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Wednesday, April 14, 2021

5 Reasons Why You Should Integrate ERP Systems with Your Company’s Accounting



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When faced with the need to upgrade your business’s accounting system, you typically have two choices. Your first choice is to purchase standalone accounting software that does only accounting-related operations, such as financial accounting, managerial accounting, or cost accounting. Your second choice is to explore all-around enterprise resource planning (ERP) software that handles accounting along with other business processes. The software will allow you to complete accounting functions as well as functions for sales, project management, inventory, material requirements planning (MRP), and corporate banking.

The tendency for many companies, especially those comprising the small-to-medium enterprise (SME) sector, is to buy only the accounting software. At first, purchasing an accounting solution may seem like the cheaper and more practical choice over purchasing a whole ERP system. But at its best, this kind of investment is only capable of improving accounting processes and nothing more. What if a software solution could help a company improve its overall business performance and not only its accounting practices? If ERP can be thought of as a holistic business software solution, it makes more sense for companies to invest in it.

If you’re the chief financial officer or other decision-maker for your company’s finances, here’s why you should consider a more integrated approach to your accounting. Below are the five best reasons for using an integrated accounting system with an ERP instead of a standalone accounting solution.

It Will Help You Get the “Big Picture View” of Your Enterprise

One thing many businesspeople learn over the years is that core business processes cannot be done in isolation. The company’s performance in one aspect, such as its financial management, will affect its performance in other aspects, such as future sales and production activities.

It’s good to be aware of this interconnectedness in your business operations and, moreover, preserve it by using an ERP system. When you’re overseeing tasks like accounting, you won’t feel as if your work is isolated from the work being done by other staff members. In other words, an ERP system will allow you a “bigger picture” perspective for your company’s processes, which would be impossible with just accounting software.

You Can Keep Your Accounting, POS, and Inventory Data Up to Date

Compared to standalone accounting software, an ERP system will be much more helpful in your everyday management of your business data. You’ll have an immense advantage if you can streamline your accounting data with data in the other modules of your ERP system. Every time you do accounting, you’ll be confident about your figures aligning with those of your inventory and point of sales. This is definitely faster and easier than drawing up separate applications and trying to reconcile the figures manually.

Using an ERP system will also reduce the likelihood of data-related errors, like double entries, missing entries, or inconsistent entries. It’ll certainly save you the grief of doing accounting processes with incorrect financial data, finding out after the fact, and doing it all over again. As such, it’s a worthwhile investment to make.

You’ll Save Time Doing Accounting and Other Vital Business Processes

Another key advantage that an ERP system has over standalone accounting software is a wider range of automation capabilities. ERP software can automate accounting procedures like those for payroll, accounts payable, and accounts receivable. At the same time, it can auto-generate invoices, auto-bill your retail and corporate customers, and automatically update your inventory.

You and your staff will end up saving so much time with an ERP system because a larger number of your tasks can be automated. If you invested in a standalone accounting solution, you’d benefit from this kind of automation capability on a much smaller scale.

It Will Tighten Your Data Security

Whether you’re doing your accounting on spreadsheets or using an application for it, you’ll constantly be worried about your data security. What if someone in your accounting team commits a serious error by accident, and you end up losing a large chunk of your financial data? What if your system falls prey to a malicious hacking attempt?

If you invest in an ERP system, you can enjoy a higher level of data security than you would on a standalone accounting solution. ERP systems are built for security and typically have more comprehensive backup protocols than standalone applications. Therefore, in the worst-case scenarios, you’ll be readier to implement a backup plan with an ERP system.

It Will Make Record-Keeping for Taxes So Much Easier

Lastly, an ERP system may contribute so much more than standalone accounting software in the task of keeping financial records for taxes. An ERP software suite like SAP Business One can auto-generate the accounting records you pass to government agencies. Come crunch time for paying business taxes, you’ll be happy to have an all-around software suite to consolidate all your data on your revenues.

Just so long as your ERP follows the BIR’s documentary requirements for the use of a computerized accounting system (CAS), you’ll be all set. You can ask your ERP software vendor to help you navigate through your CAS registration, as they’ll likely have experience dealing with this process.

Conclusion: Adaptable and Efficient Business Management Practices with ERPs

The great thing about ERP software is that you can customize it according to your needs. That means that you can choose which modules to use on it aside from an accounting module. You can make your ERP system as lean or as inclusive as you need it to be, depending on your budget or your company size.

One thing’s for certain. If your company is in a position to do so, it’s better to purchase a system that integrates accounting with other business processes. If you invest in an ERP system, you’ll see for yourself what benefits it will have on your business beyond improving its accounting practices. Here’s to flexible and all-inclusive business management strategies using ERPs.
 
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