So you are thinking about moving from a traditional accounting ledger to an all-encompassing ERP. The first thing you are going to notice is the price and you will probably wonder how you can justify paying so much more for what is essentially accounting software. I mean QuickBooks more or less, does the job doesn’t it? You can make some tailored reports and track projects in Xero right? Is the additional spend really justified to fix a few manual processes?
Here are 5 top reasons why your competitors will have decided to invest in an ERP.
1 You have increasingly complex business characteristics
Has your business expanded globally? Has its legal entity structure grown? Are they located in several different jurisdictions? Are you producing accounts in many different currencies? One key benefit that your business will realise from investing in an ERP is that you can manage all of your legal entities through 1 account. You will also be able to perform detailed consolidations at the click of a button saving your finance team lots of time and reducing risk of misstatement to your management accounts.
2. You are planning to scale fast
Scaling a business can be chaotic, alot needs to happen, and it needs to happen quickly. The journey can be made a lot smoother by having the right infrastructure in place. This refers to people and systems, likely your EPR your CRM and whatever else in your tech stack. Having an ERP eases growing pains.
On Monday you are faced with adding new products to your business line. These will need to be agreed across multiple teams in the organisation. They will need to be added to all your accounting packages. Associated costs and revenues will need to be tracked and reported on.
On Tuesday your business begins trading through its entity in Singapore. This all needs to be configured in your accounting system including tax information, invoice templates etc. oh hang on we are still configuring the new products.
ERPs are designed with these challenges in mind and completing these tasks will be more streamlined and take less time, giving you a greater chance of getting them right.
3. You want to automate processes and reduce overheads
Processing tasks in an ERP system is more straightforward than in simple accounting ledgers. Take revenue recognition – NetSuite for example has an advanced accounting revenue management system. This allows you to create rules that can then be applied to billing to recognise revenue in line with those rules. You no longer need to maintain this information in spreadsheets and transfer journals into your accounting ledgers. It can all be set up, reviewed, and posted with ease.
Similarly, prepayments can be set up in a prepayment module. Amortisation can be run at the click of a button similar to posting depreciation. When all of the efficiency gains are totted up will it save a headcount or 2 or more? That is a difficult question to answer and will depend on your business and its processes. Will headcount savings cover your investment? Maybe. (Please bear in mind that most clients we work with don’t see the benefits of investing in an ERP immediately – see our post on why you might not be seeing the benefits of your ERP implementation here).
4. You want to reduce risk
As your business grows you are going to have a lot more risk to contend with. From increased audit obligations to managing the finance function for a larger with increased headcount and larger transactional volume, risks to your business are everywhere.
An ERP will help you deal with fraud by allowing you to create distinct roles and responsibilities in the system which can provide you with sufficient segregation of duties. It reduces the risk of error and misstatement in your reports by taking manual steps out of processes and building complex processes into the system.
Reduced risks will help you as an FD to do what’s most important. Sleep easy at night.
5. Improved Reporting
ERPs allow reports to be produced at the click of a button. There are lots of options for customising reports and if you are not happy with the ERP’s reporting capabilities you can purchase completely partner apps that will improve the quality of reporting and analysis available in ERP. The reports are automated so there less chance of misstatement. Besides pure finance reports analytics tools allow you to report on additional information besides just financial data empowering decision-makers with enhanced data helping them to make better informed decisions.
These are some of the features common to lots of businesses that are investing in ERPs. The jump in price can be off-putting but if some of these features resonate with you then it is worth getting in touch for a free conversation with one of our consultants.
