For most small and medium sized wholesalers / distributors, the “accounting” part of accounting software is very much an afterthought. The owner-managed company typically focuses (quite rightly) on inventory management, order processing and purchasing tools in the business software that it uses. Sadly, with many industry-focused software packages, the accounting functionality, to be blunt, sucks big-time.
As s result, many such companies are hampered in their attempts to grow. While accounting may seem relatively unimportant to the startup entrepreneur, who can simply employ an external bookkeeper to come in a few times a month and clean things up, as the business grows this becomes more costly, and the need to be able to accurately manage accounting functions and provide key metrics on a timely basis becomes paramount.
Here are 8 typical shortcomings of the vertical business solution, when it comes to accounting:
- Books go out of balance
- No built-in multi-currency capabilities
- No good tools for collecting receivables
- No facility for automating calculation and remittance of sales taxes
- Cumbersome processes for managing and paying suppliers’ invoices
- No ability to factor landed costs into the recorded inventory values and cost of goods sold (leading to inaccurate gross margins which directly affect pricing decisions and commission payments)
- Many manual workarounds, like calculating commissions, dealing with credit cards and recording online payments
- The need to manually re-key information into Excel each month in order to get meaningful financial and management reports
So as a wholesaler / distributor outgrows the entry level packages, while it may be tempting to only look at logistical functionality when making the step up to the next level of accounting software (or more accurately, “ERP”), a failure to examine and factor in the core accounting functionality can severely hamstring continued growth.