The business world is changing so quickly that many companies—especially smaller ones—hesitate to make a commitment when it comes to investing in new technologies. They worry that by the time they get a new system up and running, and train employees, it’ll be outdated. Because of that, companies often add in new technologies somewhat randomly, one at a time. This system can work, but the lack of planning and integration that it causes often results in many unrealized opportunities.
Let’s consider inventory management and accounting, for instance. Each functional area has its own opportunities for using technology and automation to streamline processes, but integrating the two systems creates even more benefits.
Optimizing both inventory and finances
Inventory levels are a constant balancing act for most businesses—owners and investors don’t like to see any more capital than necessary spent on the cost associated with each item stocked. There are also significant labor costs associated with handling and managing large inventories.
On the other hand, functional areas like Sales, Fulfillment, and Operations need to be able to fill customer orders with the shortest delay possible (or, ideally, no delay at all). An integrated system can use Big Data from multiple functional areas not only to provide invaluable insights into things like product turns, sales forecasts, and cash flow, but also to analyze and report on how these factors work together and play off of each other.
Inventory doesn’t just incur a capital cost; there’s also an associated labor cost. Each unnecessary “touch point” is an unnecessary expense. Reducing rework and time wasted looking for a product or doing inventory counts has a positive impact on the bottom line.
Providing visibility to supply-chain partners
As supply chain partners everywhere realize the benefits of integrating their systems, Electronic Data Interchange (EDI) arrangements are becoming increasingly common. EDI arrangements allow vendors, customers, and other partners to exchange information seamlessly and automatically, reducing overall workload and the possibility of errors. In addition, the increased visibility allows for smoother processes and better decision making throughout the supply chain.
Compiling accurate financial reports
All companies eventually have to reconcile inventory with accounting. This is especially important when investors are involved, and even more so when a company’s shares are traded on the public markets. There are costs associated with inventory and rules governing how those costs must be reported. Integrating the two systems reduces the risk of delays and inaccuracies that could lead to erroneous financial reporting.
Is an inventory management system right for you?
Almost every business can benefit from an inventory management system that integrates with accounting. Some, however, will soon find that it’s hard to be competitive without one. Factors that make an integrated system essential include:
- Inventory that’s tracked by barcode, lot, serial number, pallet number, etc.
- Drop shipments
- Vendors that have minimum or maximum order quantities
- Picking more than once a day
- Storing inventory at multiple sites
- Ordering decisions made based on multiple or varying criteria
- Cash flow constraints on the timing of orders
In a nutshell, the more moving pieces that are involved in the way you order, store, and process inventory, the more you’ll benefit from an inventory management solution that integrates with accounting. Some of the main indicators that it’s time are:
- The Logistics department is frequently fielding Accounting’s requests for manual inventories.
- Procurement has to check with Accounting before placing an order to make sure current cash flow can absorb the expense.
- Investors and/or regulatory agencies question the accuracy of financial reporting, forcing Accounting to redo the work.
- Functional areas have regular battles over optimal inventory levels.
Ready to find out what an integrated inventory management system can do for your customers? Give QStock Inventory a call today. Our product integrates seamlessly with both Intacct and QuickBooks, so you’re probably already well on your way.