Enterprise Resource Planning system is one of the technological boons that have transformed the business domain by streamlining critical processes and integrating a host of management functions under a single platform. The efficiency that ERP brings into business management has made it a basic necessity for enterprises seeking uninterrupted growth.
In 2019, a survey was conducted among the world’s leading manufacturers and distributors, 67% claimed that their ERP implementation had been successful with positive results for the business. Enterprises worldwide are expected to invest in ERP in the coming years, with which the ERP market is projected to surpass $49.5 billion by 2024. All these market stats attest to ERP’s unparalleled proficiency in improving business architectures.
Other than the usual management processes, Enterprise Resource Planning has also proven to be instrumental in accounting and financial management. It helps seamless execution of day-to-day financial processes. It is also known to minimize the staggering impact of any economic disruption on the business by making it more resilient to crisis. Given the present global economic downturn due to the COVID-19 pandemic, ERP systems for financial management is just what enterprises need.
What entails ERP for Financial Management?
We are well acquainted with ERP systems that manage and streamline supply chains, manufacturing and distribution, internal operations, HR, and likewise. ERP for financial management is an augmented module that works in cohesion with all the departments within a business enterprise. It has a targeted focus on the financial aspects that aids in enhanced productivity and able decision-making.
It is a software module that accumulates financial data, analyses the same, and generates reports with accuracy to break it down. Its main point of difference from other traditional accounting and financial planning tools is that ERP ensures data accuracy and fast processing, thus significantly reducing cost and time. Financial streamlining, as such, ultimately benefits the business by cost-saving and more revenue generation.
ERP for financial management enables easy and uninterrupted communication across an organization, including the external players like vendors and even the customers. It helps in the smooth management of accounts (payable and receivable), budgeting, inventory costs, investments, etc.
What are the chief elements of ERP for Financial Management?
ERP focused on financial management leverages a host of chief elements and attributes that generate lucrative benefits from the business point of view.
- Track the Profit – ERP financial management comes with a profit tracker that helps assess an enterprise’s financial health. It uses the costs incurred in operations and inventory, and the profit returns to compare the effort and the financial results generated.
- Accounts management – Accounts management is all about managing the company funds to check on the cash flow. Every minute detail is taken into consideration, for instance, how much the company owes to the vendors and the creditors, the payable amount, and the receiving amount (customer payments, invoices, cash payments, etc.) tracked and managed through the system. The ERP takes care of the execution of the accounts as well through advanced automation.
- Ledger or Transaction Management – This feature takes care of all the transaction flow throughout the system, integrating with other inventory and customer relationship management modules. It collates all of the essential financial data concerning assets, capital accounts, expenses and income, liabilities, etc., in one place. It makes it more manageable during audits, tax filing, or any anomaly or fraud detection. The transaction management module magnifies the visibility of financial transactions.
- Tax management – It stores and manages the taxation settings in the system, providing tax audit and reporting functions across the system for consistency in collecting sales and other forms of taxes. It simplifies the tedious task of auditing, reporting, and filing, ensuring that the entire process is error-free.
- Risk management– This is one of the most crucial ERP financial management features, as every business involves a certain level of risk. But when you have a smart system, it can run checks, analyze, predict, and even manage any financial crisis. Everything starting from financial issues, security concerns, legal liabilities, reputational and compliance risks to political calamities is taken under consideration and assessed by the system.
What are the benefits of ERP for Financial Management?
The list of features gives us a glimpse of what an ERP financial management system can do. It truly has many fold benefits such as:
- The automation of time-taking and repetitive financial tasks increases the productivity of the workforce.
- All authorized users of the system will have full access to the financial details of the organization.
- The ERP software comes with an advanced dashboard that upholds absolute transparency of the financial operations.
- Each transaction and its movement across each point can be monitored via the system in real-time, which again upholds the operations’ transparency and integrity.
- ERP financial management ensures that there are zero errors in accounting and data entry.
- The software’s advanced reporting and analytics enable potential revenue and cost forecasts, which helps in proper budgeting.
- ERP financial management is paired with cloud storage, allowing the users to access it from anywhere
- The accounts management system alerts the authorized users of the upcoming payments, preventing delay, or missing out.
- Since everything happens on a digital platform, every document is retrievable, and there is no risk of misplacement like un paper trails.
- The financial management system is integrated with other ERP modules that help in the seamless business processes execution.
To enjoy ERP systems’ benefits, businesses need to utilize and integrate the financial management module with their core management system to enhance accuracy, productivity, and uncontrolled growth. Due to these contributing features, ERP for financial management is becoming an integral part of a business management module, saving a significant amount of time, resources, and costs.