Fundamental Differences Between Sage 50 and Sage 100 ERP

We spend a good bit of time here at Ardent Consulting transitioning our customers from Sage 50 to Sage 100. Most of the time, this work is done because our customers find themselves outgrowing the features offered by Sage 50. What we see is that there are a handful of distinct differences between the two offerings that will drive a company to make the decision to transition from Sage 50 to Sage 100.

Why is Sage 50 a good choice for businesses?

Sage 50 is offered as a plug-and-play accounting solution for small businesses and startups. The solution incorporates several important accounting features and functionalities while also providing different kinds of reports you can use to bolster your business decisions. It also includes basic inventory management capabilities. This makes Sage 50 a particularly good solution if you operate out of a single office location and would not be affected by desktop-based functionality.

Why is Sage 100 a good choice for growing businesses?

Sage 100 is a fully-featured Enterprise Resource Planning (ERP) solution for businesses on the path of growth. The solution, like many other popular ERP solutions, is divided into several modules for different business areas.

  • Accounts Receivable and inventory management, also found in Sage 50, are just two of these modules. 

  • You also have modules for purchasing and supply management, sales, customer management, manufacturing, business intelligence, and reporting to name a few.

These are the fundamental differences between Sage 100 and Sage 50. Now let’s take a deeper dive.

Features and Functionality

The main area where Sage 50 and Sage 100 differ greatly is in terms of features and functionality. Sage 50 is an accounting solution that is meant for small businesses, preferably to be used by one organization that has relatively simple accounting needs and operates out of one office location. In Sage 50, support for integrations and multiple users is limited and you need to use other tools if you want to incorporate additional business areas and roles. Ultimately, using Sage 50 to deal with multi-user, multi-access business environments can be quite difficult.

Sage 100, on account of being a fully-featured ERP solution, contains many added features and functionality that can allow you to apply it to multiple business verticals like retail, distribution, and manufacturing. Several internal and external processes, like purchasing management and payroll management, can be capably handled by the solution while it retains all the accounting capabilities of Sage 50 and extends it greatly with superior reporting.

Scalability

While offering some scaling, Sage 50 can become severely limited for expanding businesses quickly. While there is value in using Sage 50, it cannot measure up to full ERP suites like Sage 100.

Sage 50 is meant to work with a limited number of users and the pricing of the product is also calculated for a certain number of users. If you need visibility and access for an increasing number of users, Sage 50 is likely to hit a wall sooner rather than later. After a certain level of growth and expansion, your business can outgrow the scalability and functionality offered by Sage 50.

Sage 100, being an ERP solution, brings a level of visibility and accessibility to multiple users within an organization simultaneously and right out of the box. The flexibility it offers can enable you to apply Sage 100 to your current state of business and keep modifying and evolving it as your business scales up. This is what it means to be a scalable solution.

Customization and Integrations

Any software solution that you apply to an important business process needs to be capable of some level of customization. In this regard, Sage 50 is quite basic. The core functionality can be extended in a few ways with dedicated Sage add-ons and there are limited integration options. However, these are not designed to completely transform your Sage 50 installation to an enterprise-level solution.

Sage 100 natively supports a variety of business verticals with its many modules. This means that areas like inventory management, business intelligence, and payroll management can be natively handled by the solution without the need for third-party integrations. Moreover, you can use a whole array of existing integrations and even pay for custom-built integrations created using the Sage source code as the base. This means that Sage 100 can be deployed as a real enterprise solution for any kind and size of business.

User and Transactional Limitations

Most businesses who use Sage 50 with payroll & purchasing can manage their accounting activities in a multi-user environment without issue. When you get above 15 users, the management is trickier, but can be done. The Quantum edition of Sage 50 allows up to 40 users. However, after 20-25 users the system starts to get slower due to the increased level of transactions. To complicate matters, login is limited by device and the software is generally less user-friendly for multiple users.

Sage 100 doesn’t experience user limitations in the same way. For example, if your business has 20 user licenses, you can log into 20 of them as yourself, and the 21st person to log in would require a logout of one non-unique user. You can log into as many users as you like until the limit is reached. This allows for users to be logged in on multiple devices without forcing a logout which is really convenient for flexible work environments (like warehouse/office combinations).

While the businesses we work with haven’t experienced too many issues with multi-user limitations in Sage 50, they have encountered more trouble with transactions. In many cases, they have had to rebuild things in Sage 50 because they reach a transaction limit. When this happens, reports run slow and users get errors. The limitation occurs when too much information is in the system causing a need to purge data to keep Sage 50 running smoothly..

Report Writers in Sage 50 and Sage 100

In Sage 100, you use Crystal Report Writer for forms and custom reports. While Sage is trying to promote and increase the use of Sage Intelligence Report Writer, most people are used to Crystal Reports and continue to use it in Sage 100. In Sage 50, Crystal Reports is stripped out, and you have to use Sage Intelligence Report Writer. This means that Crystal Reports do not easily integrate with Sage 50, but most users don’t know how to use the Sage Intelligence Report Writer with Sage 50. As a result, Sage 50 users have to rely more on experts to help with reporting.

Inventory Costing Differences

Sage 50 supports the following costing methods:

  • Average Cost: A method of valuing the cost of inventory based on the average cost of the goods available for sale during a period. Average cost is calculated by dividing the total cost of goods for sale by the total units for sale. Average cost tends to level out the effects of cost increases and decreases because the cost is influenced by all the prices paid during the year. This is the standard inventory costing method in Sage 50 Accounting.

  • First In First Out (Sage 50 Premium Accounting): First In First Out (FIFO) is a method of valuing the cost of goods sold that applies the cost of the oldest items in inventory first. That is, the first items added to your inventory are the first items you sell. This method is very useful for calculating the cost of goods sold, especially if you are unable to specifically identify items of inventory that you purchased at different times for different prices. FIFO uses "layers" to keep track of an item's cost on its date of purchase or construction. Every time an item is purchased or built, a cost layer is created for that item.

  • Specific Cost (Sage 50 Quantum Accounting): Specific cost is a method for tracking inventory costs for individual inventory items, purchased on known dates. In Sage 50 Quantum Accounting, this method is enabled by turning on the serialized inventory feature. Every item that is added to inventory and is assigned a serial number, has a specific cost associated with it. The cost comes from the original purchase invoice and only changes if the invoice is adjusted. In order to use specific cost, you must turn on FIFO inventory costing first. The FIFO method will be used for tracking inventory items that do not have serial numbers.

Sage 100 supports the following costing methods:

The Inventory Management module in Sage 100 supports the following six separate methods of costing your inventory. These valuation methods determine the current value of the on-hand inventory, allocate the cost of goods sold, and determine gross profits as items are sold from inventory. Each item can be assigned a different valuation method, or all items can be valued using the same method. Selecting the appropriate valuation method ensures that the financial and inventory reports provide the most accurate picture of the status of your business.

  • Standard Cost Method: Standard Cost is the simplest inventory valuation method. When this method is used, the cost is determined by the value assigned for the item in the Std Cost field on the Item Maintenance Main tab. The standard cost does not change unless you manually enter a new cost for the item. The total inventory value of each item equals the quantity on hand multiplied by the standard cost. As items are sold, the standard cost is used to determine the cost of goods sold. This method is appropriate only if the standard cost for each item does not change frequently. After a standard cost item is established, the standard cost can only be changed using the standard cost adjustment utilities on the Utilities menu. These utilities ensure the appropriate Inventory Management and General Ledger adjustments are posted. When items are received into inventory using Transaction Entry or the Purchase Order module, the difference between the cost received and the standard cost is posted to the Adjustment account.

  • Average Cost Method: Average Cost is the most commonly used method of costing inventory. Each time new units of an item are purchased (received), a new average cost is calculated. The total inventory value of an item is the quantity on hand multiplied by the average cost. The cost of items shipped (issued or sold) equals the quantity multiplied by the average cost. As items are sold, the average cost for this item and warehouse is used to determine the cost of goods sold. Note for average cost items: If the quantity on hand is negative, the average cost will be an estimate because the actual cost is not yet known. If an item's quantity is expected to perpetually remain negative, use the FIFO, LIFO, or standard cost valuation method instead.

  • First-In, First-Out (FIFO) Method: The First-In, First-Out method assumes the first units purchased (first in) are the first units issued (first out). This method is appropriate for businesses that value inventory based on the most recent purchases. Unlike the Average Cost method, the FIFO method retains the actual cost associated with each unit received into inventory. The cost information for each receipt consists of the receipt date, quantity received, and unit cost, and is recorded as a "cost tier" for the item. As items are sold, the oldest cost tier (the cost tier with the oldest receipt date) is used to determine the cost of goods sold, thereby matching the oldest cost to the current revenue. When all units in the oldest cost tier are sold, the next oldest cost tier is used. There are no limits to the number of cost tiers that can be maintained for an item.

  • Last-In, First-Out (LIFO) Method: The Last-In, First-Out method assumes that the last units purchased (last in) are the first units issued (first out). This method is most appropriate for businesses that value inventory based on the oldest purchases. Like the FIFO method, the actual cost associated with each unit received into inventory is recorded for each item. The receipt date, quantity received, and unit cost are recorded as a "cost tier" for the item. As items are sold, the most recent cost tier (with the latest receipt date) is used to determine the cost of goods sold, thereby matching the most current cost to the current revenue. When all units associated with the most recent cost tier are sold, the next most recent cost tier is used. There are no limits to the number of cost tiers that can be maintained for an item. Using this method for items with low turnover rates (the quantity on hand is high compared to the quantity sold) results in an inventory valuation that differs significantly from the current purchase costs.

  • Lot Number Method: Items can be grouped and identified by lots for costing and tracking purposes. The Lot Number method is appropriate for items that must be identified in groups of units and is often used by food, drug, and chemical manufacturers or distributors. The quantity and cost associated with each lot is retained for each item. In addition, a lot identification number must be used whenever units are received or issued (sold) out of inventory. If more than one lot is involved in a receipt or issue, each lot number and quantity of the transaction must be entered. Because the lot number is specified when units are sold, the cost of goods sold matches exactly the purchase cost of the items in the lot. If the Sales Order module is installed, a detailed sales history of lot numbers can be produced if the Lot Items or Both Lot & Serial Items is selected in the Retain Lot/Serial Sales History field in the Sales Order Options window. This report includes the invoice number, invoice date, customer, and quantity sold.

  • Serial Method: The Serial Number method allows you to identify each item with a unique serial number, and retain the purchase cost of each item separately. This is often required for large-ticket items such as appliances, computers, furniture, and stereo equipment. Because the serial number is specified when units are sold, the cost of goods sold matches exactly the purchase cost of the items in the lot. Serial number costing differs from lot number costing in that only a single unit can be assigned to each serial number. If the Sales Order module is installed, a detailed sales history by serial number can be produced if Serial Items or Both Lot & Serial Items is selected in the Retain Lot/Serial Sales History field is selected in the Sales Order Options window. This report includes the invoice number, invoice date, customer, and quantity sold.

In summary, there are core differences between Sage 50 and Sage 100 that most of our customers consider when moving from 50 to 100:

  • Features and functionality

  • Scalability

  • Customization and integrations

  • User and transactional limitations

  • Report writers

  • Inventory costing differences

Greg Tirico