8 Benefits Of Cloud ERP Software For the Finance Department

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Enterprise resource planning, or cloud ERP, is a solution that uses the cloud to manage resources. Instead of an on-premises network, it operates on a vendor's cloud platform.

This makes it possible for businesses to access the cloud online. Key financial and operational business processes are automated by ERP software. Data on inventory, orders, supply chain management, and help with procurement, distribution, and fulfillment are all available from a single source. Organizations can use the internet to access the software. An internet connection and a web browser are all that are needed.

What is Cloud ERP Software?

ERP software that is hosted by an ERP vendor and made available to companies as a service. Without the drawbacks of upfront licensing payments, it enables capability equivalent to or better than that of on-premises systems.

Because they can access enormous amounts of data and analyze them in real-time, cloud-based ERP systems are highly sought after, according to IDC.

This enables finance teams to monitor cash runway, provide quick responses to audit requests and other requests for performance data, and provide sales teams with real-time inventory information.

What is Cloud ERP?

High-speed internet connections and technology are combined to create cloud ERP systems. ERP solutions in the cloud are always accessible online. The ERP provider can take care of security updates. To use the ERP, your team merely has to log in. This can reduce user costs compared to traditional ERP systems hosted on corporate servers.

Many times, mobile devices and desktop computers may access cloud ERPs. These include a wide range of business apps that will support your continued focus on a satisfying customer experience and successful company outcomes.

Cloud-based ERPs give your team access to any information they need, wherever they are working, and enable nearly limitless scaling. This includes sales meetings with clients, off-site work locations, or your home office. It is critical that employees may safely log in from wherever in the post-COVID era when remote and home working is on the rise.

Among the essential features is access to client information, financial information, sales history, human resource management tools, real-time operational metrics, supply chain status, and many other capabilities. Any system that your business requires can be connected to cloud ERP.

You can choose from a variety of deployment models that are tailored to your company's needs. This can help you keep your team focused on the right metrics, workflow, and goals for your company.

Cloud ERP Software Components

All cloud-based ERP software offers core accounting and financial functionality. The type of modules and applications an organization chooses will depend on their industry and business needs. The following cloud ERP modules are available:

  • Accounting and financials
  • Management of human capital (HCM) or Human resource management software (HRMS).
  • Customer relationship management (CRM).
  • Inventory management
  • Management of orders
  • Procurement
  • Management of the supply chain
  • Management of projects
  • Material requirements planning (MRP).

Cloud ERP Concepts

As we get deeper into cloud ERP, it is essential to grasp the basics of the subject.

  1. Strategy for deployment: ERP software is available on-premises, on privately hosted servers, or as an "as-a-service" model. Although cloud ERP functionality is usually more accessible, it can be delivered faster. However, companies must still plan and prepare for data migrations, configuration, and training.
  2. Cloud-based ERP: Enterprise, resource management software hosted off-site on the ERP vendor's servers. It can be accessed via a web browser and offered as a service.
  3. On-premises ERP: Enterprise resource management software installed on a company's computers and servers and then managed by contracted or internal IT personnel. Software and supporting infrastructure are maintained, organized, and stored in-house.
  4. Hosted ERP: An organization or hosting provider manages the installation of ERP software and associated infrastructure. When businesses want to outsource IT operations, they often turn to hosted deployment models. Although this arrangement offers some cloud benefits, it is not an "as-a-service" model.
  5. End-to-end security: Secure and encrypted connection between cloud-based ERP vendors and their customers.
  6. A company pays subscription licensing: A fixed subscription fee to use the software at a specific time (either monthly or annually). This fee may include software maintenance and updates per user or company.

Cloud ERP vs. On-Premises ERP

This breakdown will likely raise the question: Why choose the cloud over on-premises ERP?

On-premises ERP software: An IT department or managed service provider installs on-premises ERP software. After licensing the core software platform, the business purchases or leases enterprise-grade servers and networking equipment to run the software and the associated data. On-premise ERP systems can incur additional support, troubleshooting, upgrades, customizations, and maintenance costs. Additional costs may also be incurred for security and antivirus software, as well as storage or server backup systems.

Cloud-based ERP: is hosted and managed through the cloud by the vendor. The software is offered in an "as-a-service" model via the cloud. The vendor manages the application, data storage, and the underlying operating system. They also manage the servers and the infrastructure for installing security updates and feature enhancements.

The most obvious distinction between cloud ERP and on-premises is the location where the software runs and the person who manages it. However, there are significant differences.

Different Types of Cloud ERP Software

First of all, only some cloud service providers are made equal. To run on their own internet-connected data centers, many traditional ERP vendors have updated their software. For companies without cloud-based ERP, these products might be expensive.

Cloud ERP software can be purchased in many different forms:

  • Multi-tenant SAaS: A single version of the ERP software with its associated infrastructure is used by multiple organizations. Although each company uses the same software and is hosted on the same servers, data from one company remains inaccessible to the rest. A cloud ERP system that works well with multiple tenants is often a SaaS.
  • Single-tenant SAaS: A single version of the ERP software with its associated infrastructure is used by one company. An organization's data is stored on its servers, running a specific software instance. Many cloud ERP vendors offer customers the option of running a private or shared model.
  • Public cloud: Managed by the service provider, multiple organizations share cloud computing services. Each organization's data is inaccessible to the others. Public cloud services include Amazon Web Services (Google Cloud), Microsoft Azure (Microsoft Azure), and Oracle Cloud.
  • Private Cloud: A service that is not shared with another organization.
  • Hybrid ERP: A hybrid ERP combines on-premises software and a private or public cloud to provide computing, storage, and services.

8 Benefits of Cloud ERP Software

The efficiency of your financial department can make or break your business. That is why you must make strategic and purposeful decisions concerning your business's finances. ERP (Enterprise Resource Planning) systems provide one of the best ways to streamline operations.

This article discusses the benefits of adopting cloud ERP software for your financial management functions. Let's begin!

Comprehensive Management of Finances - Capital planning and cash management are crucial to the success of any enterprise. Unfortunately, these processes take a long time and a lot of effort to execute when employees have to do them manually.

With an integrated ERP system, you can merge similar processes from various departments automatically. For example, the system will allow you to combine the entry of financial information from the sales department with that of the accounting department.

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This integration makes it possible to manage multiple areas of your business from a central location without wasting time. Additionally, you'll be able to create a reasonable budget, allocate resources, and manage payments without moving from one department to another.

  • Transparency of Financial Data

Unlike traditional financing processes, ERP software allows you to access financial records without delay. Rather than looking through hundreds of physical files, this system will help you find the correct information as soon as possible. This can help you keep a keen eye on the financial health of your business.

You can easily access your billing schedules, payments, and revenues with an ERP system. You can track every transaction you make with customers without struggle. Nothing will be hidden from your sight, and you can make the best decision based on your available information.

This can also clear any misunderstandings arising after financial transactions since you can revisit the financial statements at will.

  • Automation of Financial Processes

An ERP system can help your business focus on crucial operations and eliminate unnecessary processes. This also applies to your accounting because it can automate your financial operations, making it easier for you to manage your accounts receivable and accounts payable. As a result, you can enjoy better cash flow courtesy of the improved cash management process.

The ERP system will allow you to gather financial information from various departments and integrate them automatically. This makes it easier to manage the finance department without manually handling each step.

  • Reduced Human Error

One of the challenges of gathering data manually is human error. Your employees can make mistakes while filling in financial information, leading to dire consequences on your accounting. Financial errors can lead to misleading results after performing economic analyses and reports.

Such mistakes can cause a chain reaction that could lead to issues like tax complications if not corrected early enough. This is why getting an ERP system is crucial since it'll prevent the collection of wrong information since the system will run automatically. As a result, you can rest confidently knowing that your financial data is error-free.

  • Better Decision-Making Based on Real-Time Data

Something else an ERP financial management system will give you is a clear view of your financial situation at any time. You can monitor your accounts conveniently and make appropriate decisions based on your financial plan. You can use that information to audit, monitor costs, manage budgets, and accurately estimate revenues.

Since you'll have a clear picture of the financial health of your business, you can make specific adjustments that can boost productivity. Even if challenges arise, you'll be on top of the situation and find a timely solution since you'll have the correct information at your fingertips.

Making decisions on financial issues will be easier if you use a traditional management system.

  • Quick and Accurate Financial Reports

Preparing financial reports from the transactions and other operations you run can be time and energy-consuming. Various bodies, e.g., banks, shareholders, and tax regulating agencies, could require this information. Financial reports can become laborious to assemble for your staff, e.g., especially during busy days like the end of the month.

Fortunately, you can avoid the hassle by getting an ERP system for your financial management problems. The software will automatically generate the financial reports; you can print them or send them where required via email.

You also won't have to worry about any errors in the financial statements since the system is designed to deliver accurate information consistently.

  • Security of Financial Data

The data on your financial transactions is sensitive and should always be protected. You want to avoid exposing your customers' or business' financial data to every prying eye. That is why you need a solid security system. Rather than installing a security software system, you can rely on your ERP system to protect your information.

This means unauthorized personnel won't access the records without your knowledge or permission. As such, you won't have to worry about falsified financial data or unlawful modification of account information.

On the other hand, you'll have full access to the data, and you can make whichever changes you think are necessary.

  • Better Management of Foreign Currencies

The last benefit we'll discuss is the management of foreign currencies in your transactions. Businesses that work with international customers could receive payments in foreign currency. When this happens, it's up to the financial department to find a way to convert the money into their base currency.

This can be a difficult and time-consuming task that can leave you with cash flow shortages. But, with ERP software, you can rest easy and watch the integrated system find a way to convert the foreign currency to your base currency automatically.

Cloud ERP Challenges

Although the cloud is on the rise, organizations could face some challenges.

  • Legacy systems: A migration to cloud-based ERP may prove difficult for larger businesses using on-premises ERP systems for many years.
  • Resistant to change: Larger enterprises with large IT or administrative departments may face resistance from key stakeholders. The vendor manages all infrastructure maintenance, so IT teams cannot control certain operations. Administrators lose some control over the ERP software.
  • Compliance with regulatory requirements: Businesses with strict cyber security policies, local hosting of customer information in the cloud, and other compliance issues may need help to reap the benefits of cloud-based ERP solutions. Still, major software-as-a-service providers have made strides in complying with rules such as HIPAA and GDPR. They can accommodate data sovereignty and locality mandates, so don't assume you're restricted to on-premises ERP.

 

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Conclusion

More and more companies of all sizes are utilizing cloud ERP. Cloud-based ERP has many benefits over conventional software. These consist of more flexibility, reduced costs, and more straightforward scaling.

Imagine you are thinking about migrating to cloud-based ERP. This manual will assist you in comprehending technology and its advantages for your company.