A massive percentage of small businesses and startups use QuickBooks for accounting processes. However, QuickBooks is not an ERP system and therefore you may be missing out on more advanced functionality only available in ERP that can help run your business. While QuickBooks is great as an introductory piece of software to get your business up and running, it's primary focus in on accounting and financial processes and lacks functionality for other areas of the business - such as inventory management. Here are some of the reasons why QuickBooks is not ERP.
QuickBooks is primarily an accounting solution. ERP includes functionality across all business operations.
Any reputable ERP software will include all the same accounting functionality found in QuickBooks, plus more. Unlike QuickBooks, ERP software also includes functionality across other business areas such as inventory management, warehouse management, sales, invoicing, order entry and processing, reporting and eCommerce. This is one of the main reasons why QuickBooks is not ERP software – ERP is an all-in-one solution with integrated functionality across departments. For example, when you process a payment from a customer in ERP, it will update their credit status so that the information is immediately available on the order entry screen.
QuickBooks allows you to manage negative inventory, ERP does not.
Negative inventory implies that you can have less than zero of your inventory – however, in reality, this is not possible. While it may seem that allowing inventory to go into a negative position is the only way to perform certain processes, this is likely not the case and it can cause issues within other areas of the business.
For example, some businesses insist on tracking negative inventory for items that they receive and ship to customers before recording the receipt of inventory in the system. This is sometimes done as part of a business practice where shipments are not received in the system until all of the related invoices have been received to get accurate costs. However, with ERP software, landed cost tracking features allow users to properly cost the product and receive it into inventory before receiving all the related invoices.
Learn more about how to manage your business without using negative inventory.
QuickBooks has restrictions on users and features, ERP software is for growing businesses.
If you’re using QuickBooks it is likely that you’re also using manual processes for tracking inventory and duplicating data entry across multiple solutions. Because QuickBooks targets small businesses, it has limitations on the number of users, amount of data that can be maintained, and functionality. ERP however, is specifically designed for companies looking to scale – and provides various features that can be activated from the beginning or as your business and processes change. Instead of purchasing a separate inventory software, tools for order entry and processing, and a CRM system to integrate with QuickBooks, you can purchase all-in-one ERP software. This helps to cut costs, streamline operations and means you’re only dealing with one team of experts for support, training and other requests. Trying to integrate with QuickBooks also means you have to rely on duplicate entry across multiple solutions. Not only is this time-consuming and prone to human error, it also prevents you from accessing advanced functionality only found in ERP – such as better financial reporting, automated email functions, and automated reports.
The bottom line: QuickBooks is not ERP. Therefore, when you decide to replace QuickBooks, remember to keep in mind the following:
- When setting a budget for new software, do so based on the cost of ERP and not based on the cost of QuickBooks.
- Keep an open mind to changing processes instead of trying to do everything you've been doing with QuickBooks, but just with ERP instead. Ultimately the right ERP software will save you time and money.
- If you’re nervous about making the switch, keep this in mind when speaking to different software vendors. Find a vendor that takes the time to learn about your needs and who will dedicate the time and resources to help you make the change.