If you have used or researched accounting software for inventory management, surely you’ve come across a wide range of buzzwords that detail the areas of the software that can help your business manage inventory better. Sometimes those who use such buzzwords forget that not everybody is knee-deep in inventory management on a daily basis, and they might need a better explanation. Here are some key inventory management terms, and a brief explanation of how they help you and your business. While some of the terms may be familiar, their definition in relation to inventory management software is more specific to that application.

ABC Analysis

This analysis shows which of your inventory items are responsible for the majority of your Cost of Goods Sold (“COGS”) based on the 80/20 rule: 80% of inventory sales come from 20% of your items. This analysis can help control your inventory, increasing the items you need in stock, and reducing the items you don’t need. This in turn, can increase your capital, since less money is tied up in inventory.

Assemblies

Assemblies are a set of component parts that make up an inventory item. By setting up items as assemblies in a software system, removing the components from inventory becomes easier, and costing of an item can also be automated within the assembly. You eliminate the need to remove (and replace if needed) every single component individually in your software during the production process.

Bill of Materials

The bill of materials shows all the information about a production plan, including its assemblies and required components. This helps you plan for which items need to be produced, and what components to pull from inventory for that production plan. It also helps you realize more quickly which components are in stock or need to be ordered for that production plan, saving significant time compared to managing the process by hand.

Multiple Warehouse Management

Many companies that manage an inventory grow such that their products are stored in more than one location, whether it’s another warehouse or even on a truck or trailer. The ability to see which items are located by warehouse is extremely helpful. Some systems allow you to manage inventory in multiple locations, and even let you make transfers within the software when necessary. The ability to view inventory by location keeps you more organized and allows you to get the inventory you need more quickly.

Physical Inventory

This is the process of counting the actual number of items in inventory, entering it into your software system and getting the two sets of numbers to agree. This process helps keep your inventory numbers accurate. Software can help with this process by printing a working file and providing a place to enter a physical count from the printed count sheets.

Serial / Lot Number Tracking

Many businesses have items for which they must track serial or lot numbers. In times of item recall, it is crucial that the number tracking system is up to date and quickly accessible. Software programs can keep track of inventory serial and lot numbers upon receipt into inventory. When an item is sold, the number can be selected and will be tied to the customer. If there is a recall or issue, you can then run reports to see which customers got items from a certain range of numbers, making this process much faster than looking back at sheets of paper.

Turnover

Turnover is defined as the number of times the average inventory on hand is sold and replaced during a period of time. A higher turnover rate indicates your inventory is not just sitting on the shelf getting “stale”. Inventory management software can help clarify what your company’s turnover is by product, which can help identify which items you are purchasing too seldom, too often, too many, etc. which can have a drastic impact on your cash flow.

Unit of Measure “UOM”

Inventory items must be measured somehow, and that is why we have units of measure. We can measure items by the pallet, the box, the bag, the gram, the pound, and much more. Where it becomes difficult is when you need to purchase items in one unit of measure, and then sell in another. Software can help out with this by allowing you to set up your own units within the system. You can also use the software to set up the pricing per unit, so that when you sell an item, the correct amount is taken out of stock, and the correct price is charged for that unit.

These inventory management tools can help keep your inventory running smoothly, and increase the profitability of your business.

If you are in the market for new accounting software, you have surely considered at some point that there will be a learning commitment involved for all of the employees who will use the system or generate reports from it. Moving to any new system can be challenging, so be sure to minimize frustrations by having a training plan in place before purchasing the software. Here are the most popular training options offered by software vendors.

Classroom Training

Many software vendors will schedule and plan for classroom style training, whether at their own site or at a remote location. The benefit of live training is that you can interact with the instructor along the way, posing specific examples or requesting clarification on certain topics. Classroom training can be a very effective means of learning a new software program; however it can be hard to get away from work, and there may not be any classes near your location. For this reason, more and more software companies are offering alternative training options.

Training at Your Site

Holding training at your own facility can be extremely helpful, since all applicable employees can be in attendance, and the training is tailored to your own needs. Some software companies will send staff to your site, or they may suggest a partner who is in your area. While on-site training is an excellent option, it typically costs more than any other training option.

Online Training

With the growth of the internet came the useful addition of online software training. This type of training is excellent for those who don’t want employees away, and also for those who want employees to learn the software a little at a time instead of spending a whole day. Of course the cost of such training is also considerably less than other options.

In Program Help

In program help is available in most software programs. Just click on ‘Help’ or else simply press the F1 key (in most programs). Help topics will typically come up based on where you are within the program. This may not be the best way to learn how to use the whole program, but it certainly comes in useful when you have a question about a certain function, or want to learn how to use something new.

Does your accounting staff spend excessive time entering each component of a finished good into your software, in order to take the item out of inventory? Does your warehouse staff struggle with which items to pull in order to begin a manufacturing run? Are you in the dark about your true manufacturing costs and profitability? These are just some of the question that may be solved if you start to use assemblies within your manufacturing management software. Learn more about the terms associated with assemblies, and how they can work together to help your manufacturing business become more organized, operate more efficiently, and increase profitability.

Assemblies Maintenance

Assemblies Maintenance is the process of defining which components or parts make up your finished item. The finished item is known as an assembly. Most manufacturing management software will let you create an assembly with all of its components as well as labor (often set up as a ‘service’ inventory item), so that true costs may be calculated. The system may also allow you to include costs from outside services, such as sending out an item to have it painted, which can be helpful if the components require other services before being included in an assembly. Once the assembly for a standard assembly item has been created and saved within your software system, that assembly can be used again and again. You may choose to copy a previously saved assembly and customize it for a different customer, saving significant time.

Assemblies Production

A production plan is a sequential list of assemblies to be built, one at a time. During this ‘building’ process, components are removed from inventory. Many systems will also allow for ‘un-building’, which put components back in inventory, helpful when an assembly was not completed or an order was cancelled. This eliminates the need to remove (or return) individual item components from your software system, as all components are simultaneously removed when the build is completed. Prior to the creation of a production plan, a shortage report can be generated to verify whether all needed items are available in stock. Once the actual physical building of the item is completed on the shop floor, the assembly is then built within the software.

Serial and Lot Numbered Items

Some components within an assembly may contain lot or serial numbers. If you record and track the numbers for each of these components as you receive them into inventory, you may also be able to select which serial/lot number is being used as a component within the assembly you are building. This is an important feature for those who wish to keep tracking the number of the component, even after it has been built into an assembly. If this is a feature you require for your manufacturing operation, be sure to choose a system that allows for that capability.

Bill of Materials

The bill of materials is a document that shows all of the information about a production plan, including its assemblies and required components. This document can be created by the software system once a production plan has been created within the system. The bill of materials typically shows the quantity of components that are needed, and also the quantity that is currently on hand, so that missing components can be put on order. The bill of materials is also useful for warehouse staff, as it provides a comprehensive list of items that need to be pulled for a product run.

Setting up assemblies within your manufacturing management software can greatly help increase efficiency and profits for your manufacturing operation.

How much time is spent finding the menu items for entering data into your accounting software?

How much time does it take to find your favorite reports?

How much time does it take to find the spreadsheets that you use every day?

How much time do you or staff spend thinking about what to do next?

How many times are tasks completed in the wrong order?

The amount of time that it takes for the above questions would probably surprise you. A few seconds here and a few seconds there don’t add up to much, until you multiply that by 10, 20, or 50 times per day. Then multiply that number by 250 days a year.

Tool bar icons and customizable tool bars were invented as a way to resolve some of the problems posed by the questions above. However, in most programs you have to memorize what the tool bar icon represents in order to use it effectively. Sure, you can hover your mouse over the icon to see what it is for, but that takes valuable time.

Another method is short cut keys. But again, you have to memorize them.

In order to help improve your organizational efficiency and effectiveness your accounting and business software program should allow you to build your own customized menus for you and your staff. The menu building features to consider include:

• The ability to order menus items according to workflow.
• The ability to rename menu items, so that they are understood by the person performing the tasks.
• The ability to create groups of menu items.
• The ability to copy outside program links as menu items (ex. a favorite spreadsheet).
• The ability to create a separate menu for each staff member.

Managing payroll seems fairly simple when a business starts up, but once a company grows and must manage the payroll for multiple locations, things become exponentially more complex. There are several locations, employee types, departments, and more that must be managed and maintained. And then there is the method of distributing pay to employees at all locations. Payroll software can help you manage this process and make multiple company payroll run like a top. Consider these tips for handling payroll for multiple companies.

Track employee locations.

Set up your payroll software system to track employee locations by profit centers, departments, companies, or a combination of these. Then when it's time to run payroll reports, you can filter out the area(s) you have tracked. For example, you could see the pay by department in one location, or your payroll costs by profit center, etc. This is also helpful for check printing, since you can print all your pay checks and sort by department and employee, or print paychecks for employees by the company they work in, which makes distribution much simpler.

Run payroll for multiple departments under one company.

If you are a single employer with multiple locations and want to run payroll for each location, setting them up as companies under one employer or by department can be extremely useful. This allows you to post the payroll data to the appropriate account, so you can keep track of expenses by location, and more. For instance, departments could be used across companies, so you could have an "office" department that could be used by all companies. Then when you process payroll, you can filter out and pay all office departments from all companies and pay them in the same pay run.

Pay employees via direct deposit.

By setting up your employees to be paid via direct deposit, you eliminate the worry of having to mail or deliver paychecks to multiple locations. Pay is simply deposited into employee accounts on pay day, and they receive a direct deposit pay advice, which is a sheet of paper representing their pay stub. Make things even more efficient by offering your employees the option of receiving and accessing pay advices electronically.

Take the time to learn more about what your payroll software has to offer, and you may just find ways to make your job of running payroll for multiple companies a simpler and faster process.