At some point every production company needs to start using manufacturing software (i.e. an MRP system). It is very likely that by that time accounting software is already in use, but it has ceased to satisfy needs – it does not supply the necessary answers and restrains the growth of the business. Therefore, a decision is made to start using special software for manufacturing. The following question arises every time: how to integrate the old and the new systems? http://manufacturing-software-blog.mrpeasy.com/blog/2017/09/19/manufacturing-software-accounting/

1. MANUFACTURING SOFTWARE
AND ACCOUNTING SOFTWARE
INTEGRATION

2. THE PURPOSE OF BOOKKEEPING
In general, the core purposes of bookkeeping are tracking the financial position
of the firm, and generating financial reports.
When it comes to inventory management, financial statements should provide
an answer to, “What is the cost of stock, and what is the change in comparison
with the previous period?”
But certainly, it does not have to answer how many pieces of specific items
were sold, how the purchase price of raw materials has changed, how much the
finished product is estimated to cost, nor what the actual cost of the individual
product was.

3. THE PURPOSE OF BOOKKEEPING
However, since financial statements were the only reports available for a very,
very long time, many solutions have been developed for getting this information
from accounting software.
For example, in addition to major accounts (ledger accounts), it is now possible
to set up sub-accounts. For each operation, where the program itself can
choose the correct account, sub-accounts can be chosen manually. Although
this does not seem complicated at first glance, in practice, when there is a lot of
data and not only the professional accountant work with the system – but also
other employees, – the accounting process is significantly more complicated.
In fact, these (over)complications are artificial and not needed.

4. FINANCIAL VS MANAGERIAL REPORTS
Accounting is not only bookkeeping. Besides financial reports, there is also
managerial statistics and reports. Namely, information which gives the
necessary foundation for making business decisions and evaluating the
effectiveness of the business.
 How profitable is the product?
 How big is the demand?
 Are the employees invested in the work?
 What is the load of the equipment?
 What are the opportunities to increase efficiency, and reduce costs?

5. FINANCIAL VS MANAGERIAL REPORTS
All these issues are very important to the development of the company. But,
they are not connected with bookkeeping.
The bookkeeping can be simplified significantly, if these questions do not need
to be answered.
Still, these questions need to be answered. This is what the manufacturing
software or the MRP system is much better for.

6. HOW SHOULD MANUFACTURING
SOFTWARE AND ACCOUNTING
SOFTWARE WORK TOGETHER?
Keeping the above said in mind, the right integration works as follows:
 The MRP system is the main tool for the firm’s work. Data input is done to
this system.
 Only the summary data necessary for bookkeeping is transferred to the
accounting program.
 Management reports are generated from the manufacturing software, where
the original data is entered, that is, from the MRP system.

7. HOW SHOULD MANUFACTURING
SOFTWARE AND ACCOUNTING
SOFTWARE WORK TOGETHER?
This approach has several benefits:
1. Since management reports are generated by the same system, where the
main data is entered, the reports can be configured most flexibly. Also, a big
advantage is that reports are available immediately, even in real time.
2. Simplified bookkeeping.
3. As the integration is simpler, it is easier to make changes to it, if a need
arose.
4. Since the MRP system contains all the original data, it is easier to find the
cause of the changes, or issues.

8. CONCLUSION
In conclusion, we wish to reiterate the main points:
• The main software system for the manufacturing company should be the
MRP system.
• Accounting is a non-core activity of a manufacturing company, an accounting
program is a tool just for the accountant, it is not for operations. The simpler
the bookkeeping is, the better.
• Managerial statistics should be gathered from the manufacturing software.
• The management of the manufacturing company should be able to obtain the
necessary reports independently and immediately, without the assistance of
an accountant, or bookkeeping software.

9.  Production planning and reporting
 Supply chain management
 Stock management
 CRM
 Managerial statistics, business intelligence
 Integration with online accounting solutions
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