How ERP Systems Facilitate Financial Management?
Forecasting financial data is important because it allows management to review an organization’s current financial state by comparing actual and projected financial figures. Financial planning gathers information on a current fiscal year’s actual data and analyzes various outcomes and forecasts. Using ERP ensures your collected data is accurate, which is important as a financial forecast is only as reliable as the data gathered. Traditionally, gathering actual data and analyzing variances is a burdensome task that shifts focus away from financial planning’s primary role of forecasting. Using an ERP system allows your company to streamline these processes, ultimately saving your financial team time.
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 POV.
*Track the Profit: ERP financial management comes with a profit tracker that helps assess an enterprise’s financial health. It uses costs incurred in operations and inventory, and 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. Account management takes into consideration every minute detail. 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.) are 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 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.
