There are some aspects of accounting that are universal to all businesses, such as recording transactions, collecting revenue and paying bills. But accounting for a manufacturing business involves some unique issues.
This industry needs to account for raw materials, work in process, and finished goods. These companies need to decide how they’ll account for manufacturing costs and value inventory and pay attention to which product lines are most profitable.
QuickBooks Enterprise for Manufacturing & Wholesale has everything a manufacturing business needs to account for costs and inventory and analyze business performance. Here’s a look at the top eight features of QuickBooks Enterprise that every manufacturing business needs.
Manufacturing and Wholesale Chart of Accounts
The chart of accounts for a manufacturing business is very different from that of a retailer or service-based business, and the developers behind QuickBooks Enterprise for Manufacturing & Wholesale know this.
That’s why QuickBooks Enterprise has industry-specific charts of accounts. When you create a new company file in QuickBooks Enterprise, you can choose a predefined industry close to what your company actually does. Then the software will generate a default chart of accounts that includes many of the accounts your business needs.
Of course, every business has some unique needs, so you can edit your chart of accounts to add or delete the defaults provided by QuickBooks Enterprise. However, you’ll have easy access to the balance sheet, income and expense accounts that are common to most manufacturers.
That way, you don’t have to spend your valuable time creating a new chart of accounts for universal things like cash, accounts receivable, equity, sales income, rent, and repairs and maintenance.
Bill of Materials Cost Tracking
At its most basic form, manufacturing involves combining inventory parts and supplies to build a product. The list of all the components that go into making that product is called a bill of materials (BOM) – it’s essentially like a shopping list and recipe for creating the final product to ensure the job is done right.
QuickBooks Enterprise for Manufacturing allows users to track BOM costs for each product the company manufactures, including labor, overhead, and even the cost of subassemblies.
When the costs of certain components change, QuickBooks Enterprise can automatically update labor and materials costs, so you don’t have to update that information manually. Plus, you can track costs using either FIFO or average cost accounting, so QuickBooks Enterprise can adapt to your inventory accounting methods.
Keep in mind that a bill of materials isn’t available in QuickBooks Online. Manufacturing businesses will need to use a desktop version of QuickBooks in order to keep track of inventory for the materials used when manufacturing a product.
Available to Promise
Small manufacturers might have just one warehouse and a relatively small number of items in inventory, but as the business grows, so does its complexity. Eventually, you could have several warehouses, thousands of inventory items, and need to navigate a complex supply chain.
When that happens, available-to-promise supply chain management can help.
Available-to-promise (ATP) is a type of inventory analysis that allows manufacturers with complex operations to maintain low inventory quantities while maintaining availability for clients.
When you add an item to a sales order in QuickBooks Enterprise for Manufacturers, click the button in the Ordered column to activate ATP.
This brings up a screen showing the total quantity of that item you have on hand, how many are currently on sales orders, quantity on purchase orders, the quantity reserved for assembles, and the number available at each inventory site.
This allows the salespeople in your organization to respond to customer orders with accurate available inventory data and fulfillment projections.
Custom Price Levels
Every business owner knows that while all customers are important, some are more valuable than others. That’s why manufacturing businesses sometimes reward their best customers with custom pricing, offering discounts for high-volume or preferred customers.
If your accounting software accommodates only one price level per product, offering such discounts can be labor-intensive. But QuickBooks Enterprise for Manufacturers allows users to establish customized price levels, so you can set different prices for different customers.
This is another useful feature that isn’t available in QuickBooks Online or QuickBooks Pro. If you’re using one of those versions and constantly having to customize the prices for certain customers, upgrading to QuickBooks Enterprise and using the price level function can save a lot of time.
Multiple Customer Shipping Addresses
Keeping your customers happy and making doing business with you easy is crucial for the long-term success of any manufacturing business. So what happens if your customer is a retail chain with multiple ship-to addresses?
In some accounting software packages, that’s a problem. But not in QuickBooks Enterprise for Manufacturers. QBE for Manufacturers allows you to set up an unlimited number of shipping addresses for each customer, so you can easily accommodate customers with multiple stores or locations.
When it comes time to generate a sales order, you simply select the correct shipping address from a drop-down menu in the ‘Ship To’ box. You can also add a new address at this point if your customer recently opened a new location you haven’t yet set up in the system.
Now, you can tailor your sales orders for each customer and each shipment address.
Key Manufacturing Reports
Reports provide critical information about your business and where it stands financially. One of the perks of using QuickBooks has always been its robust reporting features, which allow business owners and stakeholders to customize and run powerful reports that aid in decision making.
QuickBooks Enterprise for Manufacturers is no exception. The software comes pre-loaded with several report templates designed with manufacturing businesses in mind. Examples include:
- Inventory Valuation Summary Report. This report shows what your inventory is worth, how much you have on hand, what it costs and what the current sales price is. If you have slow-moving inventory taking up shelf space, this report will help you identify it so you can consider offering discounts to get it moving again.
- Inventory Stock Status by Item Report. Staying on top of how much inventory you currently have on hand is important for keeping customers happy and orders flowing. With the Inventory Stock Status by Item report, you can see what inventory you currently have available.
You’ll also get insight into whether that inventory is committed to an outstanding sales order, and how much is available for assemblies.
- Assembly Shortage by Item Report. Component shortages can cause delays in production, so you don’t want to start production when you don’t have enough raw materials or supplies to finish the run. That’s where the Assembly Shortage by Item report comes in.
This report provides a snapshot of the inventory needed for key assemblies and even provides the next delivery date for items. Reviewing this report regularly can help focus your attention on shortages that need to be handled before they start holding up production.
Those are just a few of the manufacturer-specific reports available in QuickBooks Enterprise. And since QuickBooks Enterprise comes with Advanced Reporting, you’ll have access to an extensive library of industry-specific reports. Plus, you can always build and customize the reports you need to get better insights into your business.
No matter how well you manage inventory, occasionally customers will place an order that requires stock or supplies that are not yet available. If those orders aren’t properly tracked, they can become a logistical nightmare, requiring you to keep records of all the outstanding sales orders with items on backorder and placing rush orders for missing items.
QuickBooks Enterprise for Manufacturers makes tracking those backorders easy. On every sales order and invoice, you’ll see a backorder column showing exactly which items still need to be shipped. On purchase orders, there’s also a backorder column showing what you’re expecting to receive from vendors.
This can help you manage customer expectations, ensuring you can communicate delays before customers cancel orders.
Many manufacturers today depend on e-commerce platforms. But if your e-commerce platform doesn’t integrate with your accounting solution, you’ll waste countless hours managing, tracking, and re-entering data between the two.
QuickBooks Enterprise integrates with some of the most popular e-commerce sites, including Shopify, Amazon, and WooCommerce. When your separate systems talk to each other, you can ensure that each sale, return, and addition to your stock will be automatically updated in your accounting software. It also seriously reduces the time spent correcting data entry and shipping mistakes due to manually entered orders.
That will help improve your operating efficiency and bottom line.
Accounting for a manufacturing company is about more than just crunching numbers. It impacts everything from productivity to customer satisfaction and long-term profitability. That’s why you need the right accounting system in place.
QuickBooks Enterprise for Manufacturers comes with all of the features and functionality you need to run your manufacturing business your way. If you think QuickBooks Enterprise for Manufacturers is the right fit for your company, reach out to one of our Solutions Consultants at 855-270-6252 for genuine licenses or try QuickBooks Enterprise with hosting.
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