We have all heard about Enterprise Resource Planning (ERP) software. ERP is a business process management software that automates multiple back-office functions with multiple integrated applications.
ERP, a Global Solution for Your Financial Management
The information available via an ERP system provides greater visibility for key performance indicators (KPIs) required to meet corporate objectives. ERP software applications can help us plan products, order parts, buy supplies, communicate with suppliers, check inventories, provide good customer service, and track orders.
When we hear the term "ERP software," production, inventory, order management, and quality often come to mind. However, ERP systems are equally valuable in financial management.
An ERP system helps a company manage its money by doing things like bank reconciliation, tax management, capital management, account receivables, and purchase management.
ERP financial management module collects data on finances, produces reports, like ledgers, trail balance data, income statement, and overall balance sheets.
Apart from the standard general ledger, accounts receivable, and accounts payable functionality, modern ERP systems include robust financial report writers that we like. We can integrate ERP software's financial management module with other applications, such as inventory management, purchasing, warehouse management, order processing, CRM, etc. This is great as it removes the need for duplicate data entry in more than one software package and streamlines the company's financial management and accounting operations.
ERP Benefits for Financial Management
Here are some benefits companies get from using an ERP financial management solution:
Benefit #1 of Financial Management with ERP : Better Asset Management
ERP financial management systems provide companies with the ability to get insights and better visibility regarding asset management. Companies own various types of assets, such as machinery, buildings, electronic equipment, and office furnishings, among others.
Having an ERP finance solution can help organizations track assets and remove hidden costs. This can help them save money and improve efficiency. Better visibility and control over assets can also help companies avoid making unnecessary capital investments.
ERP software offers ways for firms to:
- Access comprehensive reporting related to asset valuation and asset location
- Easily manage and track company various assets, including depreciating and non-depreciating assets (such as land)
- Better monitoring of assets to minimize the risk of theft
Tracking business assets that reach their utility limit and tracking high inventory with low usage provide organizations with immediate cost savings.
Benefit #2 of Financial Management with ERP : Financial Reporting
ERP software delivers a powerful and efficient financial planning and reporting solution that helps organizations make better and smarter decisions. ERP financial reporting solutions help companies with everything from financial reporting to management and analysis. This transforms data and analysis into answers, actionable insights, and business success.
ERP systems give top management instant data on, for example, accounting, financial reporting, budgeting, sales, billing, and order management. This data definitely helps management make better decisions.
Standalone accounting and financial management packages provide basic financial reports, such as income statements, cash flow statements, and balance sheets. ERP software offers many more varied kinds of reports that provide more visibility into financial data. Some reports use data from orders and inventory to make cashflow projections. This includes order status and inventory management, plus accounts receivable aging and customer order pipeline. ERP software gives you an idea of where you stand with easy-to-understand and easy-to-analyze dashboards, as well as Key Performance Indicator (KPI), reports.
With these amazing capabilities, finance managers no longer have to make best guesses about their business, putting the company ahead of its competition.
Benefit #3 of Financial Management with ERP: Variance Management
It's worth mentioning that variance management is an important facet of financial management. ERP software can also benefit a company's accounting department by helping set standards. Companies can better meet expectations by reviewing and adjusting expenses for any project. This includes the cost of production and any related manufacturing expenses.
Standard costing covers the cost of labour, materials, and overhead. Businesses can use different tools to understand how the cost differs from the standard cost if the cost is different. If the standard cost is lower than the actual cost, the profit would be lower than planned.
With an ERP solution, companies can timely identify and address any cost variances compared to the allotted budget. The business can swiftly assess exactly why the cost variance is arising and remediate it quickly before it starts to cut into profits. In contrast, if costs are lower than expected, then companies can set new standards, and favourable conditions can be easily preserved.
ERP financial management solutions offer the ability to review various costs over a certain period of time or according to a particular classification. This allows companies to reference multiple cost balances and create cost tables, helping review and analyze cost allocations and make more-informed business decisions.
Benefit #4 of Financial Management with ERP : Streamlined Budgeting
Good business leaders know and understand that budgeting is an important part of the business. A company's financial information and sales figures are within its ERP system. Companies can use this information to derive both projected revenue and expenses with ease. The finance department has previous financial data, so it can start budgeting.
ERP software can show a business how it's doing regarding spending. For instance, modules in these software packages can assess advertising and marketing campaigns. They can also analyze business processes as well as supply chain usage. A good financial management module can reduce corporate waste, while a more efficient business model leaves the organization with more revenue and cash.
Benefit #5 of Financial Management With ERP : Compliance
Financial and tax compliance is a must-have for businesses. Failing to follow relevant requirements can have catastrophic effects on the business.
This is where ERP software comes in to save the day. An ERP solution guarantees that companies have tracking capabilities with audit trails, so they never land in a bad situation. You can rely on the numbers and have full confidence that the IRS won't find any discrepancies.
Businesses must correctly follow rules and regulations set by the government to remain compliant. An ERP solution helps achieve that.
Benefit #6 of Financial Management With ERP : Automation
Automation helps immensely with productivity and standardization of financial processes. An automated and robust system with consolidated data will get cash in faster to support the expenses that companies need to pay. A good ERP system will allow a company to automate both cash payments and receipts through using electronic withdrawal and automatic deposits.
Automating your invoicing is a real advantage for your business!
Also, by having ERP software and accounting linked, it's easier and quicker to automate workflows that cross the 2 systems. By using ERP for accounting and financial needs, companies can completely automate accounting and financial tasks. For example, a business can streamline accounts payable and accounts receivable management and cash management. Automation can also let businesses track their financial transactions more quickly.
Benefit #7 of Financial Management With ERP : Audits
Most companies need to have an external audit on a frequent basis. Financial management packages in ERP software can help the business better prepare for the audit. The solution can also provide for things, such as e-discovery. ERP software systems make it easier for businesses to be transparent when there's a legal question or an outside investigation. This resolves the issues that come up.
With Gestisoft, You Have an ERP Solution for Your Financial Management
It's risky to use workbooks and spreadsheets instead of ERP for financial management. Programming and database errors will increase. ERP systems give finance personnel instant visibility into data for budgeting, accounting, and financial reporting. This lets management make better decisions. ERP functions simplify life for finance personnel, helping them stay on top and improve the return on daily work processes.
Our Go Finance offer provides a turnkey solution for an ERP system that's specifically adapted to your company's needs. Microsoft Dynamics 365 Business Central will benefit your sales, financial operations, human resources, project management, and operations teams by bringing them under one roof. This will boost the efficiency of all departments by streamlining your operations.
Contact us to pick the plan that's right for you and make your company more digitally competitive.