ERP stands for enterprise resource planning system. It is a management software used by businesses to manage and integrate all of their main operations onto a single platform. The enterprise resource planning system allows a firm to integrate its financials, supply chains, operations, and Human resources activities onto a single platform.
It also collects a swath of data that improves the performance and efficiency of a firm multifold. By integrating all of its main operations onto a single platform, the whole organization can be analyzed as a single creature.
The companies which use simple accounting software are not able to perform as well as those companies which use enterprise resource planning systems, it is because the accounting software is very simple and an accountant requires up-to-date data to perform his/ her task. The ERP system makes it possible.
The ERP system provides an accountant with real up-to-date data with the data being divided into sub-classes which makes it much easier to analyze.
The whole process is also highly automated, whereas, for simple accounting software, the whole process is slow and manual, and highly frustrating. The ERP system also improves the performance of the accountant using it.
Main advantages of an ERP system to an accountant
The reasons and benefits of using an ERP system for an accountant are given as follows:
Figure 1: The main advantages of an ERP system
The main benefits of using an ERP system are shown in figure 1 above. Some of the benefits are Real-time data collection, improved accuracy, better reporting, automation, standardization, and collaboration. All eight of these advantages are explained with details below:
1) Real time data collection
The biggest benefit by far of using an ERP system is the real-time data collection and update. The data is collected and updated in real-time.
This data allows an accountant to study the financial position of a company and make changes or make early payments to save on later payments. If a payment is due now; the payment can be made immediately.
2) Improved accuracy
The improved data collection, which is collected in real-time also improves the accuracy by reducing errors. Because there is little human interaction, the data collected is also highly accurate.
There would be no mistake such as a late payment to a supplier which would incur fines. The chances of this type of scenario occurring is reduced to zero, due to real-time collection of data, and highly automated process.
3) Better data reporting
The data reporting is improved multifold. Because the data collection is improved multifold, naturally the data reporting would also be reporting.
The data collected is automatically analyzed and divided into parts, which makes it easier for an accountant to analyze and report the data. The accountants can focus on the big picture while leaving small tasks to the ERP system.
Simple repeatable tasks can be easily automated through the implementation of an are automated which improves the pace, increases productivity, and reduce the chance of human error.
For example, the payments can be automated by connecting the account payables to the ERP system. So, on the payment date, the payments are automated.
5) Reduction of duplicate entries
The need for duplicate entries is reduced a lot when using an ERP system. When accountants are using simple accounting software, they have to reenter data multiple times in multiple places.
This slows down the work process and increases the processing time of transactions, which reduces productivity.
But through the use of an ERP system, the duplicate work is automated. There is no need for an accountant to spend their valuable time making multiple duplicate entries again and again. This is also very frustrating work.
6) Business Friendly Smart Features
There are many tools available in an ERP system that turn boring old data into colorful and interactive charts and graphs. This makes it easy for an accountant to report numbers to non-accountant people which may face difficulties in understanding data.
The ERP system can be set up to analyze and report, KPI or key performance indicators, which are of importance to an accountant.
The real-time reporting of key performance indicators can help in averting real disasters before they occur. For example, the ERP system can report that a certain department has run out of budget, or a certain payment is due today, which if not made, can contribute to late fines.
It is one of the best features of an ERP system. The standardization allows everyone to report data in the same metrics. Sometimes, one person may be reporting net income, while the other person reporting profit, can cause confusion.
Although, both terms are expressing the same number, workers in an organization who do not understand these terms can confuse them, which can reduce co-operation.
The company when making important decisions such as where to invest, or what payments to make first, needs accurate sets of data. If the data is confusing, it can cause issues when making these important decisions.
As stated above, the Enterprise resource planning system integrates all the important operations of a company onto a single platform. This results in better collaboration between different departments of a single company because everyone has access to the same data at the same date and time.
For example, the production department can request extra money to increase its production through the ERP system, and the accounts department can check whether the production department really needs that money. The whole process happens really fasts which helps improve productivity.
The ERP system provides a multitude of benefits that improve the performance of all organizations drastically. This drastic improvement in productivity and performance also increases the company’s profitability.
The ERP system provides a single platform for a company to integrate all of its operations on. This improves data reporting, accuracy, and collaboration within a company.