Manufacturing isn’t like other types of business. Retailers sell stock and service companies sell their time, but only manufacturers create new products from scratch.
This can lead to accounting problems. Manufacturing businesses have to account for their raw materials and processing costs, but they also have to work out the value of the finished items they create.
There are different methods of doing this. You’ll need to choose the right one for your business and use it properly. In this guide we’ll look at the methods available to you, and some potential problems and useful benefits once you’re up and running.
With this knowledge you’ll be able to choose the right accounting system to help your manufacturing business grow.
Get the right accounting deal for your company
No manufacturing company is too small for you to properly track its accounts. Of course, you’ll need the right accounting software. There are plenty of packages available, so don’t just buy the first one you see. Manufacturing accounting software will probably stay with you for the life of your business, so choose it wisely:
- Research the available products
Read forums, ask friends and colleagues, find out what other businesses like yours are using. - Make sure it works for you
Choose accounting software that was created with input from manufacturers, so you know it’ll handle your business needs. - Ensure it’s scalable
You’re starting small but you may not stay that way. Be sure to go for accounting software that will grow with you. - Aim for the cloud
Cloud-based accounting software will let you access your accounts from anywhere and should cost you less up-front, as well as reducing your IT support costs.
Why Nobel Thomas
While operating in one of the most diverse industries, businesses across the manufacturing sector are faced with similar challenges and opportunities.
Increasing input costs, a rising Australian dollar and competition from low-cost countries like China and India can place increased strain on businesses in the industry.
Successful businesses in the manufacturing industry have efficient production and administration processes, effective supply chains, and an ability to innovate. Whatever you manufacture, you need an advisor that understands the industry.
Our specialist manufacturing team have the industry knowledge to take a strategic view of your operations and provide guidance and advice on a number of matters including:
- Audit, accounting and tax compliance
- Outsourced accounting
- KPIs, benchmarking and analysis
- Management accounting
- Budgets and cash flow forecasting
- Pre-lending reviews and financing
- Capital raisings
- Business valuations
- Mergers and acquisitions
- Domestic and export markets
- Research and Development tax advice
No job is too big or small for our team and we will help you understand the key profit drivers in your manufacturing business. You need to know your business numbers including your pricing and margins so your financials are more meaningful. All business owners need to budget, plan, and monitor their business’ performance and we know the pitfalls of manufacturing in this country.