Balance sheets and profit and loss statements that are generated through traditional double-entry accounting are the only way for company management to determine whether operations are profitable, but those reports have long been shrouded in little-understood processes that result from quarterly or monthly flurries of accounting department activity. Enterprise resource process (ERP) software is slowly lifting the veil of secrecy around accounting department processes by including accounting software as a subset of greater resource management. With accounting ERP software, employees in all parts of a company have two-way access to the data and input that feeds accounting departments and are able to see in real time how their functions affect the company’s financial health. Moreover, that software can save time and eliminate errors that might otherwise give a skewed picture of a company’s financial health.
The experience of the Washington State beverage distributor, Taking Rain, is a good example of the benefits of treating accounting software as a subset of greater enterprise management. Taking Rain installed an ERP software solution that aggregated customer purchase and other data into a global system that accumulated accounts payable and receivable, historical financial performance, manufacturing, and scheduling. Incorporating traditional accounting functions into enterprise management enabled the company to substantially shorten the amount of time required to close out month-end accounting. The ability to access real-time financial data also helped production manager to reduce shipping and product stock problems that had kept some of the company’s products off of store shelves.
The inclusion of accounting functions in ERP software is a more recent development in the evolution of enterprise management. Corporations had traditionally used standalone accounting software that was maintained separately from its operations. That separation typically required a manual transfer of operations data into the corporation’s accounting package, which led to delays, entry errors, and a general sense of disconnect between accounting and the rest of the company.
ERP software originally offered substantial benefits in inventory management, and then expanded into manufacturing processes and human resources. As corporate management gained an appreciation of the business intelligence that ERP software provided, adding accounting ERP software into the mix was a natural evolution. Next-generation ERP products now treat accounting as both a subset of ERP and a critical part of it.
A company that is seeking to integrate its accounting functions into its enterprise management system can accomplish that task either by integrating its existing accounting package into its ERP software, or by pursuing a unified solution that includes an accounting ERP module. Both options have their advantages and disadvantages, and a company’s decision on which option to pursue will be a function of the company’s individual circumstances.
The crucial factor that determines the success of any integration or unification of accounting into an ERP system will be the company’s ability to use and appreciate the enhanced business intelligence that accounting ERP software can generate. With good planning and implementation of an accounting ERP module, a company’s management will quickly see benefits relating to:
- Cost reductions and elimination of inefficiencies in multiple processes;
- Productivity improvements that lead to greater customer satisfaction;
- The ability to manage processes from any location and with different mobile platforms and devices;
- Communication and collaboration improvements.
Accounting ERP software therefore takes accounting out of a mysterious black box and into the realm of a company’s overall operations. This gives personnel at all levels of a company’s operations an opportunity to see how their individual functions affect profitability as well as incentives to manage those functions to improve profitability.
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