Enterprise Resource Planning (ERP) is a tool that is normally associated with functions handling large amounts of data, for example, operations, customer relations, and sales. But the big question is, whether it is equally beneficial in handling numbers and accounting functions?
Integration of ERP and financial management of a business might seem very peculiar, as it is the impression that customarily, for accounting purposes, only an accounting software can perform what is required. However, the truth is that an ERP Accounting Software delivers much more than what a simple accounting software does. This article will help you understand everything you need to know about ERP accounting systems.
What does ERP mean in Accounting?
The basic accounting software with a set of modules is easily capable of performing specific financial tasks such as generating POs, billing/invoicing, electronic payments, expense handling, timesheets, etc. Then what is ERP accounting software and how is it different?
The ERP system designed for accounting and financial management is capable of performing all the tasks mentioned above. Additionally, it can track numerous tangible and intangible assets as well, like working hours, product life cycle, and other performance metrics. ERP accounting software can also automate various tasks performed by users in the finance department. It ensures that all the transactions are accounted for and reported accurately.
Differences between ERP and Accounting Software
For better understanding, here is a summary on the key differences between ERP software and accounting software.
There is a broad difference in the scope of software when we compare two systems, ERP and accounting software. An accounting software works on a stand-alone basis whereas a financial ERP system integrates with the data from other tools used for different business processes.
Accounting software has a limitation when it comes to meeting industry-specific needs. An ERP system can be customized and deployed based on the specific industry or organizational needs catering to a wider services landscape.
Despite the differences, there still is the delusion that ERP is another kind of accounting software, but the truth of the matter is that an ERP is much more robust. Let us break some of the myths around ERP financial software.
The misconceptions around ERP Accounting System
As explained, an ERP accounting system does much more than what an accounting software does. It is more of an advanced approach to dealing with accounting issues where respective modules are integrated as a part of the ERP package.
Myth 1: Budding and small companies do not need ERP accounting software
Considering that the company is small with fewer staff members, the operations and accounting can be managed without the implementation of any accounting software is a false assumption. Even small-scale businesses, especially those that wish to grow, need an effective accounting system to ensure the smooth running of their workplace.
Appinventiv, as one of the leading ERP software development companies can design ERP accounting software for companies of any size and industry. The software that is capable of scaling with the company’s growth.
Myth 2: ERP accounting system is an expensive undertaking
An ERP accounting system sounds expensive to many. Cost should be compared to the benefits and ease the system brings along. Leaving tedious, repetitive tasks on such a system not only saves time but also saves cost in two ways. One, by freeing up the resources to do more strategic tasks, and secondly, by making the process less error-prone, thus saving on rework. When compared with the benefits and results, the cost becomes worth it.
Myth 3: Integrating an ERP accounting system with other tools is time-consuming
One of the most common myths about implementing the financial ERP system is that it might take weeks or even months to integrate it with the existing technical environment of the company. The ERP accounting software by Appinvetiv can help you complete the configuration and integration in just a few days based on the initial business requirements clearly stated at the time of planning.
Myth 4: Understanding the ERP accounting system is challenging
It is assumed that learning, understanding, and getting accustomed to any new system demands extra hours and lengthy training sessions. Yet the employee ends up adapting to the new system only by a trial-and-error method that takes up additional time to complete their basic work. Proper training, user-friendly eLearning modules, prompt support, and effective maintenance services will surely lead to the path of easy learning and adapting to the new system that offers individual growth to the users.
Now that we have understood what is ERP system in accounting, let us understand various conventional elements of accounting.
In layman’s language, the accounts payable team is responsible for interaction with vendors, invoice generation, payments to vendors, and managing debit and credit notes, among other tasks. On the other hand, the account receivable team is responsible for collections from internal and external customers, generation of POs, and more. It will not be an exaggeration to say that the transactions handled are voluminous, complex, and repetitive. Thus making a well-designed ERP accounting system indispensable.
Elements of Accounting ERP Software
The basics of accounting elements act as the base of the accounting fundamentals. These elements remain intact for creating the accounting ERP software that makes it possible to support and monitor the financial activities of the company.
As the name suggests, this is the basic accounting book. Creating daily journal entries and collating them at the end of the period is a meticulously tedious job. One error can lead to a mismatch in the balance sheet and you will have to start from scratch.
With the implementation of accounting ERP software, managing these journals can be automated. Additionally, the sub-ledgers too can be integrated to reflect the transactions in the general ledger. Finance reports like trial balance, profit and loss statements, cash flow statements, and balance sheets can be generated with a few clicks, which makes it quick and effective.
As the name suggests, this application keeps track of incoming transactions. Also, known as a customer ledger, its primary role is to keep track of customer invoices, collections, commissions, etc. A robust financial ERP system, along with keeping track of all of the above, helps in generating customer receipts when integrated with the interface of the cash management system.
Just opposite receivables, payables track the outgoing transactions. Also known as vendor ledger, this element of accounting ERP software keeps track of vendor transactions that include invoices, payments, credit memos, debit memos, etc. This can also be integrated with the interface of cash management for vendor payments.
Capturing timesheets, calculating paydays, salaries, tax deductions, overtime payments, sales commission payouts, and much more when incorporated into a financial ERP system eases the payout process. Correct and timely processing of the salaries and other benefits can also work as an advantageous retention tool by keeping customers happy.
Analytics & Audits
Gathering information, and automating them, all sounds good but make sense only if they help in strategizing business processes for growth and expansion. An effective ERP accounting system will take care of the compliance requirements at the time of punching in details and processing them for the first time. Consequently, the tool will perform these steps meticulously without compromising ensuring that your data is audit compliant all the time.
The data in one place can be converted into sensible analytics that will provide you with a wider perspective on the business process that is more profitable than the other. It will help you create strategies to improve and fill the process gaps for better results and overall organizational growth.
Understanding various elements of the accounting process and the ERP system has provided us with a clearer understanding of what is ERP system in accounting. Let us now look at the development process of the ERP system.
ERP Development Process
With all the myths busted and understanding the basics, we believe that you are convinced enough to opt for the customized financial ERP system. Using the expertise of a technology partner like Appinventiv, you can get started with the development process of the customized ERP software. To create a product that is capable of meeting most of your business needs, follow the basic steps mentioned below:
- Define the goal – Clearly define the scope of work and reason for developing the ERP system. Set clear expectations and discuss the ways in which the goals can be achieved.
- Prototype – Create wireframes to visualize the user interface.
- Develop – This stage includes choosing between a local server and a cloud server, managing and maintaining databases in a format that is easily scalable and flexible, smooth integration of the existing applications with the ERP system, and finally designing your ERP software on the grounds of the wireframes created as prototypes. Know how much it costs to build an ERP system.
- Test – For successful implementation of the system, every aspect of the ERP system should be thoroughly tested.
Equipping the team
Having a robust ERP accounting system in place does not suffice in adding value to the process. It is important to train your people to exploit the benefits of the system to the maximum extent.
- Keep the team informed – Accepting the new system is the key as it brings along the requirement of putting in extra efforts to learn along with performing the existing role. The transformation phase, at times, becomes challenging as not everyone in the team may like changes in the process and might not be ready to devote that extra effort to learning new things. Making everyone understand the vision behind bringing in the new system is the key. Also, it is important to communicate how it will help them in their personal growth by moving from doing monotonous jobs to strategic roles.
- Assess your team’s ability – Knowing the strengths and weaknesses of the team is critical. Understanding the teams’ skill levels and desire to learn will greatly help in planning the future course of action and adopting relevant techniques.
- Firm training plan – A definitive and detailed training plan will help you and your team to assess the time required to study and apply relevant features of the new system. If feasible, a self-paced learning platform works best for working professionals. However, timelines will still be required.
- Progress & Feedback – Offering training through robust LMS will help you keep the track of their learning progress. It will also help you in gathering constructive feedback about the product and training modules.
How can Appinventiv help with ERP software development?
With a proven track record and thousands of products delivered, we have the expertise and bandwidth to manage the projects of every size and type. With a team of approximately 1,000 creative techies, we take pride in delivering the projects using the latest technologies within the specified and agreed timelines.
The positive testimonials from our clients and the diversified portfolio of projects across industries are the motivation for us to serve every client with similar dedication. One such example is the successful implementation of ERP software development services for one of the world’s biggest furniture retailers, IKEA.
Irrespective of the organization size, automating the accounting system and processes is never too late. Appinventiv can help you build an ERP accounting system tailored to your organizational needs.
Reach out to our experts to discuss your ERP accounting software requirements.
With the fast-paced business world and technological advancements, it is imperative for organizations to implement the latest tools and techniques. This will not only facilitate employee’s personal growth but will also enable your business to strategize and plan the future growth, enabling you to keep up with the competitive pace of the business world. ERP accounting systems can help you take a leap that can just be the beginning of you becoming a leader in your industry.
Q. What are the technologies used to develop ERP financial software?
A. While it is important to spend quality time on ideating the system keeping specific goals in mind, it is equally important to ensure that the technical side of the project is taken good care of. Financial ERP systems contain different modules, functions, and similar other elements. Also, the integration with existing systems makes it a multilayered complex system.
There are more than one programming languages that you can choose based on your business needs and the kind of data you are going to use.
- Java – If your backend systems and workflows are complex, the Java-based ERP system will support the cloud-based ERP accounting system.
- .NET – By using .NET, or even better, ASP.NET, you can develop an ERP system that need not be cloud-based necessarily. Your ERP accounting module can smoothly function on basic internet connectivity.
- Python – As the ERP financial software is based on business logic and data, developing the financial system based on Python makes all the sense, as the core strength of the language is business logic programming.
Q. What are the primary benefits of using the financial ERP system?
A. There are multiple benefits that one can reap from its implementation. Some of them are:
- Retrieving detailed financial reports
- Lesser errors because of workflow automation
- Reduced redundancy of resources
- No duplication of data entries thus better control
- Financial data security
Q. Which is better? Off the shelf ERP accounting software or customized one?
A. As the ERP accounting software is integrated with other internal functions for data fetching and overall reports, it is best to customize the required system based on your requirements and business goals.
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