longer apply.  Instead, distribution software vendors will quote a price based on the actual number of employees who access the software and required functionality.  However, in order to determine how many user licenses you need to purchase, it is not as simple as just counting those who access the software.  Instead, you must also take into consideration the ways in which each employee will interact with the system. Are some users sales reps who travel out of the office? Are some users people in the warehouse who pick, pack and ship orders? This information is important to consider as certain vendors will have different user licenses available depending on the functionality and system access required.  Alternatively, certain vendors will also offer specific functionality designed for certain types of users, such as travelling sales reps.  For example, many distribution businesses employ outside sales reps on a contract basis.  In this situation, these reps may only require access to inventory information and the option to enter orders from the field.  A company may also want to specifically restrict these reps from accessing the full distribution system, in which case functionality such as an online order portal would work instead. This will, in turn, reduce the number of users who require a full license to the system.

Sales Channels

Many distribution businesses who historically only sold product through their in-house or outside sales team are taking advantage of selling through multiple sales channels, such as eCommerce and through retail showrooms, both to the end consumer and to other businesses.  It is important to know what sales channels your business utilises and the volume of orders per channel, to better determine what functionality is most beneficial in a distribution system. If you sell online through your own website or other marketplaces like Amazon, consider distribution software that provides integration with each website.  This will allow you to share information between the two and reduce manual processes.  If you sell product directly to customers who visit your location, consider implementing point of sale software in order to create orders and accept payment.  However, this is where order volume is also an important metric to know.  If the volume of customers who visit your location to place an order is fairly small – do you need a full point of sale system or can you enter each order directly into your distribution software? Do you need to be able to accept payment for these orders or will they get entered on account?

Number of Locations

Another important factor to consider when you speak with software vendors is how many locations the business has.  If you have multiple locations – do these all operate the same? Some distribution businesses will have multiple warehouses and might even have their own brick and mortar retail stores.  In the case of multiple locations, are they owned by the business, or are they third party logistics companies? Does the company transfer inventory between the locations? Each of these factors will play a role in finding the right distribution system.

Preferred Deployment Method

When implementing distribution software you will have to decide between a cloud-based or on-premises deployment. If you have a preference, this can help narrow down your search in the beginning as certain vendors will only offer one option. If you do not have a preference going into discussions, make sure you do some research beforehand on the pros and cons of cloud vs. on-premises software.  Cloud-based solutions are typically based off of an on-going subscription model whereas on-premises solutions usually require a large upfront investment.  Certain factors can help aid in making the right choice about deployment such as budget, available IT resources including personnel and infrastructure, internet access and physical storage space.

Reasons for Shopping

It should be fairly obvious that before you start searching for new distribution software you need to have a valid reason for doing so, but this is not always the case. A clearly defined motive for finding new software will aid in making the best decision and provide a way to measure ROI once a new system is in place.  If you want to automate processes and save time, make sure you know how many hours of work are currently dedicated to manual processes. If you want to reduce the use of paper in the warehouse, know how much is currently being used and in what capacity. A clear picture of the pain points and opportunities you wish to address with new software will help keep the search a priority so that you find the right system within a reasonable time frame.

It is important to consider all of the above factors before you start the search for distribution software in order to make the most of your discussions with software vendors.  Of course, there are several other factors that you will want to also address right away, especially if your business has specific unique needs.  This can include the need for the system UI to be available in multiple languages, specific functionality such as lot tracking and catch weight, and remote access. Be sure to ask vendors about specific requirements, and never assume they will have the functionality you need built right in.



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Business Management Software: When to Ask for Customer References

With any major purchase it is good practice to evaluate reviews and speak to references whenever possible. This is especially the case with any major business purchase, such as business management software. When searching for a new system, it is best to narrow down your options to 3-6 vendors as a starting point for evaluating the software as well as the vendor itself.  Certain factors, like cost and functionality are obvious areas of comparison, but you will also want to consider factors such as ongoing support, company size and customer satisfaction.  The best way to evaluate customer satisfaction is to actually speak with some of the vendor’s existing customers, and while you may want to get this information during your initial discussion with each vendor, it is best to wait until a later date.

Example: Pretend that you have narrowed down your search to 6 software vendors, and each vendor provides you with information on 3 references during your initial discussion.  That means that over the next several days or weeks, someone from your organization is going to have to contact and speak with no less than 18 references (assuming all are contacted).  Most of these references will confirm a happy outcome and satisfaction with the vendor, and so the final result will be many hours of conversation to determine that you have correctly narrowed down your options.  But is this information going to help you determine which business software is best for your company?

Even if the above scenario is a bit of an exaggeration, you get the point.  You might be able to glean some useful information from speaking with references right away, but usually not enough to actually eliminate any given vendor.  A faster way to find similar information is to simply spend some time searching online for vendor reviews; you can get a lot of the same information without spending as much time doing so. This can aid in a more thorough software evaluation and then actual references can be contacted at a later date.

A better way to eliminate the various business systems being considered is to perform a comprehensive evaluation process on each vendor and system in question. Although each vendor will have their own recommended process, a good strategy to follow includes:

Step 1: During the first step in narrowing down your software options, a good vendor will try to schedule an initial and short conversation in order for you and them to get an idea of scope, needs, costs etc. at a high level only.  This allows each party to identify any red flags or show-stoppers right off the bat. Be wary of a vendor that jumps right into a demo of their product as the first step in the process – although software UI is an important factor to consider, it should not trump a system’s ability to meet your needs, and a vendor that understands your business and can help you achieve your goals.

Step 2: Assuming no issues are identified during Step 1, a good vendor will then schedule a more in-depth discussion to further review processes and requirements.  This will provide information on existing processes and needs and the primary pain points and benefits to be addressed by a new solution. This discussion will then allow you to further narrow down your list of potential vendors and eliminate those who would not be a good fit.  During this conversation it will become evident very quickly if the software being offered can meet your company’s needs.  Be cautious of too many responses of “we can do that”, and find out the specifics of how certain functions will work for your business.

Step 3: The next logical step will be a demonstration of the software based on specific information gathered during Step 2. Each demo should be no longer than 1.5 hours and with no more than 2-3 vendors, in order to avoid information overload and fatigue. Make sure that before going into a demo you have outlined and discussed with each vendor a specific agenda to follow, and try to stick to that during the presentation.  It can be easy to get bogged down with certain features and processes, but focus on the bigger picture and which features will be most important.

Step 4: The next step will vary based on the company in question, but is usually reserved for subsequent demos and discussions to focus on specific areas of the software, or processes that have been identified throughout the first couple of steps.  By this time you should only be left with 1-2 vendors as potential options for your business.  It is at this point – and while you’re also ready to receive a formal proposal from each of the vendors – that you will want to ask for Customer References.

Most software vendors will offer 3 references, and most of these references will only have good things to say about the vendor in question.  However, to get a true representation of what the vendor is like to work with and how good their software is, ask instead for more references (even if you don’t actually plan on calling them all).  In addition, ask for references from customers currently using the software that have had issues in the past (such as implementation or support issues). Every vendor will have customers who have been dissatisfied at some point or another: it is important to speak with these in order to understand how the vendor then addressed the issues.

Customer references are a vital step in the evaluation process of implementing business management software, but it is best to request them once you have already determined which systems will be the best fit from a functionality standpoint.   Don’t waste time speaking with references if the software has not been determined to work for your company.

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POS for Wholesale Businesses: What to Look For

Point of Sale (POS) software is not just for use in traditional brick and mortar retail stores.  Many wholesale businesses can also benefit from POS functionality when they also operate as a cash and carry, have a showroom for walk-in customers or have separate retail locations. In these situations, businesses often start by assessing point of sale software that can also help run the wholesale side of the business.  However, this can often lead to gaps in required functionality and a better approach is to look for back-end inventory and accounting ERP software with built-in POS functionality. An ERP system will provide tools to manage back-end processes such as inventory, purchase orders, sales and financials, while POS functionality will allow users to create orders and accept payment on the front-end.  In addition, ERP systems often include specialized features that are designed with specific processes and businesses in mind, such as lot tracking, eCommerce integration and landed cost tracking.   Although POS is an important piece of functionality for any business selling directly to the end customer, it should not be the first consideration for wholesale businesses when evaluating software.  An all-in-one ERP solution with built in POS will allow a wholesale company to manage sales from all channels – not just retail – such as eCommerce, tradeshows, EDI and external and internal sales reps. Having information stored in one database means that inventory information is always up-to-date so you’re not able to sell product you don’t have – no matter what channel you’re selling through.

Just like standalone POS systems, ERP with POS functionality is designed to work in-store with barcode readers, cash drawers, receipt printers and display poles to allow businesses to process debit, credit and cash sales. POS for wholesale businesses often means having POS stations set up at the front of your warehouse as a cash and carry business, within your showroom or even as part of your display when exhibiting at tradeshows. If you operate multiple retail storefronts, the right software will be able to pull reports based on individual location performance, or consolidate information across the entire business.

When evaluating ERP with POS, specific functionality to look for includes:

Ability to support payments in multiple currencies including split currency payments
Ability to support split payments between types of payments such as cash, credit card, gift card and others
Ability to support payment on account – this is especially important for those who wholesale product in which their customers maintain a large balance on account
Automatic calculation of sales commissions
Inventory detail lookup including multiple warehouse locations, items on order, items on backorder etc.
The ability to manage multiple ‘in-progress’ transactions on the same terminal
Integration with back-end ERP in terms of GL, AR, inventory, customer information, pricing, commissions, booked sales reports, taxes and more

Another important piece of functionality to look for is offline access in case of a connectivity issue. The ability to work offline means employees can continue to process orders while customers are still in-store. Once an internet connection is re-established, any new orders will be automatically uploaded into the back-end ERP system so that information in the database is resynced and up-to-date.

If you sell through multiple sales channels as a wholesale business (including retail), POS software is not the only type of system you will need.  Instead of implementing multiple, standalone solutions, focus your search on ERP with built-in POS functionality. This means all information is stored and managed in one database, and eliminates the need to enter information into multiple systems.  This in turn will save users time looking up information and entering data, and thus reduces the amount of errors associated with doing so.


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5 Questions Small Business Owners Should Ask When Searching for New Inventory Management Accounting Software

As a new business, one important consideration to make is what (if any) business management software is required.  For most small wholesale and distribution businesses, this usually means acquiring software for managing accounting procedures and then using manual processes or Excel for tracking inventory and other business processes.  However, as your company grows and evolves over time, there will come a point where making a strategic investment in more robust inventory management accounting software is important to continue to be successful. Once you have made the decision to start looking for new software, take the time to evaluate your existing processes and future plans, and educate yourself on the software options available to you in the market.  Speaking with multiple vendors and spending the time having detailed discussions and viewing demos can become overwhelming if not properly prepared.  As part of your search process, consider the following before engaging with potential software vendors.

1. What is the reason you’re searching for software?

Are you searching for new software as a strategic investment and because you believe in the productive power of technology and applications? Or are you searching for software because you feel it is time to make a change? As you begin to plan for company growth and expansion, consider the implications software can have on helping you achieve your business goals and meet your growth projections. The inclusion of more advanced software within your business plan can help make sure you have ample time to find and implement the right solution, before your processes become unmanageable with your existing system. In order to best prepare for implementing advanced inventory management accounting software, it is important that you understand the limitations of your existing software.  Knowing when to transition systems will depend on several factors, such as:

An increase in transaction and order volume. Does your existing system have limitations on the amount of transactions it can handle and size of its database?
Need for additional features. As your business grows, it is likely that you will require additional features to accommodate selling through new sales channels, opening multiple locations and expanding to new geographic markets.
Opportunities for automation across departments. Manually managing specific tasks can start to hinder company growth as you experience an increase in order and transaction volume, and can result in time spent fixing errors associated with using multiple, standalone systems.

 2. Is your company ready to accept new software?

When implementing any major change within your company, it is expected that there will be some resistance by staff.  This can often be one of the biggest barriers to overcome and is a natural reaction for those used to certain processes, however, it is also something that can be easily addressed by management with the right preparation.

First and foremost, be prepared for this resistance and start by educating employees on the differences between introductory type systems and more advanced inventory management accounting software.  Explain how making the switch will benefit the company as a whole.  One of the biggest reasons why employees are resistant to change when it comes to software is because they are afraid they will lose their jobs.  Another reason is because they are also worried that they will not be able to do their jobs with a new system.  Although implementing more advanced software can save you from having to hire more employees down the road, typically it does not replace existing employees.  Instead the idea is that the right system will replace the more mundane and administrative tasks those employees are responsible for, and provide new features previously unavailable.

Getting your employees on-board for new software and internal changes requires:

Clearly illustrating the need for change and how it can have a positive impact on the company as a whole
Involving employees throughout the process of selecting a system and changing procedures
Making incremental changes and setting realistic expectations – let employees know that there will be a learning curve involved in getting used to new software, and that the company is prepared to help manage this
Provide as many resources as possible to support the change, including proper training material, a channel where employees can voice concerns and on-going support resources

3. Is the system right for your business?

When you start to evaluate software you want to make sure you find a solution that is right for your business.  This means being open to hearing from a variety of vendors and approaching the search with a thorough understanding of your existing processes, and requirements moving forward. Although cost is an important consideration when evaluating vendors, focus first on specific functionality and industry experience, as well as cultural fit.  Does the vendor have experience with companies in the same industry? Do they have additional functionality that can be added on as your business continues to grow? Although you might not need all the bells and whistles upfront, understanding the direction you want to take your business in the next couple of years will give you a better idea of specific functionality you may require down the road.  It is also important to evaluate vendors based on their company size, on-going after sale support and customer satisfaction.   You want to work with a vendor that can become a trusted business partner, offering expert advice to help your business save costs, increase efficiencies and take advantage of new opportunities.
Download our eBook: 6 Factors for Evaluating Software Vendors
4. What is the Total Cost of Ownership (TCO)?

Another important factor to consider when evaluating different inventory management accounting systems is the total cost of ownership over a span of several years.  This often comes into play when deciding whether or not to implement a cloud-based solution or on-premises based solution. Although there is no easy answer as to which deployment method is best for your business, there are certain instances when one may be more appropriate over the other. Aside from some of the pros and cons of infrastructure management, it is also important to evaluate long-term differences in costs.  When speaking with vendors, get them to help you prepare 1 year, 3 year and 5 year TCO analysis of each deployment method to better determine which one is the best economical choice for your business.  Specific factors to include in a cost comparison are:

On-going monthly fees
Maintenance costs
Initial server set-up and implementation
Back-up media and on-going server management
Server hardware
Other software licenses

 5. How will you measure Return on Investment?

When investigating a possible inventory management accounting software purchase, some companies try to use the return on investment (“ROI”) as a tool to justify the project, select a vendor, and/or measure the project’s success. This is typically seen more so with larger companies as opposed to those in the small-medium enterprise space, as it can be difficult to quantify some of the expected benefits – particularly when the project is part of a strategic plan to aggressively grow the company. There is also a debate to be had over the validity of trying to build an ROI model for software implementations that result in an annual spend of less than 0.5% of revenue.

However, assuming the implementation is at least moderately successful, one simple way to ensure that your company maximizes its ROI on a software investment is to use it properly. Although this seems like an obvious answer, it is surprising how many businesses implement new software and then continue to use old methods and work around the new system.  To avoid this issue, make sure you follow up with your vendor of choice a couple of months after go-live on a formal and scheduled basis, to discuss using the entire system properly, and to make sure you’re taking advantage of available functionality.

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Accounting Wholesale Software: Profit and Loss Monthly Reporting

Picture This:  Your wholesale and distribution business has been up and running for a year now, and in that time you have been successfully entering all of your transactions into your all-in-one accounting wholesale software.  The system is showing that you have a lot of money in the bank, and therefore the company must be doing well, right?

Not necessarily.  No matter what business you’re in, money in the bank is only one part of the picture when it comes to measuring a company’s overall health.  An abundance of cash can be the result of much more than just sales revenue, and money in the bank could come from a loan, an initial contribution by the company’s owners, or a recent influx of payments due on accounts receivable.  However, just looking at cash in isolation does not take into consideration other important factors such as interest or payments due on the loan, your accounts payable balance and other expenses and credits owed.

In order to get a better understanding as to how your business is actually performing, there are other metrics and data points that will need to be evaluated.  Most accounting wholesale systems will provide specific tools used to report on overall/departmental company performance and health.  For example, certain systems will automatically calculate specific financial ratios based on numbers pulled from the GL, allow users to review general ledger details, generate reports on specific business activities and create financial statements such as balance sheets and profit and loss statements (P&L). While some combination of the above can usually give you good insight into how your specific business is performing, P&L statements are especially useful in doing so.

You may have heard the term P&L before with a different name – Income Statement.  Both refer to the same type of statement which covers a period of time, usually a month, quarter or year and provides insight into a company’s revenues and expenses.  The revenue section depicts the income earned from the sale of product or delivery of a service.  In the case of a wholesale distribution business, the Cost of Goods Sold (COGS) is then deducted from the income.  The resulting difference is referred to as Gross Profit (or Loss if negative), and reflects the profit the company has made on the sale of product, without taking into consideration the costs of operating the business.  Operating expenses is where the next section of the P&L report comes into play.

All expenses of the business other than COGS are reported below Gross Profit, often in detail by type of expense (i.e. advertising, rent, salaries or travel).  These expenses are then added together and the total is subtracted from the Gross Profit.  The result is the company’s Net Profit (or Loss) for the specific period being reported on.  This allows a business owner or manager to see if the company has made a profit for that particular time period, how much of that profit came from the sale of products and how much it was lessened as a result of operating expenses.

If the P&L shows a profit for the specific period, than great – the company must be doing well.  Once again though, this is not necessarily the case.  Evaluating P&L statements over multiple periods can give you a better indication of company performance, compared with just evaluating one period in isolation. This is why it is important to find accounting wholesale software that allows you to easily create and review P&L statements on a regular basis, such as once a month.


If you were to take a look at your P&L statement this month and see a $15,000 profit, this would probably make you pretty happy.  But would you be just as happy if you then looked at last month’s P&L report and saw a $30,000 profit?  This information might result in some questions such as:

Why did my profit drop 50% from last month?
Was last month’s profit amount an anomaly or is this month the anomaly? Or neither?

Evaluating and comparing your Profit and Loss statement period over period, can provide indications of the health of the business, growth direction and also highlight reasons for differences between periods.  In the scenario just discussed, a quick look at the expenses may show a $10,000 increase in tradeshow expenses and a $5,000 increase in travel expenses in the current period over last period.  Everything else being relatively consistent, that could be the reason for your decrease in net profit.  If tradeshows are a one-time expense every year and usually help generate future revenues, it might be safe to assume that the P&L results are not showing a trending decrease in revenues.

Reviewing P&L statements period over period and especially month over month can allow you to see trends as they occur, giving you the opportunity to try and fix any negative ones and take advantage of opportunities. Monthly P&L statements can also highlight anomalies associated with certain business transactions and they can aid in catching posting errors close to when they occur.

In summary, looking at any piece of financial information in isolation may provide some benefit, but the better option is to review specific information over a collection of periods, and to combine that with reviewing other complementary financial information and departmental data.

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