Meeting the ASC 606 Compliance Deadline with Acumatica Deferred Revenue Accounting

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Corporate accounting systems must be in compliance with the ASC 606 rule for revenue recognition as of December 15 of this year. This requirement will not be a problem for companies using Acumatica Cloud ERP’s Deferred Revenue Accounting module. Those that don’t have this software or the equivalent will be in a rush to get right with this important accounting rule. So, it’s worth taking a moment to examine ASC 606 as an example of how the interplay between software and accounting rules can affect financial reporting.

A Brief Overview of ASC 606 and Its Implications

If you’re a CPA, ASC 606 is probably not that big a deal. You should already know all about it. However, if you’re in IT and supporting the accounting department or a business analyst trying to build efficient financial workflows, a quick review of ASC 606 is in order. The Accounting Standards Codification (ASC) rule 606 is one of many rules by which companies control their financial reporting. ASC 606 is paired with International Financial Reporting Standards (IFRS) rule 15. The rule is thus known as ASC 606/IFRS 15. In the US, they’re being promulgated by the Financial Accounting Standards Board (FASB), the accounting profession’s rule-making body.

The goal of ASC 606/IFRS 15 is to standardize revenue recognition in accounting practices worldwide. Before these rules were adopted, revenue recognition was not subject to any global standards. Companies in different countries could recognize revenue on different bases. Revenue recognition relates to the period in which a company will claim a sale is actually revenue, for reporting purposes. As a result, it can have an impact on tax liabilities and many other aspects of financial reporting.

A quick cash transaction is easy. If you get paid $100 in cash in 2019 for an order that started and finished in 2019, you will recognize that $100 as revenue in 2019. However, what happens if you get $50 to start an order in 2019 and $50 upon completion of the order in 2020? Under the old rules, some companies might recognize all $100 in 2019 (and pay tax on it in 2019) while others will split it. The second $50 becomes “deferred revenue.” ASC makes everyone follow the same rules for these practices. It has implications for taxes, lending, incentive-based bonuses (e.g. revenue growth bonuses), share prices, entity valuation and so forth.

How Acumatica Deferred Revenue Accounting Enables Compliance with ASC 606

Acumatica Cloud ERP has a portfolio of specialized accounting modules. Deferred Revenue Accounting is one of them. It enables your accounting team to handle the detailed, potentially confusing revenue recognition requirements of ASC 606 in a centralized, intuitive and automated accounting workflow. In particular, the module helps users identify a contract with a specific customer—itself a major component of ASC 606. Revenue recognition is contract-based.

The module then identifies the performance obligations in the contract, such as revenue milestones for partial completion and so forth. It can determine and then allocate transaction prices to specific financial periods. Revenue is then recognized when the performance obligation is satisfied. Acumatica’s Deferred Revenue Accounting module can handle bundled contracts, multi-item contracts and related contracts. The system makes these aspects of ASC 606 compliance compatible with other accounting rules already in place.

Each company will have its own distinct revenue recognition requirements. Acumatica adaptable, allowing for Customized Deferral Schedules based on templates or created from scratch. Users can link schedules to specific transactions and line numbers on income documents.

To learn more about Acumatica’s specialized accounting modules, including Deferred Revenue, contact us today!

Additional Acumatica Resources

7 Signs That You Need ERP Software

Why Acumatica Outpaced NetSuite on the Most Recent G2 Survey

What’s New in Acumatica 2019 R1

How ERP Software Can Save Your Business Money

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Can ERP save your money business? In our experience, the answer is definitely “yes.” Enterprise Resource Planning (ERP) software, used correctly, will drive savings in multiple categories of business operations.

ERP at a Glance

The term “ERP” has become a bit of a misnomer. When ERP made its debut in the 1970s, the technology was all about running big manufacturing plants and handling supply chains and logistics for industrial companies. This is still the core of ERP, but today, an ERP solution can do so much more. In fact, modern cloud-based ERPs like Acumatica can run virtually every aspect of a business. ERP does accounting now, along with service management, Customer Resource Management (CRM), project management, project accounting, Materials Requirement Planning (MRP) and more.

High-Level Cost Savings from ERP

How does use of an ERP solution translate into savings? In the big picture, it’s about operating more efficiently. ERP helps people work more quickly and accurately. Process automation cuts down on error-prone manual steps. Miscommunications about orders, inventory, logistics and so forth generally decline with the introduction of ERP. Learn more about the signs you need ERP software.

When we help a customer deploy ERP, they tend to notice right away how much faster everything starts to move. They didn’t realize before how seemingly minor things like chasing down paper bills of lading or returning phone calls slowed down operations. ERP makes people more productive. With people doing more work in less time, the cost doing business drops.

Part of the productivity gain comes from the centralization of all business management processes into a single system. There’s no more porting of data from operations to accounting software, and so forth. People get a continuous, real time overview of data regarding orders, support cases, inventory and the like.

Where ERP Saves Money, Specifically

On a day-to-day basis, we see ERP saving money for our customers in the following specific areas:

  • Better control over inventory control—Inventory costs you twice. There’s the carrying cost of parking cash in inventory. Then, you have inventory handling costs like shipping and receiving and related accounting tasks. ERP helps you automate many of these processes. And, up-to-date reporting and predictive forecasting—along with smarter production management—help you keep inventory carrying costs to a minimum.
  • A faster, smoother information flow—The centralized nature of ERP and its rich data reporting capabilities, coupled with automated notifications and task management, result in a smoother, faster flow of information across the organization. People can make more informed decisions and stop using email to manage workflows.
  • More coherent supply chain management—ERP enables you to coordinate purchasing and supply chain, monitoring dependencies and keeping everyone involved informed about the latest production statuses. Learn how ERP can promote a sustainable supply chain.
  • More accurate, timely invoicing—An ERP solution speeds your cash cycle with timely invoicing. Learn about the benefits of ERP for accounting and financial management.
  • The ability to anticipate, rather than react to problems—Data visualization and automated alerting can give your team the ability to see potential production and inventory problems in the making. This way, they can solve them or devise a response before they cause trouble.

All of this depends, of course, on how well you implement your ERP. The software alone won’t do much if your people aren’t making the most of it. This is where we can help. We have worked with many businesses on the implementation of Acumatica and other systems. For a demonstration of Acumatica or a consultation on how software can help your business run better, contact us today!

The Importance of Project Cost Management

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Project-based businesses need more than basic accounting. The income statement has a section for revenue and a section for costs. This is great for preparing the tax return or reporting to shareholders. If you want to know how much you’re making or losing on projects, you won’t find it in the income statement. You’ll need specialized project accounting software.

Acumatica Cloud ERP can help. It includes Project Accounting Software that integrates with General Ledger, Accounts Payable, Accounts Receivable, Sales Order Management and other business management modules. Project accounting management enables project cost tracking (covering materials, services, labor and inventory items), budget reporting and billing based on specific project, task progress or completion percentage. Users can compare project costs with original and revised budgets while considering all project costs.

Project accounting figured prominently in Acumatica:

  • Split the budget into Revenue Budget, which can be defined by task or task and item, and Cost Budget, which can be linked to a revenue budget line to enable more flexible analyses of project balances and profitability.
  • View and track budget commitments for large projects lasting longer than a couple of weeks. With this functionality, you can monitor potential cost overruns, connected purchase orders, negotiated rates and other information from one location.
  • Bill for time, material and fixed price and manage the billing workflow without configuring the allocator, which makes it easier to bill for simple projects. Users outside the accounting department can review and edit invoices.

Relevant Project Accounting Applications in Acumatica 2019 R2

Acumatica 2019 R2 carries forward a full set of project accounting features. It incorporates useful applications to help businesses analyze and monitor the cost of projects, including:

  • Project Cost Accounting: View all project-related costs and use formulas to allocate shared costs and overhead expenses to specific projects. This is a benefit for marketing, construction, engineering and other project-based businesses.
  • Advanced Billing: Cost plus, fixed price, contract-specific pricing, milestone and time and materials billing can be managed. Resource billing rates can be modified as needed and labor and materials can be billed based on the type of work, the customer or project contract.
  • Time and Expense Management: Timesheets can be entered by employees, contractors and partners from any device or web browser. This improves accuracy and adds convenience to the Project Accounting Software.

Other Benefits of Project Cost Management

Cost tracking, budget reporting and flexible, accurate billing are just a few advantages of using Acumatica for project accounting. Other beneficial functions include:

  • Change Order Control: Make changes to the scope of a project, using all relevant documentation such as revenue/cost budget, class and commitments while defining workflows and approval processes. Audit trails and full visibility ease the release of change orders.
  • Project Quote Management: Improved control and management help simplify project sales and pricing while Acumatica provides support for more complex quote processes. Quotes can be created, updated and linked to CRM within the system.
  • Company-Specific Financial Periods: For organizations that have different fiscal year-end dates, financial periods can be defined at the branch level, especially if related business entities share vendors, employees and stock items.

Acumatica also supports multi-currency project accounting. Project managers and accountants can see actual revenues and costs and calculate profitability using the project currency, while customers can see costs in their native currency. With revenue recognition, billing rules can be defined to identify revenue from completed tasks or a percentage of project completion.

To learn more about Acumatica Project Accounting, contact us for a free product tour or software demo.

Additional Resources

How ERP Software Solves Your Business’s Top Financial Management Challenges

5 Benefits of ERP for Accounting and Financial Management

The Value of Implementing an ERP for Professional Service Organizations

Looking at 2020 Distribution Industry Trends with ERP in Mind

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Distribution challenges loom as 2020 approaches. Issues include increased costs and unpredictable spending habits by the ever-more influential Millennial generation. Distribution businesses must keep up to meet their goals of continued growth. ERP software specialized for distribution offers a solution. Here is a selection of pressing trends in distribution that can be addressed by ERP.

An Increase in On-Demand Ecommerce

Consumers now expect to have the option to buy and receive goods from anywhere after placing orders from phones, cars and personal digital assistants like Alexa or Siri. Many of them demand same-day delivery. It’s not uncommon for retailers to offer two-day shipping, while Amazon offers next-day delivery to about 75% of the U.S. population. To compete, businesses must invest in logistics infrastructure improvements.

Acumatica cloud ERP facilitates this kind of on-demand experience. It incorporates a Customer Management Suite that enables businesses to respond quickly to requests, from first contact with a customer through the entire sales process. It also helps manage fulfillment, billing and after-sales service requests. Visibility into real-time sales data helps with forecasting while customers can access information via the Acumatica Customer Portal, thereby connecting CRM functionality with distribution operations.

A Shortage of Labor Resources

As logistics operations grow in size and complexity, the need for labor is increasing. But with low unemployment, it is becoming more difficult to find available workers who can fulfill the demand for same-day delivery, especially during peak shipping times like Christmas. Automation technologies are decreasing in cost at the same time. Robotics and software solutions are becoming essential in the logistics industry, just to stay competitive.

Acumatica streamlines logistics operations with accurate cost tracking, manual or automatic allocation of freight costs and management of multiple warehouses. It can factor in location-specific inventory, quantities and costs as well as help redistribute inventory from a central facility to other warehouses. Purchase orders can be automatically generated to replenish stock and sent to vendors with optimal prices and delivery times.

Tariffs on Foreign Goods Are Increasing Costs

Tariffs, particularly those on goods from China, are leading companies to relocate so they can sell products at affordable prices. Businesses are finding the need to rework their distribution models, modify their tracking systems and find new trading partners. At the same time, they must maintain their bottom lines, satisfy customer demand and keep up with their competitors.

With Acumatica, organizations can have full visibility into inventory, prices and cost-saving opportunities from a single data source. Reports can be accessed from anywhere, including on mobile devices, so data and analytics can be viewed in real-time via intuitive custom dashboards. Users can also see sales trends, product movement and market information.

Dashboards also provide useful information such as product and material replenishment, lot/serial numbers and shelf life and expiration dates along with details on the condition of stock, drop shipments and vendor selection and performance analyses. At the same time, the cloud ERP system reduces the risk of errors and avoids requiring data re-entry and reorganization. This improves control as companies rework their distribution processes.

Acumatica Distribution Edition

If you hope to grow your business or even stave off the ongoing threats that exist from competitors, you need an ERP solution designed for you.

Acumatica Distribution Edition delivers, giving your business control over their supply chain and logistics activities, including warehouse management, inventory management, and order management. Built in the cloud and customized for your needs, Acumatica helps companies improve customer satisfaction, reduce order times, and control costs across the entire supply and distribution chain.

Contact us to learn more.

Additional Distribution Resources

Benefits of ERP Software for Distribution Business Management

Making the Most of KPIs in Distribution

5 Reasons Distributors Need ERP Software

How ERP Software Solves Your Business’s Top Financial Management Challenges

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Even the best-run companies face financial management challenges. Help is available from ERP solutions, as exemplified by Acumatica. They include financial management software along with a full range of accounting functions like general ledger, accounts payable, and accounts receivable. Cash, currency and tax management applications enable Acumatica to support businesses on many levels. Here’s a look at some of the more pressing financial management concerns and how Acumatica Cloud ERP software can help solve them.

Financial Planning

Financial planning is a process that involves looking at a company’s current financial conditions, as well as its strategic plan, and determining how to best allocate funds to achieve objectives. No matter what industry your business is in, financial planning is a must. Some challenges businesses face in this area include decentralized decision making, disparate data sources and the timeliness of data.

To resolve these issues, Acumatica provides:

  • A single version of the truth: Financial reports and personalized dashboards are available via a shared centralized database.
  • Artificial intelligence: From entry of individual data points to invoice scanning, documents can be stored electronically and instantly with the relevant transaction.
  • Automation: Workflows, approval limits, bank reconciliations, and the generating of managerial financial reporting data in pivot tables are automated.

KPI Reporting

Without using the right Key Performance Indicators (KPIs), it can be hard to identify where your business is under-performing, which can lead to losses and missed opportunities. Operating cash flow, working capital and a wide range of financial reports are needed. However, reliance on standard required reports doesn’t always deliver the kind of sophisticated support managers need to make financial decisions.

Acumatica goes beyond standard formats to generate special reports based on the organizational structure of your business. Reports tailored to specific departments, divisions, subsidiaries, products, etc. provide alternative views of data to expand analytical capabilities. With data available on-screen, in reports and in, for example, Excel format, trends and changes can be more easily seen and acted upon.

Inter-Company Accounting

During their natural course of growth, many companies acquire subsidiaries, which may be managed as separate entities. But does this mean requiring separate balance sheets and general ledgers for each? Without a means to reconcile each entity’s accounting into the parent company’s general ledger, inefficiencies and errors can plague your financial management process.

Acumatica provides inter-company accounting to enable financial management in increasingly complex scenarios. Managing multiple subsidiaries is simplified with functions such as:

  • Financial management
  • Customer relationship management
  • Distribution management
  • Project accounting
  • Field service

The cloud ERP’s real-time accounting system also helps your team avoid manual data entry into spreadsheets, saving time and allowing for more effective use of reports.

Security and Compliance

Data security and compliance are two of the greatest financial management concerns. A cyber-breach or fraud can expose sensitive data, while compliance issues can lead to hefty fines that can put your entire business at risk.

Acumatica increases security with its role-based access control. Financial data are safely stored in the cloud, and available via any device with a web browser. The ERP also addresses compliance on different levels, including the ASC 606 revenue recognition standard for businesses that enter into contracts with customers (for transferring goods or services) and the IFRS 15 standard to account for revenue generated from these activities.

These are only a few financial management challenges all businesses face, and just some features and benefits of the Acumatica cloud-based ERP. For a more thorough overview of Acumatica’s financial management capabilities and our solutions for implementing them, contact us for a demo.

Additional ERP Resources

7 Signs that You Need ERP Software

5 Benefits of ERP for Accounting and Financial Management

Calculating the ROI of Moving to Cloud ERP

Benefits of ERP Software for Distribution Business Management

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Distribution companies face many challenges in managing their inventories, supply chains and logistics activities in the wake of shifting demand, costs and other variables. Enterprise Resource Planning (ERP) software takes the place of legacy systems that don’t hold up in today’s interconnected, fast-paced market. It can capture customer, supplier and equipment data as well as provide full visibility into trends and processes. An ERP system can therefore improve distribution business management in the following ways:

Reduced Order Times

Manually processing sales orders can lead to human error and costly delays. ERP software automates sales order processing and the generation of shipping orders. It can eliminate delays while providing full control, from setting rules and credit limits to managing multiple warehouses and drop shipments. Reduced cycle time, from order placement to product delivery, can help a distribution company fulfill requests more efficiently. Ordering and invoicing are handled automatically within the system, without human intervention.

Improved Customer Satisfaction

Real-time visibility into inventory that is in-stock, in-transit and to be reordered helps improve delivery times and customer satisfaction. An ERP system can also track products returned for any reason. It can optimize quoting, acceptance, entry and fulfillment while minimizing inventory and costs. At the same time, process automation can help with customer retention as a business can provide faster service, accurate delivery and speedy resolution to any issues that arise during the order fulfillment process.

Knowing Your True Costs

An ERP system can help break down costs and profitability across a business or by warehouse, location or individual production line. All the information available is updated in real time. The power of real-time data allows for cost control across your supply and distribution chain. Whether your ERP system is priced per-user or per-function, the cost of implementation can be offset by savings enabled by optimized business processes and improved accuracy and efficiency.

Better Sales Management

Distribution ERP helps with sales management, as exemplified by features in Acumatica’s distribution ERP. It offers an integrated workflow that fully automates order processing across an entire business. Users can configure order status and rules for discounts and promotions that are automatically applied. The software provides real-time visibility into inventory, current pricing and shipment information. It also integrates with CRM systems to make delivery status, relevant tasks and activity history for an order immediately available. Additionally, distribution management software from Acumatica allows users to configure processes to match workflow or select different order processes based on the order or customer.

Better Warehouse Management

Acumatica Distribution Edition includes a Warehouse Management module designed to automate picking, packaging, transferal and physical counting. Manual tasks are eliminated, which helps increase productivity and accuracy. Items are automatically entered into the system when scanned and audible/visual warnings provide employees feedback when they scan more units than purchased or select the wrong items. A variety of functions help manage inventory, order fulfillment and improve the customer experience.

For more insights on how Acumatica can benefit your distribution business, contact us today to submit your questions or request more information, a free product tour, or demo.

Additional Distribution ERP Resources

Making the Most of KPIs in Distribution

Finding the Productivity Advantage in Distribution Management

5 Reasons Distributors Need ERP Software

ERP Software 101: History and Modules Available

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Enterprise Resource Planning ERP software provides an integrated suite of applications for business management that share a common process and data model. Used by manufacturers, distributors, construction companies, retailers, technology organizations and others, it helps manage everything from finance and distribution to human resources to project, customer relationship and supply chain management.

Brief History of ERP

The concept of ERP is rooted in the 1960s, when it was primarily used by manufacturers for inventory management and control. Through the 1970s, ERP ran on large mainframe computers operated by service firms. They ran applications and rented out computing/data storage resources to client companies. This was known as “time-sharing,” a rather costly approach for the customer, but still preferable the huge investment in a mainframe.

The concept of Material Requirements Planning (MRP) emerged in the 1970s as well. Catching on in the 1980s, MRP continued to incorporate more manufacturing processes. By the 1990s, ERP systems (encompassing MRP) could provide inventory control, operational support and management of functions such as sales force automation, human resources and accounting.

The Modular Nature of ERP

Cloud computing has made ERP software more affordable and accessible. Technological improvements enable applications to be run effectively and safely on remotely hosted computer hardware. It’s like the old time-sharing concept, but radically more advanced and flexible. Companies can be free of hardware issues and employees can work from anywhere.

Another advantage of ERP software is its modular nature. By integrating numerous modules into a single system, users can access data based on their role and organizational requirements and trends. The modular architecture of ERP software also makes it scalable. Whether it’s hosted in the cloud or on premises, businesses can tailor licensing or annual subscriptions according to their needs. Numerous components can be added to a modern ERP suite. Here are some of the most common modules:

  • Financial Management: Includes a full suite of planning, reporting, budgeting and analytical tools. Users can track day-to-day financial operations, generate quarterly/annual statements and manage the finances of multiple business entities. All data and reports are kept in a centralized database.
  • Human Resources (HR): An HR module collects and manages data from every employee in every department. It enables the tracking of employee skills, in/out times and vacation days. HR can even integrate with Customer Resource Management (CRM) data to reveal how many leads a sales rep converted. This capability enables automatic bonus calculation.
  • Customer Relationship Management: Contact lists, analytics and interaction histories are contained in a CRM module to help manage leads, sales processes and customers. Detailed customer data helps target customers by region and adapt advertising accordingly. Meanwhile, dashboards and reports help track marketing and sales activities.
  • Distribution: Distribution management software can eliminate human error in purchasing, inventory tracking and customer support. Acumatica Distribution Edition, for example, comprises modules for Sales Order Management, Advanced Financials and Requisition Management functions along with a Warehouse Management System
  • Field Service: Integrating field service operations with the back-office streamlines dispatching and reduces response times. Customer data are available via web-based applications the field workforce can access on mobile devices. The module supports numerous functions, including scheduling/dispatching/call center, route planning and maps integration.

Acumatica 2019 R2, the latest release of the popular cloud-based ERP, is now available. It offers a full suite of ERP/business management solutions. For more information on these products and how your business stands to benefit, contact us today.

Additional ERP Resources

7 Signs that You Need ERP Software

5 Benefits of ERP for Accounting and Financial Management

Qualities to Look for in a Cloud ERP

7 Signs that You Need ERP Software

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How do you know that your business needs Enterprise Resource Planning (ERP) software? It’s not like knowing that you need a new refrigerator when milk starts going bad the day you bought it. The signs pointing to ERP-need aren’t that obvious, unless you know what to look for. Then, it can become really clear that you are in need of an ERP solution. Here are seven such signs.

Briefly, what is ERP?

ERP is a category of business management software. An ERP solution provides an integrated suite of applications that manage business processes. Together, these apps help manage operations and track business resources like cash and raw materials while enabling efficient supply chain management. ERP suites generally offer a complete accounting and financial management program. ERP suites often contain customer relationship Management (CRM) tools along with data analytics and visualization/reporting capabilities.

Learn more in What is ERP software?

7 ways to know that you need ERP

Chances are, if you’re diligent about your business, it runs pretty well even without ERP software. Indeed, a lot of profitable concerns work fine with the most minimal Information Technology (IT) inputs. However, every business could run better and be more profitable. With that in mind, consider the following signs that ERP could improve your operations as well as your bottom line:

  1. You rely on manual handoffs between accounting and operations – Does your staff have to use email or paper to transmit information from operations to accounting? For example, when a supplier delivers materials, does the accounting department have to input the order information into the accounts payable system by copying it off a carbonless form? An ERP system integrates accounting and operations management software, getting you out of this manual work.
  2. You’re using spreadsheets to analyze your corporate data—reports about sales growth, order statuses and so forth are produced on Excel. ERP has rich data analysis tools that work in real time.
  3. You’re adding too much staff as you grow—This is a sign that your knowledge worker productivity is lagging. Ideally, the staff headcount in accounting and operations management should increase at a lower rate than revenue growth. ERP enables greater productivity through automated workflows and process orchestration between systems.
  4. You don’t know what’s happening soon enough—You’re hearing about problems in the business well after they have occurred. For example, you find out that a vendor delivered a defective batch of raw materials a week earlier, but you already paid the invoice for that shipment. ERP systems can alert you about issues occurring in your business.
  5. You’ve got excess inventory on hand—Inventory ties up cash. If you have more raw materials, work in progress (WIP) or finished goods inventories that you want, it’s a sign that you lack the means to measure and track inventory effectively. ERP provides real time reporting on inventory and the ability to set quantity or dollar limits, with alerts for situations where the limits are exceeded.
  6. Your cash cycle is lengthening—It seems like it’s taking longer to collect from your accounts, while your payables are growing. You’re perpetually short of cash, which wasn’t a problem before. ERP systems give you greater real time visibility into payables, orders and receivables, enabling you to get ahead of cash shortfalls before they manifest as problems.
  7. Your customer satisfaction is falling—Late deliveries, errors in orders and so forth are driving your customers away. Yet, you’re not aware of it until it’s too late. An ERP system addresses this problem in two ways. First, better order management and oversight of delivery and service helps you avoid customer issues. You’ll get alerted when there’s a problem. Second, an integrated CRM system lets you engage more deeply with customers and enjoy more positive, growth-oriented relationships.

If you are experiencing any of these telltale signs of ERP need, you may want to talk to us. We have extensive experience evaluating a company’s requirements for ERP and then implementing the right ERP solution.

Additional ERP Resources

The 7 Irresistible Qualities of Cloud ERP

5 Benefits of ERP for Accounting and Financial Management

How to Improve Efficiency with a New ERP Solution

Making the Most of KPIs in Distribution

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Acumatica recently published an informative white paper on Key Performance Indicators for Distribution. If you’re in the distribution business, it’s a highly-recommended read. The paper will help you understand KPIs as they apply to a distribution. Here are some highlights.

What is a KPI, anyway?

A Key Performance Indicator (KPI) is a measurement of some aspect of your distribution business’s performance that you consider critical to how the business is doing overall. It could be something as simple as rate of revenue growth. If you’re hitting the number you had in mind, you’re performing the way you want. Other times, KPIs can be more obscure, but no less meaningful. A KPI for distribution might be the rate of product returns or the number of complaint calls handled per hour. KPIs are based on data from the business, typically coming from the Enterprise Resource Planning (ERP) system and other enterprise software applications. KPIs compile ERP data into usable forms, e.g. graphical displays that visualize the data.

KPIs as a solution to data overload

KPIs are helpful in managing a wholesale/distribution business because they keep you focused on what’s important. They get you out of the trap of data overload. With modern ERP software, it’s easy to generate literally hundreds of reports at any given time. You can get caught in “analysis paralysis” or focus too much on metrics that don’t matter as much as you might imagine. Worst case, you’ll miss an early warning of an impending problem.

Types of KPIs

There are three main types of KPIs: Historical, real time and predictive. All three tend to feature the same kinds of information. They report financial results such as sales, orders, profit and loss and o forth. They track operational metrics like orders shipped, backorders, route miles driven and customer service calls answered. Depending on how you display your data, i.e. your data visualization dashboard, you might have all three types visible at the same time:

  • Historical KPIs – what happened in the business, showing trends and highlights like peak sales growth over the last 5 years
  • Real time – what’s happening right at the moment (or that day)
  • Predictive – what might happen, if historical trends are any indicator, e.g. anticipating a shortage of certain products during an upcoming peak season

Predictive KPIs are where modern data analytics tools can really shine. Not all solutions have predictive capabilities, however. This is an advanced feature, one that may take some professional help in setting up.

KPIs for Distribution

Distribution businesses have developed their own distinctive KPIs. In addition to basic financial KPIs, a distribution business tends to focus on operational metrics that reflect critical business functions—often tied to profitability. They include:

  • Inventory Turnover Ratio – comparing inventory turns for low-turnover and high-turnover items. This KPI is useful for purchasing managers, as it should inform the volume of future buying.
  • On Time Shipping Ratio – comparing on-time shipping performance for custom orders at multiple warehouses over a period time.
  • Profitability by Item – revealing which customers and products are the most profitable.

It can take some focus and internal research to determine the best KPIs for your distribution business. We can help. We have guided distribution companies through the process of setting up data analytics and KPI dashboards.

To download the Distribution KPI white paper, visit  https://www.ccstechnologygroup.com/resources/kpis-for-distribution/.

Additional Distribution ERP Resources

Finding the Productivity Advantage in Distribution Management

5 Reasons Distributors Need ERP Software

How ERP Software Can Promote a Sustainable Supply Chain

Why Acumatica Outpaced NetSuite on the Most Recent G2 Survey

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Prospective buyers of ERP software often compare Acumatica cloud ERP with Oracle NetSuite. The two solutions are broadly comparable, but with some notable differences. In March of this year, a survey by G2 Crowd, the world’s leading business soft­ware review platform, revealed a preference for Acumatica when compared with NetSuite.

What Acumatica and NetSuite have in common

Acumatica and NetSuite have similar features in many function areas. Both solutions offer Software-as-a-Service (SaaS) options in the cloud. They both integrate Enterprise Resource Planning (ERP), Customer Resource Management (CRM), e-commerce and Business Intelligence (BI). They both enable mobility. Each has several dedicated industry packages, e.g. for manufacturing, distribution and so forth.

Differences between the solutions

What’s different between the two solutions? For one thing, regarding deployment, Acumatica gives its users a choice between on-premises, cloud and hybrid architectures. In contrast, NetSuite is only available in the cloud with a multi-tenant architecture.

Other distinctions include:

  • Scalability—Acumatica enables customers to add users at any time, at no additional cost due its “resource-based” pricing model. Customers pay for resources they consume. NetSuite charges on a per-user basis as well as for additional resources.
  • Relational database export—NetSuite’s ability to directly export data in a relational format is limited. Acumatica offers built-in automated backup service and snapshots. Users can access a fully relational copy of their data whenever they need one.
  • Customization—Acumatica facilitates customization with “point-and-click tools” or coding languages like C# and .NET. NetSuite relies on SuiteScript, a proprietary programming language. It is a not common language. With SuiteScript, it is difficult to find skilled developers who understand how to customize NetSuite.

Understanding the G2 user satisfaction ratings

The G2 user satisfaction ratings reveal some telling comparisons between Acumatica and NetSuite, however. Acumatica outperformed NetSuite in several categories. Acumatica users found the solution easier to use (82% of Acumatica users rated the solution for “Ease of use” vs. 74% for NetSuite.) Acumatica is evidently an easier company to do business with. (84% of Acumatica users cited “Ease of Doing Business With” vs. 71% for NetSuite.)

Other categories where Acumatica found higher satisfaction among G2 reviewers include:

  • Quality of support – 78% of Acumatica vs. 68% for NetSuite
  • Meets requirements – 84% of Acumatica vs. 79% for NetSuite
  • Ease of admin – 78% of Acumatica vs. 71% for NetSuite

Asked “Is the product headed in the right direction,” 88% of Acumatica users agreed, versus 68% of NetSuite users. In terms of Return on Investment (ROI), 30% of Acumatica user predicted they would see ROI with 12 months. For NetSuite, the figure was 23%. The numbers were the same for customers expecting ROI with 13-24 months: 30% for Acumatica vs 23% for NetSuite. For the long term, 5% of Acumatica users felt ROI would come in more than 48 months vs. 11% for NetSuite.

Get the full report here.

The G2 findings are compelling. To figure out if Acumatica is right for your business, you’ll have to see for yourself. Learn more about comparing Acumatica vs. NetSuite. We can help. We have guided many clients in their decision about which ERP solution is the best for their particular business. Contact us to learn more.