How to Choose an ERP for a Trading or Distribution Business

Start with your own workflow, not a feature list

Feature lists make every ERP look alike. Begin instead by writing down how your business actually runs: how you buy, where stock sits, how you quote and dispatch, how customers pay and what your CA needs each month. That description is the test every vendor has to pass, and it keeps you from paying for modules you will not use.

What to check before buying a trading ERP

Whatever the size of the business, a short list of checks separates a system that will fit from one that will need workarounds.

• Document trail: are quotations, orders, deliveries, invoices and payments linked, so any figure can be traced to the document behind it?
• Stock: does stock change through documents, by product and warehouse, with a movement history?
• Receivables: can you see who owes what, and what is overdue, without building a report by hand?
• GST: is GST applied from HSN codes on every invoice and bill, and are return data and working files prepared from those records?
• Permissions: can you control who sees and changes each area, and is there a record of changes?
• Reports: are the reports you read every week available, and do they export to Excel?
• Data in and out: how do your products, customers and suppliers get in, and can you get your data back out?
• Support and training: who helps your staff learn the system, and what does help look like after go-live?

Extra checks for a distributor

Distributors carry more moving parts than most traders, so the same checks need more depth. Look at how the system behaves when the business has several godowns, many retailers on credit and stock with expiry or serial numbers.

• Multiple warehouses with transfers recorded between them
• Delivery challans that reduce stock in the dispatching warehouse, and invoices linked to them
• A credit limit and credit days for each customer, with dues visible next to their orders
• Batch tracking with expiry and serial numbers, if your products need them
• Job-work tracking, if you send goods out for processing
• An API, if your website or other software must read or write orders and stock

How important is multi-warehouse support?

It matters as soon as stock sits in more than one place. Without it, every godown’s stock is lumped into one figure, transfers happen off the books, and nobody can say what is available where. Check that stock is kept per warehouse, that transfers are recorded, and that dispatch reduces stock in the right place. TradeFlow supports multiple warehouses with storage locations, transfers, putaway, pick lists and cycle counts. One thing to ask any vendor is how cost is valued across warehouses: in TradeFlow, weighted-average cost is kept per product across the company, not separately for each warehouse.

How important is multi-branch support?

It depends on how the business is structured. If you run a single location, it is a small point. If you run several branches or companies, check whether they can share masters, whether users can be limited by branch, and above all how GST is handled, because registrations and returns follow the legal entity. TradeFlow lets you run more than one company from one login, and set up branches and departments with users assigned to them. TradeFlow prepares GST data per company, not per branch, so a business that needs branch-wise GST processing should confirm its needs with its CA before choosing.

GST questions to ask

GST is where a wrong choice is most expensive, so be specific with vendors.

• Does GST come from the invoices and bills themselves, with CGST and SGST or IGST decided by the states involved?
• What data does the system prepare for GSTR-1, GSTR-3B and input tax credit review, and in what formats?
• How are problems in the GST data flagged before you file?
• Can a finalised period be locked so later edits do not change filed figures?
• Who files the returns? TradeFlow prepares the return data; the returns themselves are filed outside TradeFlow, by you or your CA

Questions to ask an ERP vendor

Good vendors welcome specific questions and answer them plainly. Use questions like these, and ask for the answers in writing where they affect your decision.

• Can you show one purchase and one sale end to end, with stock, dues, ledger and GST effects, using our data?
• What are the known limits of the system, and what would we need a separate tool for?
• How do we load our existing products, customers, suppliers, opening stock and balances?
• How are permissions and approvals set up, and what exactly is enforced by the system?
• What happens when goods are returned, or a bill is entered wrongly?
• What training and support is included, and how are updates delivered?
• How do we get our data out if we ever leave?

How to run a useful demo

Give the vendor a script instead of watching their standard walkthrough. Send a short list of your real products, two customers on credit and one supplier, and ask them to raise a purchase order, receive goods, create a quotation, dispatch, invoice and record a payment. Then ask to see the stock movement, the receivable, the ledger entry and the GST data that result. A system that can do this with your scenario, without hunting for screens, is a better indicator than any feature list.

Warning signs

Some answers should slow you down.

• Answers that promise everything without showing it
• Claims that the system does all of the work for you, with no explanation of how
• Demos that only use prepared data and avoid your scenario
• No clear statement of what the system does not do
• No way to export your own data

Where TradeFlow fits

TradeFlow is built for Indian traders, wholesalers, distributors and dealers, and connects purchasing, stock, warehouses, sales, receivables, finance, GST, CRM, job work and an API in one system. It is a good fit to test against the checks above; it is not a fit for branch-wise GST processing or for anything outside buying, stocking and selling goods. The best next step is to take your own workflow to a demo.

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