Keep what works
Most UK machine shops run their books on Xero or Sage, and most are happy with them. The bank feeds work, the accountant knows the software, and VAT returns go to HMRC under Making Tax Digital without anybody thinking about it.
So when the business outgrows its spreadsheets, be wary of an ERP that wants to replace the accounts as well. You would be swapping something that works for something you have to learn, to fix a problem you do not have.
The better question is how the two should divide the work.
What the ERP should own
Manufacturing detail that an accounts package was never designed for:
- Quotes and sales orders, with the dates the customer was promised
- Works orders, routings and the plan
- Stock by batch, with heat numbers and certs
- Job costing: material issued, time booked, subcontract returned, against the estimate
- Stock and work in progress valuation, at any date your accountant asks for
- Raising sales invoices from what was despatched, so nothing delivered is forgotten and nothing is invoiced twice
- Goods received not invoiced and goods despatched but not yet invoiced, for the month-end accruals your accountant asks for
What stays in Xero or Sage
- the sales ledger and purchase ledger: who owes you, whom you owe
- bank and cash
- VAT, and the Making Tax Digital submission
- payroll, if you run it there
- the year end and statutory accounts
In short: the ERP knows what happened on the shop floor and what it was worth. The accounts package knows who has paid.
How the two meet
The join is narrower than people expect. What crosses over is mainly:
- sales invoices and credit notes, with the right nominal codes and VAT codes
- purchase invoices, or at least the accrual for what has arrived but not been billed
- occasionally journals for stock and work in progress at month end
For that to work cleanly the ERP has to hold your nominal codes, not its own idea of them, and let you decide the coding by customer, part, item group or supplier.
Questions to ask any vendor
- How do invoices get into our accounts package: a direct connection, or a file we import? How often, and who presses the button?
- Which system is the master for customers and suppliers, and what happens when the two disagree?
- Can we use our own nominal codes and VAT codes, and override them on a single line?
- How are credit notes, part credits and deposits handled?
- What does month end look like? Can we get stock, work in progress, goods received not invoiced and goods despatched not yet invoiced, as at a date?
- If the connection is down for a day, what breaks?
- What will our accountant need to do differently? Ask them to sit in on the demonstration.
Be cautious of any answer that starts with "we replace all that".
Where Amplify ERP stands
In the interest of answering our own questions: Amplify ERP does the manufacturing side and deliberately leaves the ledgers in Xero or Sage. Invoices are raised from despatches with your nominal and VAT codes on every line, and handed over for your accounts package to import. A direct connection to both is planned. We would rather tell you that than imply otherwise.
The short version
Do not judge a manufacturing ERP by its accounting module. Judge it by whether it knows what your jobs cost, and by how cleanly it hands the figures to the accounts package you already trust.