Distribution Accounting Software: What You Need to Know

With increasing competition often dictating smaller profit margins on a per-sale basis, wholesale distributors are facing rising pressure. Savvy wholesalers are asking themselves the same question: How can technology be leveraged to lower operational costs, establish new competitive advantages, and better meet customer demands? This article is designed to quickly acquaint you with the variety of distribution accounting software options on the market being used to meet these challenges.

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What can distribution accounting software do for you?

Wholesale distributors face some unique challenges which purpose-driven distribution accounting and ERP systems have been designed to address. As the profit margin on individual sales can be narrow, distributors rely on a high volume of overall transactions to generate revenues. Accounting software for wholesalers needs to have the capability to handle a large number of database records. This is especially so given that the average distributor needs to maintain inventory records for each of the many products offered.

As wholesalers process numerous, repetitive transactions it is imperative that the processing of orders is as efficient as possible, with a minimum of duplication of data entry. Accurately forecasting purchasing needs is extremely important for wholesalers as well—both to meet shifting customer demands and to make sure that valuable capital isn’t tied up in inventory overstocks. Distributors also require integrated tools to optimally manage shipping and logistics.

Complete accounting software

Aside from industry specific functionality, distribution accounting systems contain all the normal modules you might expect in a standard back-office accounting package. Accounting features include the ability to print checks, pay bills, track expenses, manage payroll, create orders and invoices, manage receivables, establish budgets, perform bank reconciliations, and create top level financial reports.

Optimizing inventory control and purchasing

There are numerous reasons that it is so important for distributors to have the right predictive software to help optimize inventory. Maintaining excess inventory eats away at profits, by incurring additional storage expenses. Additionally, items that don’t move often need to be liquidated at below ideal prices and sometimes even at a loss. Keeping a large amount of inventory also means decreased agility and ability to meet changing customer needs.

Meeting customer demands

Successful wholesalers are looking more and more to try to keep the minimum amount of inventory to meet customer demands. In order to employ this strategy and reap the cost saving benefits associated with it, it is critical to have visibility into upcoming purchasing requirements. Advanced software tools for distributors are providing wholesalers with this capability. When inventory control, order entry, and purchasing are integrated, distributors gain the ability to assess historical data, upcoming orders and forecasts, and predictable trends such as seasonal demand changes in order to plan their purchasing. Intelligent purchase order systems also provide the ability to perform complex calculations that can provide insight into how to reduce costs by taking advantage of volume buying discounts and how to select the right supplier to both meet customer delivery dates and minimize expenses.

Promoting a customer-centric approach

As distributors look to create competitive advantages, another key driver for increasing customer satisfaction is improving turnaround time and shortening order cycles. Customers are increasingly looking at differentiators such as delivery time in order to make their buying decisions. By integrating information between the sales staff and the warehouse, distribution accounting systems are providing better visibility into the order fulfillment process. Aside from decreasing the time needed to process orders by making information available between departments in real-time, increased visibility allows for easier collaboration in resolving issues.

Taking the next steps

Sifting through all of the distribution solutions that are available on the market can prove to be very difficult. We can help. Through a brief phone call, our software specialists will look to better understand your business and software needs to help you locate a handful of solutions suited for your specific requirements. Get started today!

Adam Bluemner is a Managing Editor at Software Connect. He and his colleagues have been helping businesses like yours find top distribution software options since 1996.

Popular Distribution Software Products

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