Most manufacturers choose between SMB accounting software and ERP systems, though both solutions are somewhat inefficient and laborious in their own ways.
Those using SMB accounting software typically have to create multiple accounts for all of their entities, and many basic processes, like consolidation, happen outside of the platform. As a result, this takes up valuable human resources and causes you to close the month slower.
On the other hand, most ERP systems take months to implement and train employees to use. Even once they are up and running, most of these systems are not cloud-native, meaning integrations require substantial engineering resources. In addition, many processes, like foreign currency consolidation, only happen when the month is closed. This means executives don't have accurate financial data until the month is closed.
To help you find an accounting platform that will improve your accounting team's efficiency, we'll introduce you to SoftLedger, our cloud-based, real-time accounting platform, as well as several other popular manufacturing accounting platforms.
SoftLedger is a real-time cloud-based accounting software that is ideal for manufacturing companies – particularly those with multiple entities.
It’s less cumbersome, complicated, and expensive than legacy manufacturing accounting software. However, it offers all the capabilities necessary for complex accounting processes that multi-entities require (that SMB accounting software lacks).
Here’s a quick snapshot of how SoftLedger is different from other accounting software solutions:
Here’s a deep dive into how SoftLedger helps manufacturing companies improve their accounting processes.
SMB accounting software doesn't enable you to build integrations, and most legacy accounting software makes it difficult to build integrations as you'll have to find someone with proprietary knowledge of that software's programming language to execute the integration.
That's one of the key reasons why we built SoftLedger as an alternative solution.
It uses a REST API, which means 95% of our platform is completely programmable via API. So what used to take weeks to build and hours of human resources now only requires a few
In addition, all of the documentation that developers need to build integrations is available directly on the website. This makes it easy to quickly execute the desired integration, whereas other accounting platforms don't offer detailed and accessible documentation.
Legacy accounting software consolidates data at the end of the month, meaning manufacturers don't have a clear picture of how the company is performing financially until the end of the month. As the close process often takes weeks, an executive making decisions mid-way through February may not have access to accurate data from January. This can lead to overspending and poor investment decisions.
For example, an executive might have projected a project from January to cost $20,000. Though if the January books don't close until February 20th, the executive might find out on February 20th that the project actually cost $40,000.
This places the company in a reactive position, and once they have overspent, there isn't much they can do to repair the damage.
That's why we built SoftLedger. It's the first platform to offer truly real-time data.
This way, executives always have access to accurate data at any time throughout the month. So if a charge that is projected to be $20,000 comes in at $30,000 on January 11th, executives can see that data on January 11th (rather than waiting until mid-February when the January books are finally closed). This way, they still have time to pause other projects and course correct to avoid overspending.
While some other manufacturing accounting solutions claim to offer real-time accounting, it often isn't entirely accurate. For example, if your accounting process involves multiple currencies, most ERP systems don't apply the foreign exchange rate until the month closes. So while the data may be entered in near real-time, it's essentially useless until the end of the month.
However, SoftLedger will automatically apply the foreign exchange rate the instant the transaction enters the system to ensure that the data is delivered in real-time and is accurate.
SoftLedger is the first solution that offers truly native cryptocurrency capabilities, meaning it's built to accommodate crypto as it's mined.
With a traditional ERP system or SMB software, you'd have to purchase a separate crypto tool to add to your general ledger software. Then, you'd either:
With SoftLedger, crypto accounting is just a part of your general ledger software. So you don't have to perform any integrations or export and upload data to make sure all of your crypto transactions appear in the general ledger.
In addition, SoftLedger calculates the cost basis for you and then creates a corresponding journal entry – in a matter of minutes.
Step 1: SoftLedger goes through your cost layers and automatically calculates your gain or loss using the FIFO methodology.
Step 2: SoftLedger creates the journal entry for you and automatically applies it to your financial statements.
SoftLedger can quickly and accurately calculate the cost basis as each booked transaction is individually tagged, dated, and time-stamped. This way, it's easy for the system to calculate the cost using FIFO automatically.
For manufacturing companies with complex crypto accounting, this saves hours of manual labor and reduces error as nothing is calculated manually or exported/imported.
As SoftLedger is a crypto native solution, it reduces many nuanced issues that most manufacturers would still face even if they use a bolt-on crypto tool. For example, most traditional accounting software doesn't offer enough decimal places (crypto transactions can have up to eight or nine decimal places).
We also realize that the crypto landscape is rapidly changing, so we built SoftLedger to be uniquely flexible. For example, it supports any coin that is exchange-traded, and you can even create your own currency.
With SMB accounting software, you have to create an individual account for each entity. Then, to consolidate them, you either have to purchase another tool and consolidate the data at the end of the month with that tool, or you have to export all of the data and consolidate it manually. Either way, both options are time-consuming and expose your data to manual error.
On the other hand, legacy accounting software might consolidate it automatically, though the setup process is often cumbersome, and it only consolidates the data at the end of the month (meaning you don't have visibility into company performance until the month is closed).
SoftLedger approaches multi-entity consolidation differently. First, the structure is very intuitive.
For example, the parent company is listed at the top, and then the various entities are listed as locations. This makes it super easy to switch back and forth between entities. In addition, you can see each entity's financials separately, as well as a consolidated view just by scrolling to the end of the data.
As you can see, every transaction entered for one entity automatically cascades to all impacted accounts and will show up in the consolidated general ledger.
Here are just a few benefits of having all of your data consolidated automatically:
If SoftLedger sounds like the manufacturing accounting software you’ve been looking for, sign up for a demo today.
SoftLedger is best for multi-entity manufacturing companies that want to avoid the complexity and headache of a massive ERP system, yet need a more sophisticated solution than SMB accounting software.
Prophix is another tool that many manufacturers use in their accounting processes. It is primarily a Corporate Performance Management (CPM) software solution that makes it easier for companies to improve profitability and minimize risk.
Here are just a few things that manufacturers can do with Prophix:
Prophix is best for manufacturing companies that are already collecting data in a general ledger software and just want a solution that will help them use that data for budgeting, forecasting, reporting, and analytics.
Centage is a planning and analytics platform that helps companies deliver year-round financial intelligence. As an FP&A tool, you’ll be able to perform sophisticated data analysis and make better financial decisions.
Here are a few things it helps manufacturers do:
If you have a simple accounting process and a single entity, Centage enables you to complete all the basic accounting processes more efficiently than an Excel spreadsheet.
If you’re running a small manufacturing business with minimal accounting complexity, Xero is a great general accounting software solution for small businesses. It enables you to complete basic accounting processes like inventory tracking, sending quotes, creating reports, and more.
It also integrates with common manufacturing apps like Unleashed, DEAR Inventory, and Cin7.
If you don’t have advanced accounting processes, Xero is a wonderful option.
If you have a really simple accounting process and a single entity, Xero enables you to complete all the basic accounting processes more efficiently than an Excel spreadsheet.
Zoho Books offers Zoho Creator, a low-code ERP software that plenty of manufacturers use to build custom systems.
So while it's not an out-of-the-box solution, it can be a great tool for larger manufacturing companies that need a more customized solution. It offers a schema builder, automated workflows, predictive analysis, and pre-built integrations that you can use during the production life cycle.
Here are a few specific features they highlight for manufacturers:
If you need a customized solution and have access to a team of developers, Zoho Books might be a good option.
Freshbooks is another SMB accounting software that can be a great choice for manufacturing companies with basic accounting needs. It offers basic services like sending invoices and tracking invoices, and it also allows you to view your account from anywhere thanks to its mobile app.
It offers double-entry accounting for more complex businesses when single-entry, cash-based accounting isn’t sufficient.
Here are a few of the key features many manufacturers use:
In conclusion, the best manufacturing accounting software depends on your business needs and size. If you're a small business and need something simple to automate basic processes, Xero might be the best option.
On the other hand, if you already have general ledger software and just want to make the most of your data, Prophix or Centage might be a good choice.
However, if you need a full cloud accounting solution that gives you access to real-time data, is structured with an open API, and offers crypto capabilities, consider SoftLedger. It's ideal for multi-entities that need more power than what SMB accounting software can provide yet offers more flexibility and efficiency than traditional ERP systems.
To discover if SoftLedger is the right fit for your manufacturing business, schedule a demo today.