Why Use an ERP System for Accounting

One of the most important courses in the La Salle University Master of Business Administration, Accounting Specialization Online program is AIS, ERP and Accounting Analytics (Accounting Information Systems, Enterprise Resource Planning Systems and Accounting Analytics). This course provides an overview of enterprise resource management and includes hands-on experience with SAP using S4 HANA. The course also provides hands-on exercises in SAP Lumira. This software combines business intelligence discovery and visualization with interactive dashboards and analytic applications.  Students in La Salle's program gain broad exposure to the benefits of these systems through weekly discussions of current topics, including privacy and security issues, disaster recovery, anti-fraud and audit resources, blockchains, cryptocurrencies, and XBRL. 

Enterprise resource planning (ERP) systems are comprehensive business systems with databases and software that run, integrate and support a business's processes. ERP solutions encompass all business operations with modules for accounting, financial, human resources, marketing and more. These software solutions streamline and automate processes and reporting, populate up-to-the-minute data across all pertinent fields in each module and eliminate redundant data entries, saving valuable time and company resources. Once implemented, these systems further improve business efficiency by making each employee more efficient and productive and providing smart business insights for improved decision-making.

How Standalone Accounting Software Differs from a Comprehensive ERP Solution

Businesses across industries and of all sizes run on powerful ERP computing solutions, and very few businesses can afford to operate without them — or with standalone accounting software — in today's competitive environment. Whereas traditional accounting software typically contains modules for accounts payable, accounts receivable, fixed assets, billing, inventory and general ledger, an ERP solution integrates all of these functions with the rest of the business. That may include customer relationship management, inventory management, supply chain management, HR and payroll. The integration provides a holistic view of the business that enables smarter, faster decision-making. This would otherwise be either extremely time-intensive or impossible to achieve.

Most ERP systems today are cloud-based, which offers additional benefits including lower initial investments, no need for on-staff IT support or on-premise servers and hardware, automatic software updates and robust security made available through economies of scale.

Industry-specific ERP solutions take these benefits a few steps further by facilitating industry-specific processes and best practices. Many ERP systems are even designed to automate compliance with industry-specific laws and regulations.

Understanding the Benefits of Complete Business Integration

When accounting software is integrated with the rest of a business, it allows for more effective accounting practices, giving accountants the ability to become true business leaders. For example, accountants can use the system to estimate capital requirements, allocate costs based on historical data and manage payments based on recent cash flows.

Automation of processes is one of the key benefits for streamlining operations and bringing cost-efficiency to a business. An ERP solution automates many accounting functions, reducing and simplifying time-consuming processes in accounts receivable, accounts payable and cash management from months and weeks of work to hours or minutes. Often, automation technologies can complete formerly complex processes through simple keystrokes or mouse clicks.

ERP software with accounting modules provides complex tracking capabilities, which includes linking documents related to customer payment schedules and order histories, revenues and credit management. Senior accountants use their systems to track and forecast revenues and profits and to set up customized reports which can be automated. However, organizations without ERP solutions often must manually manage data and share information in cumbersome ways that are no longer feasible in a highly competitive, technology-driven marketplace.

Industry-specific solutions enhance the coordination of accounting functions with the business. For example, an ERP solution for small-to-midsize manufacturing companies and job shops usually has three modules: a purchasing/production module with a bill of materials and production orders, a warehousing/materials management module that includes lot management and picking and a sales and distribution module for quotation, order processing and invoicing.

These functions integrate neatly with the accounting module so that information flows through the system across the business automatically. There is no need for expensive data re-entry, which often leads to human error that can cause significant accounting nightmares. No matter who accesses the information, from a warehouse manager to a shop floor supervisor or business executive, that information is reliably accurate and up to date.

The decision to purchase ERP solutions is often a top-down decision, wherein management understands the efficiencies that integrated and automated software brings to the entire business. Often, however, accounting professionals are the catalysts for change, especially when they have had an opportunity to explore all the benefits that accrue over time from the date of an ERP implementation.

Learn more about La Salle University's Online Master of Business Administration, Accounting Specialization program.


Sources:

Accounting Coach: What Is ERP?

AxxisConsulting: The Difference Between an ERP vs. Accounting Software

National Security Agency: Benefits of Using an ERP System for Your Accounting


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