Can QuickBooks Be Used For Cost Accounting?

Oct 05, 2015

I recently met with a new manufacturing client who, in a very short period, developed from a small start-up to a sizeable business. The owner credits their success to their work ethic and advanced skillset. As we conversed about their growing business, it became apparent they did not have a cost system.

I inquired about an ERP system. They laughed and asked if QuickBooks counted? Even though the question was posed as a joke, the answer may be yes. Let me first say, I do not advocate any specific software. I do not sell software and do not get a commission. While I do believe Excel is a great business tool with various capabilities, it is not error proof. As I have stated before, 86% of all Excel spreadsheets have critical errors. To me, this is a major flaw!

The most important aspect of any business in an efficient and accurate method for determining your costs. Sophisticated software may offer timely reports and additional insight. You man be able to make immediate decisions critical to the future of your financial wellbeing. However, if you lack the necessary data input, your software is useless, no matter how sophisticated.

While QuickBooks is not a designated costing software, the key to making it work is knowing your cost drivers, overhead, direct and indirect costs, etc. Building a cost system within your budget and skill set is absolutely possible. Accuracy is a necessity. So no matter what system you may be using, remember to continue to make improvements. Ensure your accuracy and know what is essential to make swift business decisions.

Categories: Cost Accounting