When you hear ERP, what is your first thought? Most likely, manufacturing, inventory, and order management. It can also do much more. It's time to discover how ERP can streamline and simplify your financial processes.
It's high time you switched to an ERP system if your business uses spreadsheets to track accounts payable and receivable. Excel sheets are not only time-consuming, but they also fail to give you the insights necessary for your business's financial stability.
ERP finance modules will help you to manage your cash flow and spending better. You can also easily create key financial documents such as cash flow statements and balance sheets. Artificial intelligence can eliminate potential mistakes.
ERP is a popular choice among 23% of accounting and finance employees in various organizations. What is ERP, then? What are the benefits of ERP finance modules? This blog will teach you everything about ERP, from its benefits to ERP finance. It also explains how ERP can be used for business continuity during economic disturbances.
What is ERP?
ERP system allows you to run your entire business. It connects multiple processes, such as financial management, manufacturing, supply chain, and human resources. It also can automate activities within an organization. Integrated software systems allow you to manage the entire process. Your ERP platform can use common data definitions and work on one database. This allows you to standardize and streamline processes.
The phrase "Enterprise Resource Planning" was coined in 1990, and it continues to be a success factor for companies around the globe. ERP systems are usually divided into modules that address specific business needs.
In ERP examples, the Finance module can collect financial data and create various reports, such as financial statements, ledgers, balance sheets, etc. Each ERP software module uses the central database to push and pull information. All departments in your organization, including the finance department, human resource department, etc, can now benefit from a single source of truth (SSOT). ERP systems, with their smarter intelligence capabilities and automated processes, can also help business leaders evaluate their businesses' financial and operational health.
What is the ERP Finance Module?
Let's look at the ERP system and its financial module to see what you can gain from it. The ERP finance module is a powerful tool for seamless accounting and financial management. It is also capable of invoicing, expense reporting, and maintaining standard accounts. The ERP Finance module, also known as ERP Financial Management or ERP Core Finance, can perform advanced reporting functions like profitability analysis and revenue management.
Do you require an ERP Finance module for your company? ERP software is modular and allows data to be shared with other core functions. Suppose any business function (such as production, purchasing, or inventory) impacts accounting. In that case, the finance module can capture it and record it. It will help you achieve accounting accuracy and meet your financial regulations. You can also generate multiple financial reports.
You can now measure corporate performance and make improvements easier with the help of consolidated financial information. ERP is a great tool for accounting and finance. Businesses are increasingly replacing standalone accounting systems with ERP. The following list of key ERP functions is by no means exhaustive.
- The General Ledger Module (GL): This is the core of any accounting system. The General Ledger Module allows your company to easily comply with financial requirements, such as budgeting and accrual processing. You can also integrate the General Ledger module with other operations and processes, such as procurement and cash flow management. GL is a central hub that lets you get a complete view of your financial situation and conduct real-time monitoring.
- Accounts Receivable and Accounts Payable: With the Accounts Payable module, you can both authorize and track incoming invoices and register and record existing invoices from suppliers. You can automate your invoice approval and generation process based on the type of invoices you generate. You can track the payments you will receive from your customers using the Account Receivable Module. The AR module can be integrated with a credit scoring system for real-time insight. The AR module also gives you access to statement reports and financial analyses.
- Asset Management Module (AM): Asset Management is a vital tool for managing fixed assets. The AM module allows you to manage user-defined asset depreciation and disposal easily. It also provides insurance, investment, fixed assets, and disposal information.
- Cash Management Module (CM): This module is useful when processing and analyzing all cash transactions over a certain period. It is possible to integrate the Cash Management Module with your bank to reconcile statements automatically. You can also visualize your cash flow to help you understand how you are doing in terms of reaching financial goals.
Nine Ways an ERP Helps in Financial Management
You should know the tasks you can accomplish with an ERP Finance module. We'll take a closer look at it so you can understand how ERP software will transform your organization's financial management:
- Tracking Profit: Tracking profits is a crucial financial process for every business. An ERP finance module lets you keep track of profit and thus get an overview of your financial status. You can identify the main sources of profits, costs, and underperforming areas. You may automate profit calculations using account receivables or incurred costs, depending on which ERP software package you use. Some ERP software will also allow you to forecast profit using historical data. Tracking profit is a great way to help you decide the best next move for your company in this uncertain economic environment.
- Ledger Management: You do not have time as a business person to go to multiple platforms to see financial transactions over a certain period. Here's where ledger management can help. You can maintain an accurate record of transactions with ledger management and get a comprehensive view of your assets, capital, liabilities and income. The transactions may be combined or consolidated using different accounting techniques and in various currencies, to satisfy the reporting requirements of an organization. How does it help? This allows you to see your data in a single view, which helps to improve decision-making and help achieve goals.
- Payables: Controlling cash flow is one of the most important benefits that ERP can bring. The Accounts Payable Module plays an important role. This module helps manage the funds due to vendors, processes invoices and records all financial transactions. With AP automation, you could save as much as $16 on each invoice. By integrating payable data into the purchasing system, you can avoid costly human error, increase productivity, and save money. You may be able to convert electronic invoices using an imaging function in your ERP software. The best part is that your business won't be late processing payments if you use the automated payment feature, which seamlessly integrates global banks.
- Receivables: This module helps you track customer payments and manage invoices and cash. This module helps track payments from customers and manage invoices and cash. Payment gateway integration will allow your customers to access their invoices in seconds and pay for them. AR automation will help your business to have a faster collection process, and you'll get more customers because they enjoy the smooth process.
- Fixed Asset Management: Want to capture capital expenses and prepare budgets accordingly? Fixed Asset Management can be of great help. This module is intended to track tangible assets and calculate depreciation. It also helps you meet regulatory requirements. This module is useful if, for example, you wish to determine the value of depreciating assets, such as manufacturing equipment, cars, and office space. This module lets you depreciate the costs of capital goods over time using various depreciation techniques and reduce tax. Manual processes performing these calculations in spreadsheets may make it difficult to get the desired results.
- Management of Risk: Top business leaders are always looking to minimize risks and always protect their organizations. The ERP finance module's risk management features help you predict, analyze, and manage crises, ranging from financial problems to natural disasters and legal liability to compliance risks. This module will not only prepare you to handle such calamities but also for the ever-changing regulations. You will also be able to check your credit risk, i.e. if you have enough money to pay accounts payable when customers fail to pay.
- Reporting: Access to financial data in real time is essential for data-driven decision-making. Reporting features in an ERP finance module help you make important decisions and maintain finances. This module will help you understand major revenue streams, sales forecasts, expenses, etc. Customizable dashboards provide insight into your financial and operational health at any time.
- Multicurrency: This module allows you to manage accounts payable and receivables in different currencies. The currency conversion function will allow you to work with foreign vendors and sell products around the globe. This module usually comes with General Ledger.
- Tax Management: Calculating taxes is tedious, especially if your company operates across different jurisdictions. The tax management module provides pre-built tax intelligence to help you complete sales transactions in compliance with regulations. You can manage both tax audits and tax reporting with system taxation. The tax management module saves time for your employees by preventing them from performing mundane tasks.
Features that will Support your Financial Transformation
Some of the features in finance can be used to transform any business. ERPs streamline operations by automating processes. This leads to benefits such as improved customer service and lower overhead. We've compiled a list of "must-have" financial management software features to help you get started.
Centralized Database
To transform the role of finance, you need a centralized database with easy Access that integrates information across departments. Data silos created by decentralized systems create bottlenecks when finance has to interact with other departments. A unified information source can cut the time required to perform tasks such as account processing from weeks to minutes.
Predictive Analytics
Inconsistent and slow payments can hinder long-term planning and restrict your cash flow. You can be better informed by leveraging the power of AI to create rolling forecasts based on payment history and financial trends. Financial managers can use predictive analytics to identify credit risk and allocate money to speed up payment processing.
Reporting in Real-time
According to a survey that reported that 78% of respondents stated the financial decision-making process had been more data-driven over the last three years. ERPs give you Access to data in real time. Your finance team will be able to optimize project and production management with the latest information at all times.
Your organization's agility will increase as quick pivots based on real-time data analytics make it easier to deal with market disruptions. The manufacturing industry will find this feature particularly useful since teams can examine processes to coordinate projects and relay product information across locations.
Compliance Management
Suppose you are in a highly regulated industry, such as healthcare or financial services. In that case, it's important to have this feature. It helps keep your business compliant. Compliance standards are updated constantly, and it can be difficult to keep up with growth. Expanding your services or entering new markets will bring new rules and regulations. Violations of regulatory compliance cost millions per year. Comprehensive compliance management will reduce the risks of penalties and fines.
A Security That Can Be Scaled
The average data breach cost in 2023 was strong>$4.24 million/strong>. However, transferring sensitive data between systems and reports will increase the risks. In 2023, the average cost for a data breach was 4.24 million. However, sticking to analog systems does not guarantee that your data will be safe. Elkhart Emergency Physicians learned this when they exposed 550.000 records after a third-party failed to shred them before disposing of their documents. To reduce security breaches, investing in an ERP system with a robust and scalable security feature is important.
Supply Chain Management
Automation of data entry, materials procurement, and goods inventory can improve inventory management. The software will allow you to track your history and understand how different products perform. Software that compares prices from different vendors will ensure you always get the best price. This feature is important for companies that manage complex supply chains daily, such as those that work in retail or distribution. It can lead to greater customer satisfaction.
Subscription Billing Management
The business models in recurring billing have become a standard across industries. You must have an ERP that supports subscription payment management if your business offers subscription-based service or regularly recurring payments. You will also need an ERP that can handle deferred revenues, maintain a detailed revenue record, and comply with ASC 606 regulations.
ERP Accounting and Financial Management
Accounting and financial management are crucial for any business. Financial data, such as budget estimations, cash-flow management, and other complex financial information, must be updated to enable organizations to take informed business decisions. This information will help you to grow your business and increase profits.
What Is The Relationship Between ERP And Accounting?
Enterprise Resource Planning (ERP) plays a vital role in modern business by improving productivity, automating processes, and streamlining them - including accounting. ERP software can help streamline accounting processes by integrating data. This gives business owners and managers a 360-degree overview of their business. They are then empowered to make quick, well-informed decisions.
ERP software can be a more effective tool for managing the finances and accounting of a company than standalone accounting solutions. You can manage and track all operations across your organization via a central platform. Financial data insight facilitates cost-efficiency and increases the organization's productivity.
The Benefits of ERP in Accounting
We now understand the relationship between ERP and Accounting. Examine in depth the advantages of ERP financial module:
You Can Manage Your Accounting And Financial Needs
With an ERP module for accounting, it is easy to manage your cash flow efficiently. It provides access to vital business information and allows you to create a budget and allocate financial resources to different expenses, such as raw materials, marketing campaigns and employee salaries.
A unified management system for multiple departments or processes reduces the time and costs spent purchasing individual tools. You can do the following:
- Estimate capital needs and manage cash using ERP.
- Budgets should be drawn up accurately.
- Cost allocation for various activities.
- Pay vendors, employees, and others.
Remove Duplicate Data Entry
The majority of organizations deploy ERP solutions to manage and streamline business operations. When you combine that solution with an accounting module, you can save yourself the hassle of comparing and verifying the data between different systems. This also eliminates redundant entries and improves data consistency.
Transparency Financial Information
Accounting ERP software allows you to access your financial data whenever and wherever. ERP systems deliver accurate, reliable information to the user in a timely fashion so the company's resources are optimally used and business processes properly managed. This visibility provides a 360-degree view of financial data.
The Higher Level Of Control
The ERP system in accounting gives you greater control and empowers your business. Real-time insight into the impact of events and strategic decisions on your bottom line. You can improve decision-making, reduce costs, and increase profitability by using this method.
Automated Workflow
Automating your business processes can make it easy to improve your core operations. An accounting software management system, such as workflows, includes features that save time. They automate accounting and simplify data entry.
This software simplifies complicated accounts, payables, and receivables and improves cash management. ERP software's Finance and Accounting Module allows you to track and analyze financial data from various departments easily.
You can generate other financial statements such as balance sheets, income, and expense statements, etc. This automation allows you to collect data from across your organization and use it to manage your business better.
Reducing Human Errors
Data entry by hand is always susceptible to error; accounting and financial data are no exception. While such mistakes are common, inaccurate or incomplete accounting information can harm the quality of financial reporting, causing even more issues. It can also lead to problems in the tax calculation.
Comprehensive solutions for ERP identify and correct errors during data entry. This reduces the likelihood of creating erroneous bills, incorrect payments, or other accounting problems that can arise as a result.
Tracking Capabilities That Are Second To None
One of the most important benefits of ERP for accounting is its ability to be used as a financial management system. This includes enhancing finance and accounting activities such as credit management, revenue tracking, customer payment schedules, etc. You can easily manage payments, revenues, and billing activities if your parent company has an ERP system. The software can also track profits, costs, analyses, invoices and budgets.
Receive Detailed Financial Data Insights in Real Time
Accounting and Financial Management offers comprehensive, detailed visibility of financial conditions across all departments. This system allows you to view your financial health with efficiency and clarity. It helps you control costs, measure revenue, and perform other accounting activities. You will be notified of all financial transactions as they happen.
Robust Reporting Capabilities
Accounting departments spend a lot of time creating financial reports to be sent out to various stakeholders, such as banks, tax authorities, and shareholders. This manual labor can be eliminated with an ERP system with robust reporting capabilities. The filters built into the software can be tailored to meet specific agency requirements, resulting in accurate financial reports.
Financial Data Security
Financial information is highly confidential and requires a strict level of data security. Reliable ERP systems have multiple levels of security, strict protocols for databases that hold information and only allow users to access the system based on their roles. Users will also need to authenticate multiple times to gain entry. ERP software can prevent data breaches and safeguard sensitive financial information.
Last Words
ERP is a powerful tool for financial management. The statement assumes that any ERP system used will be efficient and well-designed. You have found the best place to find a dependable ERP tool. We will gladly take down your specifications and provide you with a quotation. Contact us today to start.
Arion ERP is the most efficient ERP system that helps streamline your business and project management. With the best financial management software, you can access your data anytime and anywhere. Arion ERP can help you manage your ERP system.
