08 Nov QuickBooks vs. ERP: What Are the Big Business Differences?
QuickBooks is the go-to for many businesses to get their financial house in order, but there’s a time where that software can become far too burdensome because your success has grown so large. That’s a fantastic place to be in your business, but it often comes with increased difficulty in understanding your business and your bottom line.
If you’ve hit a speedbump and aren’t sure how to best use accounting software, or find yourself stuck too deep in the day-to-day tasks and looking for more automation, you might want to consider an upgrade from QuickBooks to an ERP system.
Dive Into Account System vs. ERP
QuickBooks is a natural starting point for most businesses because they have relatively few enterprise resources they need to optimize. QuickBooks operates relatively independently of your other systems, and it is such a common small business standard that many pieces of software can use QuickBooks filetypes.
However, enterprise systems are mixed on their ability to directly integrate with QuickBooks — this matters because you’ll have to save a file, open it up separately, and then check to make sure everything copied okay, which can become burdensome for large databases or when using multiple platforms.
As your company grows and those difficulties increase, or your need for integration increases, you might want to consider an enterprise resource planning system, or ERP.
An ERP provides you with a single platform that manages your company’s assets. QuickBooks is a financial piece of software, so it only manages financial assets like your goods, inventory and bills of sale. Powerful ERPs are not only able to track this same information, but they’re also able to integrate your marketing, accounting, strategic planning, sales and other specialty platforms you may be using — all into one spot.
All of the QuickBooks products from Intuit are accounting platforms, and they should not be looked to as an ERP. The company even states this on its own website: “Is QuickBooks Desktop Enterprise an ERP System? Simply put, no.”
There are many different ERPs for different types of companies, with special offerings for manufacturers, eCommerce stores, publishers and much more.
Signs You’re Ready to Upgrade From QuickBooks to an ERP System
Each company is different when it comes to the QuickBooks vs. ERP question, but there are some overall guiding principles that will help you understand if it’s time to upgrade from QuickBooks to an ERP system.
The first is a special word the in the question itself, which you’ll find here and all over the Internet: “upgrade.” Almost all companies view an ERP system as an upgrade over QuickBooks because an ERP will offer a broader set of features and functionality. That means if you’re feeling limited by the capabilities of QuickBooks, you should consider the shift.
Another big factor is where you actually do a lot of your performance checks, reporting and projections. If this has moved to Excel or other spreadsheet and database software, with QuickBooks serving more as your checkbook, you could choose an ERP that allows you to perform all of those tasks within a single program. That’s where the account system vs. ERP consideration can really make a difference.
Here are a few other key things that might indicate your company is ready for the upgrade:
- Billing clients is getting slower and more difficult.
- Data from outside of your system is becoming more important, but it can’t be added automatically.
- Financial reports aren’t easily formatted to what makes the most sense for your company.
- If you needed to know what your cash balance was right now, you’d have to spend 20 minutes checking QuickBooks and your accounts to make sure your answer was correct.
- Multiple transactions have to be entered each month from a variety of other systems.
- Orders come in multiple currencies or through multiple channels you have to manually process.
- You’re duplicating data entry across multiple systems.
- You have a growing team where a dozen or more users need to access your system with the most up-to-date information right when they need it.
Here’s Why You Should Make the Switch
We’ve touched on some general areas where an ERP system performs better than QuickBooks, and that typically has to do with growth. For brands we see, and for your average company, that’s usually about the $5 million to $10 million annual revenue mark — but it could be lower than that for you if you have an especially complex industry or if you’re running a tight ship with just a small crew.
Taking your business to the next level often means automating processes and integrating them so they’re easier to keep track of on a daily basis. That’s the main reason we suggest smaller companies make the switch to ERP. For instance, you’ll be able to process all of your orders and your returns in the same portal, which can automatically link to your inventory and provide alerts for when things are running low.
Custom orders can be pre-programmed so they occur at a certain point or stock level. That way you never forget to order those items that only sell occasionally. Plus, you can track these versus your other sales to make sure you’re focusing on the goods that give you the best margin. That’s something you want to check when performing the accounting system vs. QuickBooks math.
And, ERPs can grow with you. Consider the FDM4 ERP software for apparel brands. We’re able to integrate multiple channels for a wide range of businesses, giving them functions they need as orders and sales increase. This can include the introduction of an e-commerce store for marketing and advertising.
As you grow, for example, you may also want to stop using a drop shipper or fulfillment partner and bring your warehousing in-house. If you choose an ERP system that offers warehouse management system functionality or can integrate with WMS tools, then you have less to worry about in terms of data loss, training time or in-house coding and development compared to implementing a new system that would work with QuickBooks.