ERP systems remain relatively unfamiliar to many organizations despite their widespread market presence, yet many businesses continue to use accounting software despite becoming more challenging.
When accounting becomes no longer accessible or costs too much time and money to complete properly, business owners must reassess their software selection options before becoming overwhelmed. When problems like these arise for any given company, it may be wiser to switch to an ERP solution for optimal business operation.
Common Accounting Woes: How ERP Solves Them
Manual Processes That Hurt Financial Management
As your SME expands, its sales and profits should bring cause for celebration. However, as time and resources become available, more time may be allocated toward human data input processes necessary for maintaining accurate accounting software records. Your company may have attempted to address this problem by expanding your accounting department to handle an increasing workload; however, this approach can be expensive and time-consuming.
Accounting software typically only offers essential functions for financial management; other features related to money, like invoice creation capabilities, are usually lacking.
Your company likely employs multiple solutions to cover features your accounting software does not provide, yet due to their discordant systems; they cannot seamlessly exchange business data.
As such, employees must manually enter data into various systems to move it between systems, which slows down your SMEs monthly closing procedure. Build a single source of truth that automatically reconciles data across all connected systems and streamlines all financial procedures with ERP software. This can make month-end closing much faster and more accurate with reduced human error risk.
Difficulties Generating Business Insights Reports
Your SME's long-term success hinges heavily on its financial operations. Your ability to gain visibility into them is also significant in its long-term viability.
As your business is just underway, its sales volumes may still be small, and all operations may be concentrated in one location. Essential accounting software is often enough to give you visibility.
But as your company expands- for instance, by opening additional branches or connecting mobile devices that enable employees to work remotely or reach higher monthly sales volumes- it will produce much more real-time financial data than before.
Your accounting software won't help make sense of all this data; all it can provide are reports outlining the current financial status of your company without providing insight into why its performance may have taken such an unexpected turn.
Your accounting department would need to manually cross-reference reports generated from your accounting software with data from other areas of your company to gain these insights; this would be both time-consuming and prone to inaccuracy.
You need an ERP program with business intelligence (BI) dashboards to overcome this roadblock. With these dashboards, you will gain real-time information and analytics that allow for wise decision-making to propel your company toward success.
Lack Of Real-Time Data For Budgeting And Forecasting
Additionally, you must quickly gather data from every aspect of your company - sales and inventory included - to gain the insight needed for accurate forecasting and budget allocation.
Today's business environment demands that companies be agile enough to react quickly to market shifts and respond effectively. Reaction time can make or break success for any enterprise.
A practical solution may involve switching out your accounting program for an ERP program, as this combines data sources into one central point of truth. Simply put, data aggregation consolidates all of the information from various departments within your company into one accurate real-time source for easy analysis and allocation of funds. This way, accurate projections and funds allocation are always possible.
Utilizing Spreadsheets Only For Inventory Management
Financial management may be one of the more essential processes for your SME, but other components require close oversight as well. Many businesses, like yours, must manage inventory to avoid under- and overstocking and meet client demand for warehouse items. Since accounting software cannot effectively manage inventory, SMEs like yours often turn to spreadsheets for inventory tracking.
Regarding inventory management, manual data entry poses challenges similar to those experienced when entering sales data into QuickBooks - such as having an incomplete inventory picture in your warehouse and not being able to access real-time inventory data on demand for internal use or customer interaction.
ERP software like SAP Business offers an inventory management module packed with features. As such, it makes managing finances and inventories more accessible from one platform by switching from essential accounting software to an ERP program like this one.
Forecast product demand to keep enough stock and manage operations where inventory management meets finance management, such as handling accounts payable/receivable (AP/AR).
Time To Switch To ERP Software Instead Of Accounting Software
Your SME may no longer be capable of managing its operations with the accounting software it currently employs if its growth has led to inefficiencies across several business processes.
Accounting software does not contain the features and functionality necessary to manage other aspects of your organization; its sole function is financial management.
Furthermore, even if you use additional software programs to assist with other aspects of managing your organization - like sales and inventory - these don't integrate and share business data effectively.
With your company complex and proliferating, gaining a holistic view can be tricky - rendering insights to support making informed decisions for its success can be even more challenging.
If your SME is becoming challenging to manage, perhaps switching from its accounting program to an ERP program would help. An ERP will aggregate all aspects of data within your company into a single source of truth - an essential feature in today's complex businesses.
When Should You Switch From The Accounting System To ERP?
Many organizations still consider ERP systems relatively novel despite their wide market presence, using accounting software instead of an ERP system as they attempt to keep everything under control. When this becomes impossible or drains too much time and money from operations, business owners must reconsider their software selection - this might indicate it's time for an ERP system upgrade instead! Here are several indicators your organization may need an ERP solution right away:
Too Much Paperwork
Manual data entry may be necessary when multiple systems track different transactions since accounting software limits access to only a few members within your business. In these instances, manual data entry becomes essential. Staff with access to the system manually record data that will later be entered into it, thus increasing laboriousness and the chances of errors.
As your firm expands, this becomes even more burdensome, increasing the chances of mistakes. Implementing an ERP system may be the answer to all of your woes. ERP automatically reconciles all data across various platforms, improving system efficiency and decreasing errors.
Lack Of Access To Real-Time Business Data
Accounting software API limitations restrict information interchange between accounting databases and third-party apps and create an inconsistency between system data and third-party app data, resulting in irregular sync of both parties and consequently limited real-time access for businesses due to irregular sync/exchange cycles; real-time integration by ERP solutions like SAP or Microsoft corporate Central can address this problem more efficiently.
Lack Of Visibility Into Business Growth And Limitations
Accounting software poses several difficulties when it comes to managing data from various systems and sources, and tracking company history. ERP enhances decision-making by consolidating all corporate information from various systems; spreadsheets or papers present gaps in their integration, which cause a lack of transparency about expansion or constraints of a business, which hinders decision-making processes.
read more: Revolutionizing Business Management: A Brief Introduction to ERP Software in the Modern Age
Need For Improved Customer Relations
Enhancing client relationships involves closely tracking product details in real-time, such as stock levels and order statuses. ERP allows businesses to monitor this information in real-time for customers and staff, giving access to data that influences purchasing decisions and preferences, ultimately creating the basis for enhanced client relationships by tailoring experiences to individual goals more precisely through improved forecasting.
Conflicting Customer Data
Your business's CRM and accounting applications don't always sync, causing inaccurate accounting processes due to conflicting customer data and resulting in duplicative client records. An ERP system integrates and syncs up seamlessly with all your organization's software and processes for reliable data records.
No Access Control
Not every employee can access accounting software, hindering department cooperation and workflow. By utilizing ERP, employees have immediate access to corporate data whenever needed - further increasing efficiency by streamlining systems' and personnel's coordination process.
Need For Enhanced System Performance
Consolidating data from multiple systems when using accounting software can be time-consuming, as the sheer volume of transactions slows the entire process down. To manage all corporate data efficiently and quickly, one server and one system may be necessary; ERP solutions like SAP or Microsoft Business Central may prove helpful here in improving the functionality and efficiency of systems like these.
Need For Data Safety And Regulatory Compliance
Every organization places great emphasis on data security. Accounting software with many interfaces and external tools, like spreadsheets, can put its users' data and systems at risk. On the other hand, ERP systems centralize all your information into one repository that integrates reporting capabilities for ease of regulatory compliance.
How An ERP System Provides Complete Visibility Into Your Business?
An Enterprise Resource Planning (ERP) system is a software solution that integrates and centralizes data from different corporate areas, including sales, human resources, production, accounting, and provisioning.
Thanks to centralization, you and any authorized individual have complete visibility over all aspects of your company's information systems and business operations, allowing instantaneous control. Therefore, any individual working for your company shares this same real-time understanding of its current state. Your company can benefit from increased visibility in numerous ways.
Enhance Materials Requirements Planning
Imagine that your food product X is being considered for purchase by a large grocery chain. When complete insight over inventory, sales, and production is available (unlike with accounting systems, which typically do not offer this level of visibility), you are able to see exactly which components are on hand, what customers have already committed, and production happening live - an invaluable advantage over accounting systems.
ERP systems allow businesses to forecast the personnel and supplies necessary to fulfill an order, something not usually provided by accounting systems. This data enables more informed, risk-averse choices when presented with such orders.
Better Inventory Control
Inventory control for growing companies can be an exhausting and cumbersome endeavor. Your products could be stored anywhere from your facilities and warehouses to storefronts or online marketplaces - but once your ERP system is set up, monitoring everything instantly becomes possible - not to mention all authorized members of your team - from warehouse staff to salespeople on the road will have instantaneous access to inventory data.
Your ERP inventory management system allows you to:
- Keep an eye on the movement and availability of your goods.
- implement just-in-time inventory control to reduce expenses.
- consolidating essential data into a dashboard to stay informed.
Your ERP also enables you to monitor the history of any SKU within your company with its inventory management feature, making food and beverage industries such as restaurants simple. By managing batches, recalls, and traceability difficulties using ERP, you'll have full audit support to meet industry-level quality standards.
Cost Control
An ERP system's data structure lets you dive deep into numbers and view individual values, making cost control much more precise and manageable. Say, for instance, you wish to review daily manufacturing runs' gross margins; by observing deviations in each of these figures and scrutinizing further detail when they arise, you're better positioned to address new problems as they emerge proactively.
Conclusion
Enterprise Resource Planning (ERP) systems have become indispensable accounting and finance management tools. ERP based financial management systems help finance professionals make wiser decisions by streamlining financial procedures, increasing accuracy, and providing real-time information. In the future, ERP should become even more automated and customized and interact with cutting-edge technologies than they currently are.
