How ERP Accounting Software Elevates Finance Management
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Marcie Nguyen
Marcie is a skilled writer at Havi Technology focusing on creating content for marketing, eCommerce, point of sales, and ERP solutions. With over 8 years of experience in the retail, eCommerce and ERP technology sectors, Marcie is dedicated to providing insightful answers to business owners of all scales.
If you are looking to upgrade your accounting tools, the most important thing to figure out for your business is whether to go with a standalone or an ERP accounting software. ERP and accounting systems are similar in several aspects but also have distinct features that can help your company in different ways.
First, let’s understand the basics of ERP accounting software.
Defining an ERP accounting software
1. What’s an ERP accounting software?
The ERP system manages and automates key operations to help businesses perform at their best. They achieve this by consolidating data and systems into a single source of truth, which helps staff members optimise processes at all levels.
The majority of ERP systems have accounting as one of their core components. As your company expands, you may need to automate more procedures, data recording, and reporting. All manual operations can be streamlined and automated using an ERP accounting system, which reduces errors and saves time switching between platforms. Significantly, ERP systems, which are integrated with accounting, go beyond simple accounting functions.
2. ERP and accounting software
2.1 What is a standalone accounting software?
A standalone accounting software is designed to help you manage your business finances, handling tasks like bookkeeping, invoicing, payroll, or financial reporting. It mostly concentrates on accounts payable and receivable data. QuickBooks, as an example, is a stand-alone accounting software created to automate and simplify routine financial procedures of small businesses.
Standalone accounting software covers financial and cost accounting activities
2.2 How are ERP accounting and standalone software different?
The scope of features
This is the main distinction. ERP systems provide more business management features than accounting systems, which are primarily developed for financial administration. This means that an ERP system will typically have more extensive financial and operational management features.
Consider the case of QuickBooks. It functions on a small stand-alone database and we may find it difficult to connect with the company's real-time procedures. Therefore, to complete the task in this case, an integrated ERP system is more beneficial. An accounting module within an ERP system will significantly and quickly handle cash flows in addition to reacting to current market changes.
Learning curve
In general, accounting systems are more accessible and affordable, especially for smaller companies or those with tighter budgets. When compared to ERP systems, they are also typically simpler to set up and operate. However, ERP platforms are now easier to implement for businesses of all sizes thanks to the development of SaaS solutions.
The Lego view
A different perspective on an ERP system is to think of it like assembling Lego blocks to build a house. An ERP - the Lego house, includes all company activities - the Lego blocks, that provide a comprehensive overview of the performance and well-being of the enterprise. The system offers an all-inclusive approach to business management as a unified source of truth for data, combining information from many departments and procedures.
A standalone accounting system, on the other hand, is simply one Lego block. Although it is limited to basic financial reporting and frequently not updated in real-time, it provides information on the company's financial performance.
Specific industry requirements
Unlike an ERP system, accounting software is not as capable of satisfying industry-specific requirements. To meet the unique market demands of particular industries, numerous ERP suppliers, including Odoo, have developed industry-specific solutions. Our client in timber manufacturing, for instance, will have very different needs than a retail establishment.
It is uncommon for standalone accounting solutions to be industry-specific. When you pay for licensing fees, the software is typically accessed through the cloud. However, customisation options are limited. On the other hand, you can implement and tailor an ERP system to align the specific needs of your industry.
3. Key features of ERP accounting software
ERP accounting software can have a wide range of functions, from marketing and sales to inventory, supply chain, and human resources management. However, for Accounting particularly, they usually have the following features:
Key features of ERP accounting software
Automated accounting transactions
This feature describes how ERP accounting software carries out particular financial operations and enters them into the accounting ledger without human support. Thanks to automation, it increases the efficiency of financial operations, reduces human risk, and streamlines financial processes.
Finance analytics & report
These capabilities are essential to enable finance professionals to exploit insightful information from your organisational financial data. They offer capabilities that help your team with data analysis, visualisation, and decision-making in addition to standard data entry and transaction processing.
Security protocols & audit trails
An audit trail is a chronological recording of all actions and modifications made to financial data inside an ERP accounting software. It serves as a digital paper trail, recording details on who made the change, what was changed, when it happened, and why.
Workflow automation
In ERP systems, workflow automation refers to the use of technology to plan, coordinate, and expedite a sequence of tasks, or approvals throughout your business process. Workflow automation is essential to standardise and improve your financial management process. This offers better productivity, lower error rates, and improved compliance.
Multi-currency assistance
Multi-currency support is the ability of ERP systems to manage accounting and financial transactions in various currencies simultaneously. If you engage in global trade or conduct business on a global scale, this function is notably crucial.
Real-time financial management
Real-time financial management is the continuous and ongoing tracking of your business’s financial performance, transactions, and KPIs within ERP. It depends on a real-time stream of financial data and updates that give your team quick insights into many facets of the financial situation.
Compliance management
Different industries and locations have different financial legislation and compliance needs. Several ERP accounting software have localisation features for each country, thereby, helping your business comply with rules. For instance, Odoo recently offered users a new localised feature on their Accounting app. It bridges the gap between Odoo and legal requirements and complies with the Australian Taxation Office (ATO) with ease. This feature covers Peppol Integration, Standardised Taxation Formats, New Stock Valuation Configurations, and more.
How ERP solutions drive value for finance and accounting teams
1. A unified system for accounting operations
With fully integrated ERP accounting software, you can manage every aspect of your business from the finance and accounting departments to the complete operation of one system.
45% of professionals said they plan to automate time-consuming and repetitive accounting operations, such as data entry (Sage, 2021). A single ERP system can address the problem better than a standalone software. It can be proved by eliminating the need to cross-reference and reenter the same data into various systems and spreadsheets. This saves not only time but the money you spend on maintaining those systems.
2. Real-time data for accurate financial reporting
According to Panorama report (2023), 65.9% of businesses reported that real-time data is one of the benefits derived from ERP implementation. You can effortlessly monitor, analyse, and report on your financial health and business success thanks to using a single platform that provides real-time data. With access to up-to-the-minute data, you can plan and budget for the future, make quick and precise decisions, and stay adaptable to market changes. Moreover, the integrated view, shared across all teams, enhances decision-making throughout the entire organisation.
3. Improved productivity and collaboration
In the aforementioned study, 74.3% of respondents claimed that productivity and efficiency were the most frequently mentioned advantages of ERP systems. The ERP accounting software not only lowers your expenses but also simplifies accounts payable and receivable, addressing cash flow and cash management problems. Furthermore, your employees will have more time to focus on other tasks, as they won’t need to spend nearly half of their working hours entering data.
An ERP system will not only boost the output of your accountants but also provide you with improved financial insights into your business. Your accounting department will be able to focus on other crucial duties, such as producing thorough financial reports, with the time saved from data entry.
4. Stakeholders management
Employees
Every member of your company is connected, which enhances communication and makes teamwork simple. Department collaborations can lead to more cost-effective workflows and savings, thanks to access to real-time data. ERP systems can also support cross-functional initiatives because they enable your teams to access the same data simultaneously.
Customers
Customers strongly benefit from a seamless experience from purchase to receipt. 83% of the participants in Panorama’s study realised that all ERP benefit categories were attainable. More precisely, 70,1% said that their customer experience - one of the categories, had improved.
This is because within ERP, the department barriers are eliminated and each team will be aware of the customer's current buying stage. If required, they can be informed of when to anticipate the item, invoices can be delivered accurately, and required paperwork can be obtained quickly.
Suppliers
Following the previous study, 76,2% of respondents realised better supplier interactions after confirming that the ERP project met their ROI expectations. You could already have a supplier management routine in place. However, ERP accounting software allows you to automate and plan payments, as well as deliver quotes and repeat orders efficiently. With an instant view of invoice audit trails, the audit process is simpler because accountants can retrieve historical invoices and supplier details in seconds.
Your accounting team can find suppliers who might be overcharging or decide whether to diversify the supplier database. Following that, you know where to cut expenses and increase profit margins by identifying the worth of each supplier.
Recommending the 3 best ERP accounting software
1. Odoo Accounting Software
Odoo ERP Accounting Software
Odoo Accounting is integrated within an open-source, cloud-based Odoo ERP system developed especially to make your financial processes run more smoothly. Odoo provides an extensive feature set including accounting automation, AI invoicing, smart bank reconciliation, real-time performance analysis, and a lot more. They aim to help streamline your accounting chores, increase productivity, and provide insightful financial data, regardless of the size of your company.
Odoo is constantly considering what's best for its clients. Odoo 16 and later users in Australia can take advantage of localised capabilities in the Accounting app that smoothly align with the Australian Taxation Office (ATO). This feature helps your business fill the gaps between your Odoo system and Australian legal requirements.
2. MS Dynamics Accounting
MS Dynamics Accounting (source: MS Dynamics)
Microsoft Dynamics is an ERP system that has many product lines, including Dynamics 365 Business Central. It's designed to help small and medium businesses manage all aspects of their operations, from manufacturing and purchasing to finance and delivery. Dynamics 365 Finance and Supply Chain Management is another option. Product demand, inventory, logistics, and manufacturing are all managed within this system.
3. Sage Intacct
Sage Intacct
Sage Intacct offers integrated payroll, HR, analytics, planning, and advanced financial management solutions. Sage markets Intacct as a tool that can digitise bank relationships, employee interactions, supplier partnerships, and business processes.
Before you go
We hope that this article has helped you to distinctively understand the difference between ERP accounting software and a standalone one. If you happen to need consultation on how modern ERP systems match your current business, leave us a note!