There are several ways companies can apply enterprise resource planning (ERP) tools that help streamline procurement, compliance, supply chain efficiency, and financial operations. ERP software links processes, allowing decision makers to plan, budget, forecast, and report on company activities with high accuracy. Below, we’ll explore how a subset of financial ERP resources can boost your analytical capabilities–you can also read more about how ERP systems benefit supply chain management in our latest article.
What Are ERP Systems?
An ERP software solution provides an integrated platform with secure cloud hosting to manage each element of your production or distribution. This type of management system collects intelligence, data, and other information from across a business including:
- Human resources
- Supply chains
It works as a central control panel, with multiple modules that share a database and communicate metrics. ERPs are a cohesive framework that can be scaled up or down.
How Can ERP Software Improve Business Accounting?
An ERP finance module supports business accounting and integrates information from other segments, such as asset management, sales, and research and development. Financials are a core aspect of understanding company performance, and an ERP oversees many financial functions, such as:
- Tracking accounts payable and receivable
- Performing regular financial tasks
- Closing year-end accounts
- Analyzing financial risk
- Producing business reports
Because ERP software is enterprise-wide, it offers advanced reporting and evaluation tools, regardless of whether a company opts for a simple revenue management module or a full suite of financial accounting, billing, and project management functions.
What Are the Organizational Benefits of ERP?
Finance is a very specific area of any business, whereas ERP encompasses a much larger range of processes. The single source of truth model used by ERPs provides greater accuracy because there is one database integrated across every element of the organization that delivers real-time information condensed into useful reporting tools.
Everyday tasks can be automated. These run the gamut from creating invoices and running financial reports to assessing service delivery levels and calculating material requirements. From a cost perspective, investment in an ERP solution can quickly pay dividends, generating cost savings by:
- Improving inventory management, procurement, and vendor relationships
- Automating manual or regular tasks, implementing efficient workflows, and sharing data across all company servers
- Providing greater order accuracy, on-time deliveries, and lean stock controls.
- Identifying and resolving production bottlenecks
For bigger entities, the most significant benefit of ERP is transparency, immediate access to reliable data, and hands-on management that allows executives to make fast, informed, and data-driven decisions.
Is an ERP Solution Suitable for My Business?
There are several scenarios where ERP is an optimal solution. Although ERP software is commonly used in manufacturing and supply chain departments, it also benefits finance functions and accounting teams. ERP for finance is particularly relevant where:
- Companies have multiple business systems and/or independent servers and need to improve internal communications and overall efficiencies
- Business data requires collation and analysis from numerous systems
- The organization is expanding and has outgrown legacy software, requiring an agile solution to support ongoing progress
- Disruptions or delays in reporting cause issues in production, sales, or data management, impacting customer experiences and satisfaction
Finance managers can harness the power of ERP to close accounts faster, improve reporting accuracy, produce detailed forecasts, and optimize each step in the accounting workflow.