The Beginner’s Guide to ERP Finance Module and Its Benefits

Anu Singh

Anu Singh

Senior editor

Parul Saxena

Chief editor

Last updated: August 10, 2021

When asked to select areas where ERP produced ROI, the top three answers were reduced IT costs (40%), reduced inventory levels (38%), and reduced cycle time (35%).

There is no doubt that an ERP system can streamline your organizational processes and finances. From reducing admin costs to expediting processes, an ERP does it all.

Looking for ERP Software? Check out SoftwareSuggest’s list of the best ERP software solutions.

However, if you wish to use it to streamline your accounting and financial needs, you must try out an ERP finance module.

But, what exactly is the finance module in ERP?

It is the software component that handles an enterprise resource planning system’s main financial and accounting management functions. However, before we move onto the benefits and features of the finance module in ERP software, let us know more about it.

What is ERP Finance Module?

An ERP finance module contains accounting records such as balance sheets, general ledger (GL), financial records, expense reporting, and other related transactions. It is also known as ERP core finance and even supports functions like profitability analysis and revenue management.

Finance in ERP shares data with core business functions, including production planning, inventory management, purchasing and customer relationship management (CRM), and others. Whenever a transaction in one of these modules happens, it triggers an action or transfer of data in the ERP finance module.

Importance of Finance Module in ERP Software

ERP finance module is the first component activated in an ERP system. This is the primary reason organizations replace traditional accounting software with ERP.

Integrating various business functions will help you ensure accounting accuracy and meet financial regulations. Besides, it provides you access to consolidated financial data and improves corporate performance.

The ERP finance module differentiates ERP from other business applications and human capital management (HCM) suites. Moreover, when combined with these, manufacturing ERP modules will help you address the shortage of raw materials and other components needed in manufacturing.

Wait, there is more to it!

The finance ERP module also serves as a great backup when a company changes ERP systems, decides to scale, and expands to new locations.

Now that you have ample idea of the ERP finance module let us look at its common features.

ERP Finance Module Features

ERP Finance Module Features 

These are some of the standard features offered by an ERP finance module.

1. Profit Tracking

Most finance ERP modules come with a profit tracker that lets you have an overview of your business’s financial health. Some profit trackers also help you forecast your organization’s return on investment (ROI) from all channels based on expense data and historical sales transactions.

2. General Ledger

A general ledger in an ERP finance module keeps a comprehensive record of your company’s financial transactions. It tracks parameters such as income, capital accounts, expenses, assets, and liabilities.

3. Accounts Payable (AP)

The AP feature of the ERP finance module lets you process many financial transactions and invoices with ease. This, in turn, lets you establish a great relationship with your vendors.

Besides, accounts payable also helps you integrate the organization’s payables data with its purchasing system and better control cash flows.

4. Accounts Receivable (AR)

The accounts receivable function in the finance module lets you automate tasks such as generating recurring invoices, payment reminders, and financial statements. Thus, helping you accelerate collections and making it easier for customers to pay and support in providing excellent customer services.

5. Fixed Asset Management

ERP finance module lets you track and manage tangible assets such as factory equipment, computers, and vehicles. Fixed asset management lets you consider depreciation calculations, tax implications, and compliance requirements. Besides, you can use it to get better visibility into our assets and the associated costs and maintenance.

6. Purchasing

Most ERP financial modules let you streamline the purchasing of supplies and services. They also help you manage the required paperwork, such as requisitions and purchase orders.

The purchasing function also lets you match invoicing before you process any payment. You can also choose to buy an ERP for logistics if you have an eCommerce business to fulfill all your supply and raw material needs.

7. Risk Management

The risk management function lets you predict, analyze and manage risks related to your business operations and financial stability.

For example, knowing how to handle credit risks can ensure that you have enough cash reserves to manage accounts payable if a customer delays your payment. Besides, risk management features also let you deal with legal liabilities, reputational risks, and compliance.

8. Reporting

Reporting features in an ERP finance module provide access to financial data in real-time and lets you produce audit trails for regulatory requirements. You also get visibility into your financial data, the ability to make data-driven decisions and forecast financial trends.

Most ERP finance modules come with business intelligence (BI) and analytics features that let you have a clear view of your revenue. Moreover, some even offer dashboards that let you compare actual and expected sales, expenses, and financial information. You can convert this data into a graphical format and analyze it to improve your business processes.

9. Tax Management

Some ERP finance modules save the system’s tax settings and provide reporting and audit functions. It even lets you collect tax information from all financial documents into a single repository. You can also use it to generate reports when you need to file taxes.

Benefits of ERP Finance Module in Business

Benefits of ERP Finance Module in Business

Here are some of the benefits offered by the finance module in ERP software.

1. Streamlines Finances

Finance and accounting is an indispensable part of every business. The way you handle it can be different, but the objective is more or less the same. Here are some of the things you need to address.

  • Managing wealth and increasing profit margins  
  • Minimizing expenses
  • Ensuring safety on investments and fund acquisition 
  • Expanding the firm’s valuation

From the estimation of capital requirements to cash management, the ERP finance module lets you unify data and bring it all together in one place.

It lets you improve cost accounting and allows managers to define budgets and allocate costs. Besides, you can use it to pay wages to employees, make financial forecasts and make payments to vendors. But, wait, there is more to it!

When you have a single business management system, you will no longer need to switch between systems. As a result, you will be able to reduce the cost and time spent on many tools.

2. Keeps Track of Payments

ERP finance module ensures that you stay on track with customer payments, credit management, and revenue tracking. Besides, you can even integrate it with customer relationship management (CRM) to automate reminders and reduce customer complaints.

These modules can also help you with cost analysis, managing investments, and profit tracking with enhanced tracking capabilities.

3. Round The Clock Data Access 

When your data needs are met, you can organize and use your resources adequately. The finance module in ERP software lets you maintain finances and gives out in-depth information whenever needed.

But what about data security? 

Well, these modules let you set access controls and manage your financial data seamlessly. Moreover, multiple reporting options and modules eliminate the need for maintaining paper files and spreadsheets. 

4. Easy Report Generation 

Real-time data synchronization, improved data quality, and 360-degree visibility of the organization are just a few benefits of using the ERP finance module. 

It provides you with shared management tools and lets you track accounting data with financial data. This means you can select a framework in multiple currencies, companies, currencies, and charts of accounts. 

It lets you gather financial data from other different departments and generate reports with ease. Besides, it lets you seamlessly integrate within the system, making ERP an indispensable part of every modern business. 

5. Fulfills Compliance Needs

Unfortunately, most accounting software is not GAAP(Generally Accepted Accounting Principles) compliant. But, a full-fledged ERP solution is. The finance module is driven by a powerful engine that encourages productive financial reporting and complies with multiple accounting standards, including GAAP.

Thus, ERP has become an inevitable part of modern businesses. It provides you with a host of business functionalities that are designed to address inventory requirements, manage production functions, oversee crucial business processes and quality of finished products.

Wrapping Up

ERP finance module not only lets you streamline financial management but also lets you provide extraordinary services to customers.

You must not forget that ERP and digital transformation go hand in hand. Thus, investing in a finance module will benefit your business and support you in achieving your business objectives. 

Are you confused about choosing the right ERP finance module? Then, allow us to help you find one and take financial management to a whole new level!

Anu Singh
Anu Singh has worked for known SaaS firms and holds extensive expertise in breaking down technical topics into digestible copies. Her content speaks volume about her creativity and knack for exploring new avenues. When not writing she likes to read novels, hone her editing skills and stay abreast with the latest industry trends.

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