The Benefits of MRP System for Manufacturing Accounting

Manufacturing accounting and MRP system

If you have any familiarity with MRP systems, you know the advantages they offer in workforce planning, procurement, inventory management, workstation capacity, shop floor data collection, and so much more.
And while production planning, eliminating excess inventory, and cost savings are substantial benefits of owning MRP software, one that might be overlooked is the value it brings to the manufacturing accounting department.

MRP provides manufacturing accounting with automated data collection, accurate cash-flow planning, and it prevents costly and embarrassing mistakes in accounting because there is always real-time data available.

Here are just a few of the ways that MRP solutions can help your accounting team:

Automated data collection

One of the best features of MRP—and a big plus for the accountants—is its automatic categorization of any movements of inventory such as:

  • Cost of Goods Sold (COGS)
  • Adjustments
  • Purchases
  • Write-offs

The system calculates inventory value and stock balances in real time and adds them to a historical record that can be accessed by every department and each company location. All stock transactions are accurate and integrated, making it possible for accounting to calculate work-in-process at a moment’s notice.

Because COGS, purchases, and other indirect costs are accurate and up-to-date, accounting can analyze and monitor the value of the company’s sales to ensure they are making a profit. They can also assist the salespeople to attach a precise cost to each product or service.

All of this is possible thanks to a quality MRP system that integrates with accounting.

Improvements in cash-flow planning

Businesses must be able to plan their cash flow. Forecasting both short and long-term expenses against any expected incoming cash is made easier with the help of an MRP system. Real-time data is always available to show monthly income and expenses, which integrate with accounts receivable—and takes into consideration information from sales and the production schedule— to give a clear picture of how much cash can be expected and when it will be available.

Cash flow planning permits you to foresee trouble and create a cash cushion for any unexpected expenses. It gives you a good idea what your cash balance will be in future months and helps your accountants anticipate and avoid those expensive surprises that could disrupt, or even destroy, your company.

MRP system for manufacturing accounting ensures following the best practices

One of the benefits of an MRP system for manufacturing accounting, which is not often thought about, is that it can prevent malpractice and theft. Since information is collected in real-time, and the system prevents modifying historical data, every transaction is saved and leaves a trace, making it all but impossible for employees (or anyone else, for that matter) to steal inventory without being discovered. That saved information could also become valuable evidence in avoiding a malpractice suit.

MRP software also prevents the possibility of a confusing double-entry. Any manufacturing operation made at a workstation will also be automatically reflected in the inventory system, without manually updating the inventory.

The system prevents other mistakes by enforcing data integrity with logical constraints. For instance, if a part or product has been shipped to the customer, it is automatically removed from inventory, so it’s not possible to incorrectly enter a wrong quantity. There is always perfect balance in stock movements.

Is an MRP solution right for your company?

MRP system will mean less work for your accountant, which in turn means cost savings for you! Highly accurate reports are generated in real time, and they will most likely be free of mistakes. A bonus is that several responsibilities will be transferred from accounting (stock-keeping, for instance), freeing up time for them to do other things.

And the advantages of MRP are not confined to accounting. They spread to every department and almost every worker, making them more effective and efficient, which makes your enterprise more profitable.

We are MRPEasy, and we’re here to help your business

We can assist you in making the most of your manufacturing efforts. MRPEasy has the products to bring your employees, equipment, and data together in one place. And we have the expertise to show you how to streamline your manufacturing resource planning with one of our easy-to-use and affordable MPR systems. It is the perfect choice for your growing enterprise.