Enterprise resource planning (ERP) systems are a powerful tool to support the work of any type of a financial management company. Accounting firms, investment banks, asset and wealth management firms, insurance companies, hedge funds, and credit rating agencies are just a few examples of companies in the financial industry that successfully use ERP systems. In addition, any company from other industries can use the features of modern ERP software to manage their finances. In this article, you will learn more about the benefits of ERP in financial management.
Seamless Data Integration
Advanced ERP software such as Microsoft Dynamics 365 Finance and Supply Chain Management (FSCM) is an effective tool that can consolidate data from different departments. As a result, ERP users can access real-time updated information united in a single platform.
This feature significantly increases data transparency, which is essential for working with accurate and up-to-date data and making effective decisions.
Powerful Financial Reporting
With all the necessary data readily available and up-to-date, companies using ERP in Financial Management can produce comprehensive financial reports. At the same time, ERP systems like Microsoft Dynamics 365 FSCM are already equipped with effective tools for analysis, reporting, and data visualization. With their help, employees can quickly create accurate financial statements of various types, including cash flow and income statements, as well as balance sheets. Microsoft Dynamics 365 FSCM also allows its users to customize reports according to the company’s needs.
Automation of Financial Processes
Implementing a robust ERP system enables the automation of numerous financial tasks and other business processes.
For example, with Microsoft Dynamics 365 FSCM, companies can automate most of the operations related to accounts payable and accounts receivable. The ERP system can streamline invoicing, payment tracking, notification creation, and more. In addition, this ERP system can be integrated with Microsoft Dynamics 365 CRM software, which can link more customer data to payments for better management.
Automation can also be used to manage the general ledger more effectively. Journal entries, general ledger reconciliations, and financial transaction updates can also be automated.
In addition, ERP systems are particularly useful for companies with complex structures, multiple business units, and multiple subsidiaries, as this software can dynamically aggregate financial data from different resources, eliminating manual consolidation work, processing intercompany transactions, and producing consolidated financial statements.
Better Financial Understanding
Automation can be used to streamline fixed asset management, specifically tracking the acquisition, maintenance, depreciation, and disposal of fixed assets. The improved analysis and smooth flow of data make it easier for companies to make financial estimates related to their fixed assets. For instance, they can more accurately predict depreciation and maintenance costs.
With an ERP system, businesses can also gain a better overview of cash flow. Automated cash management provides a real-time view of cash balances, while analytical tools make it easier to forecast cash flow. In addition, cash receipts and disbursements can be streamlined.
Simplified Tax Management
Microsoft Dynamics 365 FSCM is an ERP that also can be used to simplify tax management. It has support for dozens of countries for which it can integrate appropriate regional rules and regulations. It can be of great assistance to generate correct tax reports and ensure tax compliance.
At the same time, many tasks related to taxes can be automated too, for example, tax filing processes. With the help of this feature of an ERP system companies can make tax reporting more accurate and timely.
While tax management tools are very effective for any organization, they can be of particular help to companies with international branches.
Enforced Regulatory Compliance and Improved Data Security
While the aforementioned efficient tax administration is critical to regulatory compliance, it is not the only feature of ERP systems that can help companies meet governmental requirements.
For example, companies can automate certain audit processes. For example, companies can use automation to support internal controls and track audit trails while maintaining accurate financial records and reporting.
While automation can also be a powerful assistant in assessing data privacy and security, modern ERP systems have additional tools to ensure data security. Thus, Microsoft Dynamics 365 FSCM has security roles that define the scope of data manipulation that certain users are allowed to perform. This is a useful feature that can effectively restrict access to and secure corporate data.
In addition, using a cloud ERP system is also one of thea most efficient ways to protect data from natural disasters and other incidents that can lead to its loss. The corporate data used by a cloud ERP system is backed up so that users can access it whenever they need it.
When Should Finance Management Companies Implement an ERP Systeacm?
Although virtually any financial management company can increase its competitiveness in the market by implementing ERP software, in some cases such a system is an absolute must.
One such case is a company that relies too much on manual processing and can increase its productivity through automation. Another common scenario where an ERP system can be of great benefit is a growing and expanding company that needs assistance in managing its financial complexity.
Regulatory compliance, eliminating data inaccuracies and inconsistencies, improving data analysis, reporting, and decision are some of the other needs that can be met by implementing ERP software.Hope you enjoy the article, so please stay tuned on more interesting articles.