- Manufacturing businesses have unique accounting needs, and finding the right accounting software can help your small business stay on top of your finances, easily pay taxes, and handle other aspects of your business.
- While many manufacturing companies may start their accounting and financial recordkeeping with spreadsheets, accounting software solutions can reduce errors and provide a better picture of financial health.
- Learn how accounting software can streamline your financial management processes, including accounting and bookkeeping, and find the best accounting software for the manufacturing industry in this article by Nav’s experts.
Accounting Challenges of Manufacturing Businesses
Manufacturing businesses of all sizes have unique accounting challenges, due in part to long timelines before a product is ready for sale. The manufacturing process can take much longer than selling a ready-made product or running an ecommerce business. It can take months to get the raw materials you need, particularly if there are supply chain issues. Unlike other retailers who may simply buy their products from wholesalers, you’re producing a new product from start to finish, including assembling the on-premise workflows and processes to create the finished product.
Manufacturing businesses have specific business needs, and manufacturing accounting software has to take this into account. Beyond handling accounts receivable and accounts payable, your accounting system needs to be able to:
- Handle supply chain management
- Track inventory
- Manage expense tracking
- Manage procurement
- Deal with order management
- Handle procurement and purchase orders, including a bill of materials
- Manage contacts, including distributors and suppliers
Many manufacturers may also find that management software can augment their accounting solution to help them with project management from design to distribution. Enterprise resource planning (ERP) software can automate many aspects of your business, including finance, human resources, customer relationship management (CRM), marketing, and more. Many ERP solutions include an accounting solution to streamline operations. However, an ERP system can also be pricey, especially for small manufacturers or startups.
How Accounting Software Can Help Support a Manufacturing Business
The biggest benefit of using accounting software is to save you time. Spreadsheets may work for smaller businesses, but the more complex your operations become, the better it will be to have a tool that can automate most of the accounting processes.
Automated bookkeeping tools like a general ledger are also an important benefit of accounting software for any small business. Unlike spreadsheets, accounting software can help you minimize errors from data entry or incorrect formulas. Because the software will automate the calculations of things like your profit and loss (P&L) statement and other items on your balance sheet, you’ll have a better understanding of your cash flow and financial future, and you’ll be able to trust that it’s accurate.
The best accounting software for a manufacturing business will help manage financial data to provide a good look into the business’s finances, especially when it’s time to pay taxes. The right accounting solution will also provide easy-to-read financial reports that you can share with tax preparers and accountants. You should also be able to create budgets and use other tools for financial forecasting.
How to Choose an Accounting Software for Your Manufacturing Business
You’ll want to base your accounting software solution on your business needs, but there are some basic features you may want to consider to choose the best accounting software.
The first consideration is whether the software is user-friendly and intuitive. Most small business owners haven’t studied accounting, and the software should help you do basic bookkeeping and accounting easily without too much of a learning curve. You should also be able to access and understand your financial reports quickly. Ideally, you’ll be able to make customized dashboards to help you get a fast overview of your finances when you need to.
Cloud-based accounting software is very popular because you can update it in real-time from anywhere, including your shop floor. Cloud-based software offers apps for mobile devices, which makes it easy to use for multiple team members.
The best accounting software for manufacturing businesses will also integrate with other software you use, such as your ERP software, CRM systems, or other modules that speak to inventory management and production. You should also be able to give access easily to any third-party professionals that may need access to your financial information, such as your tax accountant or bookkeeper.
Best Accounting Software for New Manufacturing Businesses
Small manufacturers and new manufacturing businesses need easy-to-use, intuitive accounting software that they can set up quickly.
Intuit QuickBooks Pro
Intuit QuickBooks is the number one accounting software for small businesses, and QuickBooks Online is an excellent entry point for manufacturers. QuickBooks’s popularity also means that there are a lot of resources available to help you learn how to use it, and most accountants will gladly work with the software to help you balance your books and pay your taxes.
Bench helps small businesses automate their bookkeeping and accounting processes, which is great for startups and new manufacturing businesses. They provide you with a team of dedicated financial professionals to help you with all aspects of your bookkeeping and accounting, so you can focus on manufacturing.
Invoiced is great for businesses that need to keep on top of their accounts receivable and invoicing. It automates everything from payments to reminders to collections, with the goal of getting your company paid faster — something most manufacturing companies need. They also provide a customer portal and pre-built reports. You can schedule a demo to find out about pricing.
Xero is a great choice for manufacturing businesses that are just getting started. It integrates with third-party manufacturing software to give you an overall view of your full business process. Invoicing, financial reporting, and intuitive dashboards are all part of Xero’s benefits, and you can track stock and inventory, too.
Best Accounting Software for Expanding Manufacturing Businesses
As your manufacturing business grows and expands, you may want more functionality from your accounting software to help manage your growth.
Sage is particularly good at automating financial administration, and with multiple pricing tiers and structures, you’re sure to find a level that works for your specific business needs. The software handles everything from procurement to sales, as well as inventory, financials, and even scheduling. And as your business gets bigger, you can upgrade to Sage Intacct for expanded business software.
Zoho Books is a good startup accounting software that includes real-time inventory tracking. It tracks taxes and includes automated banking. While it’s not as robust as other accounting software, it’s a good starting place for manufacturing companies. Paired with Zoho Expense — which provides expense tracking and reporting — it can be a good solution for growing manufacturing companies.
Best Overall Accounting Software for Manufacturing Businesses
As a manufacturing business gets more complex, the above options may still work well for accounting, but other solutions may provide more features to help you manage your business finances and processes.
FreshBooks is another cloud-based option that allows you to track expenses, send invoices, and manage customer relationships. It integrates easily with third-party software solutions to help with project management. Plus, it’s particularly useful for tax management.
Oracle NetSuite ERP is a complete manufacturing software and accounting solution built for manufacturers. It can be a good choice if you want to manage your entire business from one software tool. The solution includes important business management features, such as:
- Shop floor management
- Production control
- Procurement and ordering
- Supply chain management
- Compliance management
It also includes important accounting tools like general ledger, accounts receivable, accounts payable, taxes, and payments.
Accounting software is an important way for small businesses — including manufacturers — to save time on accounting tasks, increase accuracy of financial data, and make tax time easier. To learn more about accounting solutions for manufacturing businesses, visit Nav’s accounting software resources center.