Should QuickBooks Compatibility Be a Requirement for Your Manufacturing Software?

By Mike Hart

If your company uses QuickBooks and you are shopping for manufacturing software, should you make QuickBooks compatibility a requirement? This only makes sense if you accept three premises:

First, QuickBooks has unique accounting capabilities that would be lost were you to change accounting systems.
Second, manufacturing and accounting are separate functions where one can use "best of breed" software for each.
Third, an accounting system conversion should be avoided because of its disruptive effect on operations.

If these three premises are true, then QuickBooks compatibility should indeed be a requirement of your manufacturing software. But are these premises true? Let's examine them one by one.

Does QuickBooks Have Unique Capabilities?

Does QuickBooks have unique accounting capabilities? QuickBooks does a fine job with basic financial functions -- receivables, payables, banking, and payroll -- but so do hundreds of other accounting software packages.

Are Manufacturing and Accounting Separate Functions?

Are manufacturing and accounting totally separate functions? It depends on what you consider to be "accounting" functions versus manufacturing functions. QuickBooks includes inventory, sales orders, and purchase orders. These functions are integral to the manufacturing process workflow and should not be considered accounting functions. Any manufacturing system that relies on QuickBooks to perform any of these functions is making severe design compromises, because these QuickBooks functions have virtually no manufacturing-specific features. If you limit your use of QuickBooks strictly to financial functions, it can be made to work, but never as efficiently as a single, integrated system would.

Is an Accounting Conversion Disruptive?

Is an accounting conversion disruptive to operations? Don't confuse the accounting conversion with the manufacturing system implementation, which is a major undertaking. Converting from one set of financial applications to another is relatively easy. Once the new chart of accounts and bank accounts are set up, you plan for a "startup day" when you enter your open agings and beginning account balances. It is not a disruptive process and is a one-time event that should not affect your manufacturing software decision.

Accounting Departments Fight for QuickBooks

Accounting departments in small companies do not like to change and will battle mightily to keep QuickBooks. Accounting people see no reason why they should give up QuickBooks if the manufacturing people can find software that works with it. But most accounting people have little appreciation or understanding of what a fully integrated manufacturing system does and how little the portion of QuickBooks that can actually be used contributes to your efficiency and profits.

If You Are in the Manufacturing Business:

If you are in the manufacturing business, shouldn't you operate with software designed specifically for manufacturing? QuickBooks was never designed with manufacturing in mind and offers nothing of any significance to manufacturing companies. Use QuickBooks if you have to, but if you have other options, such as a manufacturing system with integrated accounting, don't let QuickBooks limit your efficiency potential.

Is a Hybrid Manufacturing-Accounting System a Good Solution?

Mike Hart is the co-founder and President of DBA Software Inc., a leading provider of manufacturing software for small businesses.

Comments

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I agree, QuickBooks is limited in regards to doing manufacturing. I recommend Fishbowl Inventory, they are the # QuickBooks add-on. You can keep using QuickBooks for accounting and then use Fishbowl for manufacturing.

Posted by: QuickBooks Manufacturing | May 03, 2010 at 01:10 PM