How Enterprise Resource Planning Streamlines the Accounting Process for Businesses
It goes without saying that proper accounting is one of the most important functions of a business. It allows for your company to identify how its operational costs are translating into profits over a certain period of time.
For many years, accounting has been done via a separate system that doesn't necessarily integrate with other business functions. This means that data from multiple departments of the business would have to be collected on a regular basis and submitted to accountants for review. This process is not only time consuming, it is also expensive and prone to multiple errors.
A new system for businesses now makes it easier for accountants to access data that they need and to analyse it in a quick and efficient manner. This new system is Enterprise Resource Planning (ERP).
What is ERP?
ERP is an integrated software platform that allows for the core functions of a business to be easily accessible under a common umbrella. An ERP system is capable of centralising core areas of the business (such as inventory management, purchases, finance and accounting) under a unified software platform that various stakeholders can easily access.
ERP essentially breaks down the barriers that are normally present between different departments of a business and allow for information to flow freely across the entire company.
How does it work?
Think of ERP systems as a common tool that the entire business uses to carry out functions of the business. Warehouses use the system to keep track of inventory, while the finance team uses the same platform to process reports and make budget decisions. In addition, the procurement team uses the same system to process orders and to manage customer relationships.
In most cases, an ERP will consist of a common database that synchronizes company information across multiple areas of the business.
What does this mean for accounting?
For any business, ERP will significantly improve the current state of their accounting practices. Both internal and external accountants will be able to easily access accurate and timely information from multiple departments of the business. This means that as soon as the finance team makes a purchase or the sales department sells an item, this data will immediately be entered and stored on the unified platform of the ERP system.
Therefore, your accountants will be able to easily access information on a real-time basis and provide you with more accurate insights about your business. ERP can also make it easier for you and your accountants to track down account receivables and to better manage your cash flow. By working with accountants who are familiar with ERP systems, you can reduce your operational costs and remain current with all your business expenses.