ERP Accounting Software Explained: Why Businesses Need ERP

Technology is the way forward for any future-focused organisation. And a comprehensive ERP solution is suitable for many types of organisations and industries – from e-commerce to manufacturing, hospitality and not-for-profit entities. There are many modules within a modern ERP system that you can pick and choose to create the perfect solution for your organisation; the accounting or financial management system is just one of the core functions. 

The trend of ERP systems is slowly shifting from a 'good-to-have' to a 'must-have' for your organisation. So, what exactly is ERP and ERP accounting software; how can you leverage it to move your organisation forward; and what benefits can it bring to your business, both internally and externally? 

What is an ERP System? 

There are 1.3 million search results when you type ‘Enterprise Resource Planning system’ into Google. There’s a lot of information and a lot of providers out there, but what is an ERP system?

Simply put, an ERP system allows for a unified view of your business thanks to one centralised database or ‘source of truth’, which can be accessed by various departments. It's a type of software that will improve the efficiency of your internal business processes by automating and integrating tasks such as finance management, inventory management, order management, warehouse management, HR management and other essential business functions. You may have implemented software for specific functions over the years, but disjointed systems that don't communicate with each other prevent your organisation from performing to its full potential. 

An ERP system allows your company to operate all core functions seamlessly, allowing for a bigger-picture view of your business with real-time, up-to-date data helping you to make timely and accurate decisions. With an ERP system, data integrity is assured. It provides transparency, and as every department will be operating and basing their decisions on the same data, a system like this goes a long way to eliminating misunderstandings, mistakes and friction. 

Centralised data, improved efficiency, real-time updates and transparency are all things business owners like to hear when considering new software. With an ERP system in place, you can do more of what matters most with the certainty that no part of your business is operating in a silo. 

How does an ERP system actually work?

An ERP works by integrating and consolidating multiple functions of your business's operations into a single software system. Apart from foundational applications such as HR, payroll, finance, and CRM, you also have the flexibility to pick and choose industry-specific functions to meet your organisation's needs and to achieve that sought-after 360-view of your business. Since no two businesses are the same, industry-specific functions ensure an ERP system is fit for purpose and can include everything from inventory management, expense management, warehouse management and distribution to planning and scheduling. 

As with any technology, ERP has evolved in many forms from on-premise models that used physical client servers, to cloud-based software with remote web-based access and boosted security. 

• On-premise ERP

One of the biggest differentiators between an on-premise vs cloud-based ERP is the requirement for an internal IT team. With an on-premise ERP, since the software runs on in-house servers, the ongoing maintenance of the software and hardware is dependent on your internal team. An upfront capital investment is also required, with additional costs added for consults or training with every customisation you make. With most technologies embracing the cloud more and more, you would think on-premise ERP systems are on the downfall. However, a report published by Panorama Consulting Group shows in 2022, 35% of organisations have opted for on-premise software. The main reason for this? Having complete control over data and the systems. System updates, maintenance, security checks and backups can all be arranged without relying on a third-party vendor. 

• Cloud ERP

The flexibility offered by the cloud ERP is unmatched by on-premise software. If you have an internet connection and a browser, you can work from any authorised mobile device of your choice. The resources needed to run the software, plus the technical needs, are all handled and maintained by the vendor, off-site. 

Cloud ERPs are typically delivered as a software-as-a-service (SaaS) model, either as a monthly or yearly subscription. Easy maintenance, flexible accessibility and real-time data delivery are all reasons why 63.7% of organisations have chosen cloud ERP as their perfect solution. The increased adoption has also come about due to the effects of the pandemic as a way to reduce both costs and headcount, as organisations can rely on external teams' resources, rather than having to operate their own servers and databases. And with the move to remote working, cloud software solutions are more in demand than ever.

For more information on cloud ERP, read our article, Cloud ERP Systems: Benefits of Cloud ERP For Your Business. 

Which ERP system to implement will solely depend on your business needs. Regardless, the main aim of ERP is to automatically integrate siloed data into an easy-to-understand dashboard allowing all employees to access critical information across multiple departments. As ERP serves as a single source of truth, you can access the data without relying on or waiting for those with access privileges, saving you time and increasing overall productivity. 

How can an ERP system help my business? 

Having fragmented information spread across multiple departments within your organisation is not only risky but also a waste of your valuable time. The right ERP system will allow you to unify all your systems, processes and people, improving workflows while lowering operational costs. The information is collated into one centralised database, giving you complete visibility of the entire organisation's performance, and ultimately empowering you to find potential issues or identify opportunities for optimisation or growth. This transparency around the business data and operations can help you assess and audit existing processes, resource allocations and identify areas of improvement, generating higher efficiency and productivity. 

With a good ERP system, each department can access real-time data within a single system, teams can service clients, vendors or business partners promptly and with accuracy, and this all ultimately leads to higher customer satisfaction. By establishing visibility around the data, teams can have clarity and trust in the reason for a particular decision, action or even the introduction of a new process. With indisputable data at your fingertips, you can forecast future demands to make informed and financially-sound decisions assisting in the growth of your business. 

What is ERP accounting software? 

Most ERP systems include accounting as one of the fundamental modules. Your need to automate processes, data recording and reporting may increase as your business grows. With an ERP accounting system, you can streamline and automate all manual processes, saving time switching between platforms, and reducing the risk of error. But integrated ERP accounting or financial management software includes integration beyond your basic accounting needs.

ERP accounting systems keep track of your financials whilst also maximising productivity. Not only do you have full visibility over finance, but you will also have visibility over the people and resources. You can analyse and determine whether you need more resources or if you have allocated tasks appropriately. Based on these insights, you can adjust and pivot as required by tweaking your resource allocation to boost profitability and growth. In addition, compliance and legislation are ever-changing. ERP accounting systems guarantee that you will always be compliant with your country's legislation and reporting requirements. 

If you are on the search for a reliable ERP accounting system, look no further. The Access Group's financial management and accounting software is rich in functionality, delivering a full suite of financial management modules and core accounting performance. As your business grows, outdated processes and disconnected systems can cause inefficiencies, adding unnecessary costs, risks and delays. Move beyond the workarounds and gain greater financial control and the power to grow with confidence. If you need to manage multi-entities, that's also not a problem. From core ledgers to credit control, Access Financials provides everything you need to run large volumes of transactions more efficiently and cost-effectively.

To learn more about how you can bring all your financial management and accounting functions into one centralised system, book a demo today. 

What are the benefits of ERP Accounting Software? 

The benefits ERP accounting software can bring to your organisation are endless. Some of the main benefits include: 

A single unified system to manage all accounting needs

Fully integrated ERP accounting software means all the functions you need to carry out can be done from one single system. As all the information you need are stored in this one system, it eliminates the need to input the same data into multiple platforms, so the need for spreadsheets and cross-referencing become redundant. Not only is this time-saving, but it also improves the accuracy of your data as double handling and multiple entries are eradicated from the process. 

Real-time data to create accurate financial reporting 

Real-time updates within a single platform mean you can easily monitor, analyse and report your financial health and business performance. Real-time information means you can make quick and accurate decisions, have the flexibility to adjust to any market changes, as well as budget and forecast for the future. Plus, an integrated view with other teams improves organisation-wide decision-making thanks to access to the same detailed reports and in-depth data analysis. 

Increased productivity

Automating menial and manual tasks means your employees can spend more time on what matters most in their role. The time they spent on data entry before can now be spent creating and interpreting detailed financial reports. Chasing after invoices and sales orders are some of the most tedious tasks the finance team have to carry out, almost daily. With the ERP accounting system, at the click of a few buttons, they can access real-time updates across multiple departments, breaking the cycle of being dependent on others when gathering the information they need. 

Improved collaboration 

With everyone across your business connected, communication is improved, and collaboration is now easy. With access to real-time data, multi-department collaborations can help pave the way for more efficient workflows and cost reductions.  An ERP system can also support cross-functional projects thanks to the ability for different teams to access the same data at any one time.

Improved customer satisfaction

As the departmental silo is eliminated, customers can enjoy a seamless experience from purchase to receipt, as each team is aware of what stage of the buying cycle the customer is in. If needed, necessary paperwork can be requested in a timely manner, invoices can be issued correctly and at the right time, and customers can be notified of when to expect the item. All these actions are triggered by the relevant teams because of one integrated ERP system. 

As any updates and records about a customer are funnelled into the one ERP system, the finance team can understand the customer value by analysing purchase volume and payment history, and whether they are an existing or new customer. If problems are to occur in billing and payments, the teams can provide a faster response as all information can be found with the click of a button.  

Vendor/supplier management

You may already have a routine established for vendor management. However, with an ERP accounting system you can automate and schedule payments and provide quick and accurate estimates of quotes and repeat orders. Historic invoices and supplier details can be pulled in seconds, simplifying the audit process with an instant view of invoice audit trails. With accurate insights into spending across all suppliers, the finance team can identify suppliers who may be overcharging, whether to diversify the supplier database or what can be leveraged to improve the existing relationships. Understanding each supplier's value helps the team identify areas where costs can be reduced, ultimately improving profit margins.

ERP vs Accounting Software: what are the differences?

As your business grows, standalone accounting software functionality may become insufficient and inefficient. You may find yourself inputting data into one system only to perform exactly the same task in the next system due to a lack of integration. Functions such as accounts payable, journal entries, general ledger and reconciliation are some overlapping functions between ERP and accounting software. However, accounting software can only provide surface-level reporting. Simply put, the data that has been produced can only show the 'money-in and money-out' in a particular period, and the profit and loss amount. In this case, the numbers don't convey a complete story and you are left with more questions than answers.  

Looking at the report, can you recall exactly the factors responsible for the financial changes within the year? Were the teams not functioning at full capacity, which led to failure to meet the targets? What area of the business has the most significant impact on growth and why?

With an ERP system, as you have the 360-view of the business, you can draw meaningful conclusions and more easily identify the cause behind any unusual numbers or trends. As ERP is a resource management system that tracks every function of your organisation, from logistics, sales, and inventory to finances, allocation of resources and customer behaviour, you can pinpoint more accurately what’s contributing to overall success, profitability and financial health of your organisation. The holistic view provided by an ERP system means every decision you make is not based on guesswork, but on data. You can determine and forecast supply and demand, how the smallest changes can lead to a ripple of effects across the departments and how you can best recover if the worst occurs.  

No two businesses function or operate in the same way. A retail business works differently from a manufacturing business. Add to that the fact that customisation is either limited or non-existent with standalone accounting software, and it can be difficult to find the right solution for your business. Most accounting software is categorised according to business size, which is helpful in many ways but does not account for the different needs of different industries. An ERP system on the other hand is highly customisable to meet the bespoke and specific needs of the industry at hand.   

Who Uses ERP accounting software?

Whether you’re a small or an established organisation, accounting functions are necessary for decision-making, planning and forecasting business growth trajectory. The misconception is that ERP systems are made for big enterprises with multiple operations and substantial budgets. However, due to flexibility and customisation options, you have complete control over which functions and modules to include to create the perfect solution for your organisation's needs.  So don’t be put off by your company’s size when considering an ERP solution, as the options are almost endless.

Key features of ERP accounting software 

The main aim of an ERP accounting system is to eliminate as many manual administration tasks as possible, allowing teams to work on tasks that matter most and empowering them to make smart decisions based on the insights available. Some of the key features to look out for include the following: 

General ledger

A general ledger is a recordkeeping system used to sort, store, and summarise a company’s financial transactions. A general ledger has four primary components: a journal entry, a description, debit and credit columns, and a balance. The general ledger is an integral part of any ERP system, as it accurately manages large volumes of transactions - from assets and liabilities to income and expenses and capital accounts. The general ledger allows you to manage, monitor and report from every angle across the business. 

Accounts payable and receivable 

This is the ability to track cash flow between the organisation, vendors and customers. Accounts payable software keeps track of money that you owe to any third party, while accounts receivable keeps track of money that third parties owe to you. Know exactly how much is spent on a particular supplier, authorise payments, track incoming invoices, and automate payment reminders and recurring invoice production. 

Asset management 

From purchase to disposal, the fixed asset management function makes it easy to record, manage and audit all the tangible assets within your organisation. The system must include depreciation calculations, revaluations and remain tax compliant. Asset management will provide better visibility of which assets are utilised, costs associated with maintenance and keep track of those that have been replaced.

Expense management 

There are many expenses associated with running a business, and tracking these manually is inefficient, risky and can mean lengthy approval processes. Good expense management software will allow employees to submit expenses on the go via an app or browser, with easy receipt management and fast approval and payment Automated and integrated expense solutions remove manual processes, help enforce your expense policy and improve the employee experience. 

Project Accounting

Businesses that run numerous projects throughout the year can use project accounting software to get real-time insights into project costs, resources, and expenses, which can help them improve their end-to-end project and financial management.

Stay compliant with local accounting requirements 

Remaining compliant with ever-changing legislation and statutory reporting requirements is one of the main features accounting systems must provide. Failure to remain compliant or stay up to date with the legislation will result in costly monetary penalties, legal issues and reputational damage. For example, the introduction of Single Touch Payroll on 1 July 2018 required all employers with 20 or more employees to report payroll information, PAYG withholding and super information to the ATO. The financial management software you use could apply for a deferral if they require more time to implement the changes.

Reporting and analytics 

Viewing real-time data in an easy-to-interpret format can help you understand your organisation's overall performance and financial health. From keeping track of accounts to management reporting and forecasting, you need an integrated view of your entire organisation in order to improve current and future efficiency and profitability.

In a highly competitive environment, you can't afford old clunky systems to diminish your competitive edge. If technology can lend a hand to automate and improve your workflow, embrace it, and see where the change can take you.

 

The Access Group's financial management and accounting software is a great first step to embracing a full ERP solution if that’s what is right for your business. It can be integrated as part of a full ERP suite or used independently as a comprehensive and modern standalone accounting solution. 

Book a demo today to learn more about how you can bring all your financial management and accounting functions into one centralised system.