May 31, 2011
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.
May 16, 2011
Week after week, we here at Blue Link Associates receive calls from business owners in desperate need of change to their existing software systems. The existing systems are hindering their business growth and, naturally enough, they want to do something about it. One of the common themes in these discussions is the lack of data integration across multiple systems.
Far too many business owners rely on various disparate systems to meet their needs. Initially, this may make sense – when the business is small, things are relatively simple. As the business grows, however, they soon find that many of these disparate systems have limitations when it comes to integration capabilities, and that can put a significant strain on their operations.
It is natural to want to grow your business slowly; gradually building and ramping up to coincide with sales. The problem with this approach is that by the time business starts to really take off, you may find yourself stumbling and spending money unnecessarily, on Band-Aid solutions and extra people to paper over the gaps. Business owners would be better served by planning ahead and making some investments to help them in the long-run. This means that instead of adding workarounds to their current systems, they should implement a well-integrated solution to replace them all.
Robin Smith at Virtual Logistics Inc., a Blue Link partner, emphasized the need to have a corporate data integration strategy in a recent blog article. The reality, Robin says, is that integration is getting more and more complex, and not having a well-defined data integration strategy is going to cost lots of money in the long run. This goes hand in hand with a corporate strategy of defining both needs and objectives to be fulfilled by the ERP package. Blue Link and Virtual Logistics both believe that a well-defined strategy allows a company to handle the ups and downs and manage growth in a cost-effective manner.
May 10, 2011
In a previous post on lot tracking, we discussed the top 3 excuses for not implementing a proper lot tracking system. We now have a new contender for the list, and it’s a good one, tough to argue against. I heard this comment during a webinar on inventory management for food and medical distributors:
“There’s no point in trying to use lot tracking software, because all lot tracking software out there sucks…”
This was the “expert” opinion of one of the attendees, a supply chain manager at a medium-sized food distributor who has apparently looked at “dozens of software packages” and found them all wanting when it comes to lot tracking. Unfortunately, the moderator did not drill down with this person, so we never did find out what software packages he’s looked at, why they “suck”, and what he’d like to see in a good solution. We did, however, hear him proudly proclaim that he tracks all their lot movements, in and out, on a spreadsheet that is always up to date and accurate on a daily basis. Apparently, manually updating all this information, probably taking several hours of his time per day, does not “suck”.
Here’s my opinion: a properly implemented accounting software solution with an integrated lot tracking module beats a separate manually updated spreadsheet 100% of the time. And yet…there are still so many companies out there in food distribution, medical and similar industries who either don’t track lots at all, or do it “on the side”. I just don’t get it.