When to Graduate from QuickBooks to Advanced Accounting Plans

CEOs, COOs, and CFOs of medium- to large-sized manufacturing businesses frequently struggle with maintaining accurate financial records amid growth and regulatory demands. They face ongoing challenges, such as tracking inventory across multiple warehouses and managing complex production costs.

This article explores QuickBooks’s limitations for manufacturing accounting needs, illuminates operational inefficiencies stemming from inadequate practices, and unpacks the integration challenges with Enterprise Resource Planning (ERP) software.

Six limitations of QuickBooks for accounting in manufacturing

Although versatile, QuickBooks faces challenges meeting the demands of medium- to large-scale manufacturing enterprises.

Here are the common limitations for growing companies.

1. Lack of advanced manufacturing-specific functions

QuickBooks has limited power for manufacturing-specific functions. Intricate production scheduling, shop floor control, material requirements planning (MRP), and multilevel bill of materials (BOM), are fundamental for businesses with intricate production processes.

These limitations lead to performance issues that hinder operational productivity and decision-making.

2. Performance issues with complex transactions

Large databases require more time and resources to process. As manufacturing businesses accumulate larger inventory and transaction history, QuickBooks struggles to keep up.

While there is no transaction limit, complex transactions have a greater impact on performance than transaction volume. An invoice with a single item and no sales tax is less complex than one with multiple items and with sales tax applied.

Even though QuickBooks Online (QBO) is a web-based service, it relies on your computer’s processing power, RAM, and Internet bandwidth to perform. Issues with any of these reduce performance. Offline versions of the software are subject to similar constraints.

3. Inventory management issues

While QuickBooks offers basic inventory management features, it falls short in meeting the demands of manufacturing businesses with elaborate inventory requirements, such as multiple warehouses, batch tracking, and serial number tracking.

4. Industry-specific compliance challenges

QuickBooks may not cater to specific regulatory compliance requirements in certain industries, posing challenges for businesses operating in highly regulated sectors and potentially leading to non-compliance issues.

For businesses in manufacturing, the lack of specialized compliance features increases the risk of penalties or legal issues, making it vital to consider more robust accounting solutions.

5. User limitations and scalability

QuickBooks imposes user limits based on pricing plans, restricting access for larger organizations or businesses with multiple users requiring simultaneous access to the system.

As businesses expand and their teams grow, user limits hinder scalability by preventing adequate access to the accounting system when multiple employees need to work concurrently.

6. Lack of support for mobile devices

The absence of support for mobile devices on the warehouse floor hinders real-time order management and tracking of serial numbers, impacting operational productivity.

Gaps in mobile support mean warehouse staff can’t immediately update or access data, which complicates tracking inventory and fulfilling orders efficiently as businesses grow.

Operational inefficiencies caused by inadequate mfg. accounting practices

Insufficient manufacturing accounting practices lead to operational inefficiency— posing risks to business success. Recognizing trigger warning signs, such as limited financial visibility and hindrances in decision-making processes, is vital for prompting an upgrade.

Inventory management

Challenges in inventory management are a massive signal to try something new. Difficulty tracking inventory across warehouses results in discrepancies and delays. Expanding manufacturing accounts may face this challenge when prolonging their QuickBooks use.

Inaccurate financials

Another huge red flag is inaccurate job costing and pricing resulting from inadequate tracking of production costs. It impacts profit margins and requires urgent attention to sustain profitable manufacturing financial management. Due to limitations in tracking and reporting capabilities, the risk of non-compliance with industry regulations also increases.

ERP integration issues

Integration problems, especially with manufacturing-tailored ERP software, may arise, particularly when a company lacks in-house expertise. Additionally, rapid growth can outpace the capabilities of existing systems, further complicating integration efforts.

A seamless integration with ERP is critical for scaling your business effectively and ensuring streamlined operations.

Issues integrating QuickBooks with ERP software like JobBOSS2 and E2

Integrating QuickBooks with ERP software is challenging due to the significant differences in their data structures and functionalities. It requires a Plus or Advanced Quickbooks account to be successful—a massive integration benefit of the premium Quickbook accounts. However, even with the upgrade, there are still hurdles when integrating Quickbooks with ERP software.

These differences create a substantial communication barrier between QuickBooks and the ERP systems. Merging problems range from discrepancies in data formats to failing synchronization processes. Disparities lead to manual data entry duplication, where data entered into one system must be manually replicated in another, leading to inefficiencies and potential errors.

Managing data across disparate systems can also introduce errors in financial management and reporting, compromising the accuracy and reliability of financial information. Maintaining data integrity is burdensome for businesses struggling to blend the data stored in QuickBooks with that in their ERP systems.

For businesses using JobBOSS2, E2, MISys, Acumatica, Sage 100, or food and beverage manufacturing facilities operating on Quigistics, consider outsourcing your accounting and advisory needs to a partner well-versed in manufacturing software.

At what point do you outgrow QuickBooks?

A combination of factors typically marks the point a business outgrows QuickBooks. These factors include increased transaction volumes, complexity of operations, and the need for more specialized features and functionalities.

QuickBooks may not adequately support their evolving needs as businesses expand, leading to challenges in inventory management, reporting, and scalability. Integration with other systems, such as ERP software, is also increasingly challenging and hinders operational efficiency.

While the software is a valuable tool for many small—to medium-sized businesses, recognizing that it no longer meets the demands of your growing enterprise is essential for maintaining competitiveness and facilitating sustainable growth.

Conclusion: Seek help from the experts at Chortek

Navigating the challenges of manufacturing accounting demands a keen understanding of QuickBooks’ limitations, operational inefficiencies stemming from inadequate practices, and integration obstacles with ERP software.

QuickBooks may not meet the specialized needs of medium-to-large-sized manufacturing enterprises, from inventory management to compliance concerns. Operational inefficiencies hinder profitability and growth. Integration with manufacturing-tailored ERP systems presents additional challenges, especially as businesses strive to scale and adapt.

Chortek specializes in helping businesses overcome challenges with Quickbooks and Enterprise Resource Planning. Contact the accounting and advisory experts at Chortek for help determining if it’s time to upgrade to an advanced accounting plan.