Finance departments track money coming and going from every other department in the business. So doesn’t it make sense to connect those departments directly to financial?
ERP accounting systems offer a central location to track, analyze, and store crucial financial information that your business needs. In this article, we’ll explain what ERP accounting systems are and how they benefit your business.
What Is an ERP Accounting System?
An ERP accounting system is a financial management software solution that automates and centralizes financial information for a business. They are typically modules within a company’s broader ERP system that focus on providing a comprehensive solution for the entirety of the financial department.
The primary goal of integrating your accounting system with your ERP system is to consolidate your business functions by enhancing visibility and communication among departments.
Features and benefits include:
- Automating menial tasks
- Creating a centralized document depository
- Simplifying paper trails
- Enhancing reports and analytics
- Improving data flow and collaboration
5 Benefits of Using an ERP Accounting System
Centralizing all parts of your business using an ERP system has myriad benefits in and of itself. Here are the benefits of folding your finance department into the system, too:
Advanced Reporting and Analysis
ERP accounting systems offer advanced reporting and analysis tools that can help your team gain insights into the business’s financial performance and make faster, better decisions.. Because it’s all integrated, you can see exactly how other departments are spending their budget in real-time.
Use a standard reporting template or create custom reports. Access drill-down features, query tools, custom dashboards and scorecards, and share reports with relevant teams.
Total Customization and Scalability
More robust ERP accounting solutions allow deep customization, so you can draw up the right report for the right audience. For example, employees or external clients don’t need to see the same data as leadership.
Furthermore, customization allows for more complex reports as your business grows. Reporting abilities scale with you.
Easy-to-Track Audit Trails
A centralized financial database makes audits a breeze. ERP accounting systems automatically create detailed change logs when any change is made to financial data. This means transparency and compliance are automated.
Ability to Integrate with Other ERP Modules
Is leadership not convinced that procurement is making the wisest purchases? No problem. Accounting solutions are integrated with other ERP modules, like procurement, supply chain management, and more, to give your team easy access to information about how other teams are spending. This kind of collaboration helps the business make smarter decisions faster.
Access Real-time Data
All data is collected and aggregated instantly. This means you don’t have to wait until weekly or monthly reports to identify and resolve problems. Access up-to-date data at any time to support strategic decision-making processes.
7 Features of ERP Accounting Systems
Now that you know the benefits of ERP accounting software, here are the capabilities.
General Ledger
Any accounting solution worth its weight provides a general ledger module, helping your team maintain accurate and up-to-date records. The general ledger module includes a chart of accounts, transaction recording, sub-ledger capabilities, multi-currency support, reporting, automation, and security controls.
Cash Flow Management
Popular ERP accounting systems include cash flow forecasting abilities, access and visibility into related modules, automation, cash position analysis, and custom alerts and notifications.
Accounts Receivable and Payable
ERP accounting system integration streamlines accounts receivable (AR) and accounts payable (AP). Both modules connect to your general ledger to automate updates.
With accounts receivable, your system manages customer information, sales invoicing, credit, payments, collections, and more.
With accounts payable, you get features that support vendor information management, purchase invoicing, the invoice approval and denial process, payment processing, supplier relationship management, and expense reporting.
Budgeting and Forecasting
ERP accounting systems are at the center of a company’s most important task: budgeting. ERP accounting systems offer tools that help your business plan, track, and analyze your financial performance more accurately.
Enjoy a breadth of features that enable your team to create comprehensive budgets that pull from historical data from other relevant departments. Collaborative budgeting connects different departments, allowing stakeholders to contribute to the budgeting process so that it aligns with overall business objectives.
Depending on the system you choose, your ERP system may also allow for rolling forecasts so you can adjust and prepare for changing market conditions or supply chain disruptions.
Asset Management
Keep your asset register in one accessible place, complete with information on asset location, acquisition date, maintenance history, and depreciation.
You can also easily track assets using RFID and/or barcode integration, analyze the lifecycle of assets, and schedule maintenance. Moreover, you can integrate your asset management information with your general ledger, ensuring that any transactions related to assets are logged and recorded in real-time.
Finally, ERP accounting systems allow your team to easily create asset utilization reports so you understand how effectively assets are used and make improvements if necessary.
Tax Management
Spend less time sweating over taxes. ERP systems assist with tax management by offering automatic tax calculation. Customize your system to consider sales tax, value-added tax (VAT), corporate income tax, multi-currency tax, and any additional taxes based on your regional tax code.
ERP accounting systems with e-filing capabilities can then automatically file taxes at the appropriate times, withhold taxes on payments to vendors, and overall comply with tax requirements. All the while, the system is creating an audit trail without your team needing to hit a button.
Financial Reporting and Analysis
Your financial analysts will never get tired of the myriad ways they can configure reports and drill down deep into the analytics. ERP accounting systems allow accountants to create the standard reports they need and analysts to create and leverage custom reports with real-time data.
Which ERP Accounting System Is Right for Your Business?
ERP accounting systems boost your bottom line by reducing the number of hours spent tracking and tallying income and expenses through automation, all while freeing up time for your analysts to make smarter business decisions.
If you know your business would benefit from an ERP accounting system, but you’re not sure what level of software you need, reach out to our experts at Godlan today.
