For the longest time, ERP (Enterprise Resource Planning) systems were viewed predominantly through the lens of operational efficiency – primarily used for streamlining supply chains, managing projects and tasks, dealing with manufacturing processes, etc. That perception is changing rapidly, though. ERP platforms are now increasingly recognised as powerful engines for driving financial transformation in businesses of varying industries and sizes.
The all-in-one approach
Finance, by its nature, touches every part of an organisation. While sales generate revenue, procurement incurs costs, HR manages payroll, marketing campaigns have budgets, and so on. The foundational benefit of an ERP system is the way it centralises the whole organisation in a single, unified database. It allows businesses to manage all of these processes in one platform, including the financial aspect, making sure that each department is on the same page. In other words, there is a ‘single source of truth’ for all operational and financial information.
Besides making business management more efficient and convenient, the centralisation of all activities also has other benefits. It eliminates the chronic problems of data duplications across various systems, as well as significantly reduces many manual, error-prone processes when it comes to data management. With accurate, consolidated information available at all times, company leaders are also able to make better-informed strategic decisions.
Real-time visibility
Forget waiting weeks for month-end reports compiled manually from various different sources. Modern ERP systems offer real-time visibility of all business processes. Popular programmes like Odoo ERP or SAP ERP offer integrated, dynamic dashboards that display key performance indicators (KPIs) instantly. This means that the view literally changes immediately after a new bit of data has been uploaded or adjusted. Not just that, these dashboards can also be fully customised according to your preferences, whether you want to switch up the dates, view the performance of specific teams, exclude certain projects, or only view your cash flow.
This ability to make reports in real-time is a game-changer for financial management. The responsible persons can gain instant insights into the most important metrics of the business, like outstanding sales or product profitability, having a 360-degree view of the company’s financial health. This data is absolutely key in financial planning and forecasting, since it allows organisations to optimise their businesses quickly.
For instance, say a retail company released a new collection of T-shirts available in 10 colours, but stocking all of them is very expensive. They can release a marketing campaign and analyse the consumer interest in these T-shirts, gaining real-time data on engagement and sales. Based on this information, they can make a decision to lower the stock or get rid of 3 least popular T-shirt colours, which will decrease the manufacturing and warehousing costs. In turn, the new clothing line will be more profitable. In such scenarios, it’s all about making quick and proactive decisions based on market demand.
Integration capabilities
Another huge advantage of ERP systems is the ability to integrate different solutions into the existing ecosystem. It means that whatever your current software is lacking can be added on top of it, without having to invest in a whole different ERP. For finance, this means integrating a range of important tools through APIs.
A prime example of this is Prometeo cash management solution – an open banking API platform that allows ERP systems to automatically fetch real-time bank balances and transaction histories from multiple financial institutions. This gets rid of the need for manual statement downloads from different baking platforms. Instead, you are able to view accurate, consolidated, up-to-the-minute view of cash positions right from your ERP platform.
Similarly, if your business requires a specialised treasury management software, which typically includes advanced debt and investment management, an all-in-one ERP system will be unlikely to offer such capabilities. But, if you integrate Trovata, Kyriba or any of the other popular treasury software into your ERP, these tools will be integrated with your overall financial management and data.
Automating operations
Last, but certainly not least, automation is one of the most important advantages of ERP systems. These are able to fully streamline a multitude of manual, often tedious processes. For instance, data imports and exports, report creation, lead generation in CRM, follow-up emails after registering for a newsletter, and many others. The ability to automate these simple yet time-consuming tasks can result in great savings of time and costs.
Beyond general business operations, financial management benefits greatly from automation. Think automated three-way matching of purchase orders, goods receipts, and supplier invoices in Accounts Payable. With smart OCR technology, many ERP systems allow suppliers to simply send their invoices or receipts to a dedicated email address, automatically recognising the information within the document and uploading relevant data to the accounting part of the software. Other tasks, like sick pay calculations or payroll are also automated, thanks to the direct connection between accounting and HR management, which allows the employee timesheets to be calculated easier. This is not just important for efficiency – it helps simplify compliance with various regulations too.
ERP as the engine for modern financial management
With all of the above benefits, the transformation is crystal clear. ERP systems act like a vessel for the whole organisation, and financial management is the cockpit right at the heart, driving the business forward.
Feature image by Jakub Żerdzicki on Unsplash
