Understanding Inventory Management: An Accountant’s Perspective

Understanding-inventory-managementPrior to my current role in software implementation, I worked as a bookkeeper while getting a degree in Accounting. After graduation, I really had a passion for cost accounting and wanted to work with businesses to help get their inventory and processes under control. Now, I work with many small to mid-sized businesses to implement inventory management software to enhance their day-to-day operations. Having both knowledge and background in accounting and inventory management software gives me a uniquely integrated way of viewing business operations.

What are common methods of tracking inventory?

Different businesses may use different systems to manage their inventory including: pen and paper, Excel spreadsheets, QuickBooks® software, and inventory management software.

Pen and paper, as well as spreadsheets, are considered manual methods of tracking inventory. This is because the user(s) must update any changes to inventory levels — such as added inventory from purchases or sold items — by hand.

QuickBooks software and inventory management software are automated methods of tracking inventory. By using a software system, inventory is updated by the software to reflect any changes to inventory levels including any changes from purchases and sales.

To learn more about inventory systems, check out this article that discusses the different types of inventory systems.

What is QuickBooks software?

QuickBooks is a small to mid-sized business accounting software that also dabbles in inventory.

It is easy to learn and use, so it’s great for small to mid-sized businesses that may not have an accountant on staff to keep track of finances. It’s still a valuable program to have for a business with an accountant on staff because of its useful features such as financial reporting and tax calculations.

QuickBooks also has inventory management capabilities. However, since its main focus is on financial management and reporting, it’s not as functional as inventory management software, which is specifically equipped for inventory management.

What is inventory management software?

Inventory management software is a software package that allows you to not only transact all of your inventory processes but it also allows you to keep track of all transactions. All inventory data is in one place (the software system database) and also linked to what those processes were for, as well as the customers and vendors associated with each purchase or sale.

You’ll have the complete history for your product, which goes through a general ledger as it would for cost accounting, using cost of goods sold and inventory asset accounts. It’s mostly based on accrual accounting, not cash accounting, because of tracking accrued liabilities.

What is the difference between QuickBooks and inventory management software?

There are a lot of differences, but to be simplistic about it, QuickBooks doesn’t have the internal controls that inventory management software does, nor does it have the full functionality offered by inventory management software. This means more complex features and functionality such as lot and serial number control, landed cost, and inventory valuation and costing (just to name a few) are better suited for inventory management software.

For instance, Acctivate inventory management software has all available cost methods. With Acctivate, you also have the choice between each item on how you track it. Users can choose to track lot or serial numbered items with Actual cost, other items with Average cost, and the remaining items with FIFO, LIFO, or Standard cost. It all depends on what makes sense for your business. Additionally, any change in Acctivate is prospective, not retrospective, so it will not affect any past transactions. This is not the case in programs like QuickBooks.

Here’s the good news: you are able to utilize both the power of QuickBooks and inventory management software. That’s because some inventory management software integrate directly with QuickBooks, meaning that QuickBooks and the inventory management software systems essentially “talk” to each other by synchronizing data and information from one program to another.

For instance, when you post a transaction in Acctivate, the financial records are sent to and saved in QuickBooks. Then, when it’s tax season and/or it’s time for an accountant to review your finances, all the financial information from your inventory, purchasing, and sales history is ready in QuickBooks. So you can have the best of both worlds — financial management with QuickBooks and inventory control with inventory management software.

You can learn more about QuickBooks and inventory management software integration here.

Who is the right fit for inventory management software?

Inventory management software can benefit any and all businesses, and is an affordable investment for small to mid-sized businesses. Inventory management software is a vital investment for businesses because of the importance of keeping inventory values and records organized, as well as the time, money, and effort saved with the features available.

Some examples of businesses that would benefit the most from using inventory management software include wholesale, manufacturing, and distribution businesses. However, any business wanting to run a tight ship with finances and their supply chain, as well as those wanting to integrate and keep track of omnichannel inventory (such as in-store and web store inventory) are also great candidates for inventory management software.

L StineAbout the Author: Lauren Stine is the Manager of Implementation for Acctivate Inventory Management Software. Armed with a Bachelor’s Degree in Accounting, Stine’s extensive knowledge and background allow her to finely blend accounting expertise with technical skills and support. She has been working directly with customers to train them on Acctivate Inventory Management Software since 2012.

For more information, articles, and resources on inventory management, check out Acctivate’s blog or contact a specialist at 817-870-1311.

Hidden Expenses Growth-Hungry Startups Need to Be Aware Of

image 1One of the most prominent definitions of ‘startup’ term was coined by Paul Graham, a programmer, entrepreneur and an essayist. While most other theoreticians tried to connect ‘startup’ word with advanced technologies or newly founded companies, he said that startup enterprises are those that are designed to grow fast. This fast company growth is in most cases (but not exclusively) fueled by advanced tech and innovative business strategies. Achieving fast and continuous growth is not always easy. It is often fettered by various unpredicted circumstances and hidden costs.

Employees

Regularly employed workers require a lot of spending. Depending on the country or state law, companies need to pay for sick leaves, vacations, health insurance, and taxes. Companies that have less than 10 workers pay the most expensive health insurance. These costs are the reason why many startups decide to outsource parts of their business or to hire freelancers to do most of the tasks.

Another very important point when it comes to human resources and office management, is that startups need talented employees, who will get the job done. In some cases they can rely on outsourcing agencies or talented freelancers, but if they want to make their company attractive to the top experts in their niche, they need to add a lot of benefits (like high 401(k) share), clean and secure work environment and even employees stock ownership programs, that include handing out company shares to most effective and agile employees.

Rent

Most startups begin their lifecycle in founder’s home or in a work hub. When business starts growing startup owners need to rent new office space. This is a very difficult period, since entrepreneurs are still not sure about their business’s potential, but they need to work and cover increasing client orders. That’s why these companies are stranded in between small and big business models, which makes them an eligible pray for money-craving property owners. At this moment company’s business is too small for taking a mortgage loan or building their own premises and too big to work from home or a work hub. This means that the money company is giving for rent is not getting them any equity, which is why entrepreneurs should decide to shift to mortgage or building their own space, as soon as possible.

Utilities

Utilities’ costs can be quite high. In most cases they are as high as the cost of leasing office space. Many companies decide to pay several utilities’ costs in a bundle, which makes them less harmful to their budgets. Phone and internet costs usually come in bundle packages.

Another great cost that concerns utilities is when something gets broken. Companies that work in service and production industry are especially sensitive to these situations and installation failures can seriously damage their customer loyalty and revenue figures. That’s why these companies need to have employees who are familiar with commercial plumbing market and services, and react immediately and fix the problem.

Tech

All new businesses need to spend money on latest gadgets. Without advanced tech they would never stay competitive in the harsh business world of today. Most tech comes with 2 year warranty, but if used for business purposes computers, phones, printers, modems and scanners usually last much shorter.

Most businesses require smartphones, computers, printers and plenty latest software packs. In addition to this they might also need scanners, modems, fax machines and many different niche-specific gadgets and production equipment. On top of all these costs companies also need to pay for maintenance of their systems and hardware, which can be quite expensive.

All these costs can drastically hurt startup businesses, which is why entrepreneurs need to include them when determining company’s budget for the next fiscal year. Although entrepreneurs should be optimists about their business growth, pessimism definitely eliminates certain risks when it comes to company expenses and finances.

Derek is a writer from Australia. He likes exchanging business and success tips with bloggers and enriching his experience in order to deliver informative articles. One of his hobbies is interior design. To fulfill his passion, he blogs regularly at Smoothdecorator.

The Importance of Proper Office Design and Organization on Employees’ Output

3Everyone who has ever worked in a company that has more than one employee knows how important human relations are for creating a healthy and productive working environment. And it is human relations that have been considered as the most important factor for business success.

However, the latest studies showed that almost 90 percent of people in one way or another express discontent with the physical environment they work in. Such high negative percentage surely is alarming and is something employers should not neglect nor leave to chance. Let us discuss the importance an office design and organization has on productivity and output of employees.

There are no universal solutions

This premise is the starting point of any proper office design and internal office space organization. Different job descriptions ask for different solutions. For example, if the company is based on teamwork the focus needs to be on providing design and organization that supports it. The team rooms need to be ample, located at the center of action in the building and easy to reach.

On the other hand, if the success of the company depends on individual performances and team meetings are scarce, then the focus is on providing optimal conditions for an uninterrupted individual work and team rooms, which serve only for occasional meetings and results announcements, should be located at the edge of business premises.

Everything counts

When it comes to employees’ output, office design and organization are of outmost importance. Every factor counts to a different extent and however small their contribution may seem at first glance, they produce a cumulative effect. Lighting needs to be suited to the type of work that is being done, desks and chairs ergonomic, air of high quality and pleasant temperature, noise minimal and clutter nonexistent, to name just the major ones. Therefore, it is highly recommended to give all of them proper attention.

Open office plan or not?

Open office plans gained increased popularity in the last decades based on certainty that they create a healthier office atmosphere and thus increase communication between employees and boost their productivity. However, there are more and more studies that prove quite the opposite. Without taking any sides, one thing is certain, office design and organization highly influence productivity and consulting the employees on how they feel in the present setting will provide crucial guidelines for future actions.

Meeting room tables

Office design has a strong impact on executives as well. Although they have private offices furnished to their preference the problems occur in meeting rooms and this is where improvements need to be made. The usual order of things is that the larger the company the larger their meeting rooms are. This correspondingly transfers to the size of boardroom tables resulting in them being too large for the number of people sitting behind them.

The importance of proper office design and organization on employees’ output

By using ones that are properly dimensioned, the executives present will sit closer to each other, their communication will be clearer and less prone to misunderstandings, resulting in more productive and efficient collaboration and easier decision making.

Once again, a proper office design and organization is of utmost importance when it comes both to employees’ and executives’ output. The sooner the full notion of it is taken, the better the business results will be.

Derek is a writer from Australia. He likes exchanging business and success tips with bloggers and enriching his experience in order to deliver informative articles. One of his hobbies is interior design. To fulfill his passion, he blogs regularly at Smoothdecorator.

Four Reasons Your Company NEEDS to Stay in Good Standing

staying compliantCongratulations! You’ve had your business for almost a year (maybe more!) and the roller coaster ride has been exciting, challenging and rewarding. With all of the effort you put into working on and in your business, it’s important you maintain your company’s good standing status in the state (jurisdiction) of creation and/or the states where you are qualified to do business.

Each jurisdiction has its own annual requirements and it is imperative you meet each obligation to stay in good standing. Failure to fulfill the state(s) annual requirements can carry some steep consequences:

  1. You could lose your name: You’ve built your business and brand identity around your carefully chosen name. It’s a part of you, your company and your culture. It may even be the envy of some of your competitors. If your entity falls out of good standing, in many jurisdictions, the name is no longer legally protected. That jealous competitor could swoop in and form a new entity under YOUR name. You would no longer be able to operate under that name and would be forced to change your name or operate under a different legal structure (e.g. a doing-business-as d/b/a) to continue in that jurisdiction. Aside from that headache – think about the cost of rebranding your company with a new name!
  1. Publicly defunct status: You’ve spent months working on an important partnership and you’re ready to close the deal. The potential partner has a great feeling about you and just needs to wrap up the final details. When he checks the public records of your company, he finds the entity is defunct (the legal term will vary by jurisdiction). Deal aborted, opportunity lost.
  1. Extra fees, time and aggravation: As a business owner, every penny counts. More importantly, every minute counts. If your entity falls out of good standing, it will cost you both time and money to come back into good standing. Depending on how your company is set up and where you are doing business, you may have to reinstate/re-incorporate and/or re-qualify. Oftentimes, the state will assess penalties for doing business while in a “defunct status”. Missing an annual filing or tax payment can add up to an abundance of fees rather quickly.
  1. Potential legal trouble: Legally forming your company as a corporation or limited liability company (LLC) was the first of many smart decisions you made in this venture. By doing so, you took steps to protect your personal assets from potential loss and facilitated the opportunity to take advantage of specific business tax planning and savings practices. Falling out of good standing “pierces the corporate veil” and causes you to lose those legal protections you created.

What can you do to ensure you stay in compliance? One step is to make sure you fully understand the state requirements and tie them into your accounting and corporate maintenance procedures. Another way is to engage the services of a professional service company who specializes in keeping companies active. Many of these service companies offer compliance services, such as Compliance Verification Service (automated alerts) or Compliance Filing Service (automated filing) for a nominal fee. By utilizing a service company for these services, you can rest assured your company is going to maintain an active status.

About the Author: Kyle Buzzard is Director of Client Development at Incorporating Services, Ltd.(IncServ). IncServ is a full-service registered agent and corporate services company providing administrative, legal support and related services to the entrepreneurial community. A former business owner and consultant with a passion for entrepreneurs and small businesses, he is an advocate for smart outsourcing and insourcing that allows business owners the freedom to grow their companies. If you need help with compliance, or simply have questions about growing your business, Kyle can be reached at pr@incserv.com or 302-531-0702.