All About Financial ERP Module
Implementation of an ERP Financial Module
What Is the Finance Module in ERP?
An ERP finance module, or core finance, contains accounting records such as balance sheets, general ledger (GL), financial records, expense reporting, and other related transactions.
It is also known as ERP core finance and supports functions like profitability analysis and revenue management.
Finance in ERP shares data with core business functions, including production planning, inventory management, purchasing and customer relationship management (CRM), and others.
Whenever a transaction in one of these modules happens, it triggers an action or transfer of data in the ERP finance module.
Importance of Finance Module in ERP
The ERP finance module is the first component activated in a system. It is one primary reason why organizations replace traditional accounting software with ERP.
Integrating various business functions will help you ensure accounting accuracy and meet financial regulations. Besides, it provides access to consolidated financial data and improves corporate performance.
The finance module in the ERP system differentiates ERP from other business applications and human capital management (HCM) suites. Moreover, when combined with these, manufacturing ERP modules will help you address the shortage of raw materials and other components needed in manufacturing.
Wait, there is more to it!
The finance ERP module also serves as a great backup when a company changes ERP systems, decides to scale, and expands to new locations.
Now that you know the finance module in the ERP system, let us look at its common features.
Steps To Implement Financial ERP Module
Step 1: Identify the Stakeholders and Business Objectives
Step 2: Define Project scope — What, When, Who, Where and How?
Step 3: Do a Current System Study
Step 4: Customization work, if required
Step 5: Data migration
Step 6: End Users training
Step 7: System Integration Testing (SIT)
Step 8: User Acceptance Testing (UAT)
Step 9: Go Live preparation and Live.
Step 10: Post Go Live Support
ERP Finance Module Features
By integrating essential features into an ERP system, any organization can stay on top of changing market conditions.
Being a market leader is much easier when all the key processes are automated, and staff can concentrate on increasing revenue instead of administrative tasks. These are some of the standard ERP finance module features:
Finance Module Features
1. Profit Tracking
Most finance ERP modules come with a profit tracker that gives you an overview of your business’s financial health. Some profit trackers also help you forecast your organization’s return on investment (ROI) from all channels based on expense data and historical sales transactions.
2. General Ledger
A general ledger in an ERP system finance module keeps a comprehensive record of your company’s financial transactions. It tracks income, capital accounts, expenses, assets, and liabilities.
3. Reporting
Reporting features in an ERP system finance module provide real-time access to data and enable you to produce audit trails for regulatory requirements.
You also get visibility into your data and the ability to make data-driven decisions and forecast economic trends.
Most ERP finance modules come with business intelligence (BI) and analytics features that give you a clear view of your revenue.
Moreover, some even offer dashboards that compare actual and expected sales, expenses, and financial information. You can convert this data into a graphical format and analyze it to improve your business processes.
4. Accounts Receivable (AR)
The accounts receivable function in the finance module of the ERP system lets you automate tasks such as generating recurring invoices, payment reminders, and financial statements.
As a result, you will be able to accelerate collections, make it easier for customers to pay, and be able to provide excellent customer service.
5. Accounts Payable (AP)
The AP feature of the ERP system finance module lets you easily process many financial transactions and invoices. AP enables you to establish a great relationship with your vendors.
Besides, accounts payable helps you integrate the organization’s payables data with its purchasing system and better control cash flows.
6. Fixed Asset Management
ERP system finance module lets you track and manage tangible assets such as factory equipment, computers, and vehicles. Fixed asset management lets you consider depreciation calculations, tax implications, and compliance requirements.
Besides, you can use it to get better visibility into our assets and the associated costs and maintenance.
7. Purchasing
Most ERP financial modules let you streamline the purchasing of supplies and services. They also help you manage the required paperwork, such as requisitions and purchase orders.
The purchasing function also lets you match invoicing before you process any payment. You can also buy an ERP for logistics if you have an eCommerce business to fulfill all your supply and raw material needs.
8. Risk Management
The risk management function lets you predict, analyze and manage risks related to your business operations and financial stability.
For example, knowing how to handle credit risks can ensure you have enough cash reserves to manage accounts payable if a customer delays your payment. Besides, risk management features also let you deal with legal liabilities, reputational risks, and compliance.
9. Tax Management
Some ERP finance modules save the system’s tax settings and provide reporting and audit functions. It even lets you collect tax information from all financial documents into a single repository. You can also use it to generate reports when filing taxes.
10. Client Database
In a centralized location, you can store your client’s information and gather financial data, balance sheets, and personal information about your clients. Additionally, your staff can access this information any time of day or night, making it readily unrestricted.
11. Forecasting
Comprehensive algorithms built into ERP financial system modules will save you a great deal of work by providing accurate forecasts based on reports and the current situation in your business.
12. Manage Multi-currencies
With global customers, managing multiple currencies is critical. Money conversion abilities authorize you to conduct transactions in diverse currencies. Multi-currency administration automates both the buying and selling of different currencies.
How To Measure the Success of ERP Implementation
Measuring the success of ERP implementation is crucial for organizations to determine whether the system is providing the expected benefits and to identify areas for improvement. Here are some key metrics that organizations can track to measure the success of their ERP implementation.
Cost savings
Check the costs associated with their ERP system, including the cost of the software, implementation and ongoing maintenance and compare them to the cost savings generated by the system. For example, organizations can track cost savings from improved efficiency, streamlined processes and reduced errors.
Process improvements
Organizations can track the improvements in key business processes, such as inventory management, financial reporting and customer service resulting from the ERP system. For example, organizations can track the time it takes to complete a process before and after the ERP implementation and measure the improvement.
Data accuracy
Track the accuracy of data entered into the ERP system, such as sales data, inventory data and financial data and compare it to the accuracy of data entered manually before the implementation.
User adoption
Organizations can track the rate of employee adoption of the ERP system, including the number of users logging in, the number of transactions processed and the number of support requests. A high rate of adoption indicates that employees are finding the system easy to use and valuable.
Return on investment (ROI)
Calculate the return on investment of the ERP system by measuring the benefits generated by the system, such as cost savings, process improvements and data accuracy and comparing them to the costs of the system.
By tracking these metrics, organizations can determine the success of their ERP implementation, identify areas for improvement and adjust their strategy accordingly. Regularly monitoring the performance of the ERP system is important to ensure that the system continues to meet the evolving needs of the organization.
Bottom Line
An ERP system can help organizations to optimize their operations and gain a competitive edge. The implementation process, although complex, can be done efficiently by following the steps and addressing potential pitfalls. The effort invested in the implementation will pay off in the long run with improved efficiency, streamlined processes and valuable business insights.
Conclusion: —
To put it briefly, adding an ERP financial module to your company is like having a strong financial ally. It makes things easier, cuts down on mistakes, and gives you a clear, up-to-date view of your financial situation. Your team may concentrate on key projects by saving time and money by automating operations. The transparency of the module guarantees adherence to regulations and promotes departmental cooperation. By using this application, you can do more than just manage your money — you can also increase general productivity and create the conditions for making well-informed decisions. Your organization will benefit from a more efficient and seamless financial journey as a result of the deployment.
Authors -
Harshal Dhande
Jayesh Deshmukh
Aditya Bonte