ERP financials: 8 features to look for
What are ERP financials?
ERP financials refer to the financial management modules in the ERP system that address various financial functions, such as accounting, budgeting, cash flow and financial reporting. Financials are a key component of an ERP system and an essential tool for any business looking to maximise profitability and efficiency.
ERP financials provide real-time visibility into an organisation's finances, allowing for more accurate budgeting and forecasting. Using analysis and reporting functions, businesses can gain a deeper understanding of company performance and pinpoint areas for improvement. ERP finance systems also automate many manual accounting and finance processes, improving efficiency and accuracy.
What’s the difference between ERP finance and accounting systems?
The main difference between ERP finance and accounting systems is their scope and capabilities.
An ERP’s finance module integrates financial data across an organisation, providing a holistic view of a business' financial processes. The ERP financials also provide visibility into other business areas, such as human resources and supply chain management. This allows organisations to make informed decisions based on up-to-date data across all areas of the company.
On the other hand, accounting software focuses specifically on financial management. As a tool for everyday financial management, this software offers precise capabilities for tasks like invoicing, budgeting and tracking expenses. Additionally, it can automate many accounting tasks, allowing businesses to focus on core operations.
ERP finance systems: key features to look for
1. Accounts payable
Accounts payable (AP) manages all your company's debts to vendors and other creditors. AP tracks and reconciles payments, determines when payments are due and schedules payment.
ERP systems should include automated accounts payable functions to improve the speed and accuracy of invoice processing.
2. Accounts receivable
Accounts receivable (AR) facilitates the management of all funds owed to your business by customers. AR activities include generating invoices and account statements, tracking customer payments, performing account reconciliations and automating payment reminders.
Including AR in your ERP financials system is critical for properly tracking and accounting for payments. It also gives businesses increased visibility into cash flow, enabling more informed decisions.
3. Ledger management
Managing your ledger includes tracking assets, liabilities, capital accounts, income and expenses. This information is essential to accurate financial reporting and tracking the performance of the business. It also helps in making informed, strategic decisions.
ERP finance systems make ledger management easier and more efficient by importing and organising financial data from various sources. Integrating these systems reduces manual data entry and ensures the accuracy of company financials.
4. Profit tracking
Tracking profitability is vital to monitoring and analysing any business's financial performance. A profit tracking system calculates your organisation's profits based on incurred costs and receivables. Profit forecasting programs use historical sales and expense data to predict future earnings.
Integrating profit tracking with your ERP financials can help you better understand your business performance and the impact of any changes that you make.
5. Asset management
Asset management is the process of tracking, maintaining and disposing of fixed assets. It involves monitoring the performance of assets, maintaining them properly and disposing of them when necessary. Optimising assets to maximise their return on investment is the goal of asset management.
Integrating asset management with your ERP financials enables real-time cost and depreciation data. It also simplifies asset utilisation tracking and maintenance, generating tax reports and ensuring compliance.
6. Tax management
Tax management is the process of understanding and managing tax liabilities. Managing your taxes effectively requires understanding your tax and reporting requirements and minimising your tax liabilities.
An ERP finance system can help you manage your tax and reporting obligations. Additionally, if you sell internationally, the right ERP can help you manage your tax requirements across different jurisdictions.
7. Risk management
Managing risks is a crucial part of business, as it can mitigate potential losses and maximise profits. Risk management processes identify, assess and control hazards that could impact a business, such as compliance issues, cyber attacks or natural disasters.
A risk management tool in an ERP finance system can help businesses identify and prioritise risks, as well as track and monitor risk-mitigating activities.
8. Reporting and analytics
Real-time access to financial data is vital for maintaining your cash flow. Analytical reporting allows visibility into company finances, facilitates auditing, ensures compliance with regulations and helps prevent fraud.
ERP finance systems allow companies to collect and store financial data from multiple sources quickly and easily. Detailed reports and analyses shed light on financial performance, enabling data-driven predictions and decisions.
Is your business ready for an ERP system?
MYOB’s cloud ERP software offers a scalable and affordable solution for your enterprise resource planning needs. Integrate your ERP financials, accounting and tax requirements with your other key workflows across customers, employees, projects and suppliers.