Summary: The finance module of ERP system helps in saving time by consolidating financial data from different business processes for analysis and reporting. Learn more about the other useful functions of the ERP finance module in the article below!
Generating financial reports individually is time consuming and can also lead to inaccurate data entries and delay the generation of annual financial statements. However, with the Finance Module of the ERP system, businesses can generate financial statements by consolidating data automatically from different businesses processes.
Further, it also reflects any change in the data in real time for complete financial accuracy. By viewing all the financial data at one place, organizations can easily get insights on its financial health and take data-driven decisions to improve it.
There is a lot more that you can do with the ERP finance module as elaborated in the article below.
Table of Contents
What is ERP Finance Module?
ERP Finance Module helps businesses to gather financial data from different business procedures and generate reports for analysis. This module fetches all the financial information like balance sheet record, ledgers, profit and loss statements, and a lot more.
By integrating financial data from other modules like inventory management, CRM, production planning, etc., businesses can generate reports to analyze financial health. Whenever any financial data is recorded in these modules, the information is automatically transferred to the finance module for analysis.
Importance of ERP Finance Module
The finance module of the ERP would help in recording the finances from various business systems like inventory and asset management to maintain financial accuracy. Maintaining this accuracy is important to stay compliant with the financial regulations and reporting requirements.
Further, it represents all the consolidated financial data at one place, thus making it easier to analyze the business financial health and implement ways to improve profitability.
Features of ERP Finance Module
The ERP Finance Module can help in simplifying the key accounting and financial procedures. Some of the common tasks you can find in the ERP Finance Module includes –
- Profit Tracking
The ERP Finance Module helps in profit tracking and provides a comprehensive view of your financial health and your company’s financial resources. The tracking will help in finding the most profitable source of income and calculating the ROI on all the assets. It uses costs incurred and receivables to calculate profit for the organization.
Further, ERP solutions with finance module forecasts the profit through analyzing the historical data. The profit tracker would also track the costs to understand per resource spending.
- Ledger Management
The general ledger records all the financial transactions including income, expenses, assets, and liabilities for the current financial year. Through all the information at one place, the ledger simplifies the task of creating different financial statements like balance sheet or profit and loss account.
Further, all the data entries for any transaction are automatically recorded in the ledger through integration with accounting, inventory, CRM, and other modules of ERP software. Most ERP systems can also automatically identify and notify any miscalculations or double entry to users.
- Accounts Receivable Management
With the account receivable, you can track and manage all the payments from your customers. It automatically generates bills and invoices and sends them to your customers. Many ERP systems also let you create a separate portal to enable customers to make payments and download invoices.
Further, with the accounts receivables, you can also automate tasks like sending payment reminders or generating recurring invoices. The information related to account receivables can help with better management of the cash flow.
- Accounts Payable Management
Accounts Payable involves all the payments an organization owes to external parties or customers. By automating accounts payable, users can easily save time and labor costs. The accounts payable can also help in processing bulk invoices and sharing them with customers.
Moreover, some ERP solutions also come with the data-capturing capability to easily convert paper invoices into digital forms. In short, this feature will let users know how much money they owe to their clients or customers.
- Fixed Asset Management
The Finance Module in ERP lets you keep track of all your fixed assets. The list of fixed assets includes equipment, vehicles, computer resources, furniture, fixtures, etc. With this module, you can manage depreciation calculations, tax implications, and compliance requirements.
Further, it provides real-time visibility into all the fixed or tangible assets in terms of their maintenance costs, depreciation costs, and utilization. Keeping a tab on your fixed assets would also help in preventing the tax payment for all the assets that are no longer needed or have been removed.
- Risk Management
With risk management, users can identify business risks and implement effective strategies to minimize their impact on the business. There are different types of business risks like strategic, compliance, operational, or reputational risks. For example, analyzing the credit risk would ensure that the company has enough cash in hand for managing accounts payable in case of a customer missing payments.
There are several ways to manage risks such as eliminating the root cause of that risk or reducing the associated financial value with the risk to mitigate it.
By not paying attention to these risks, an organization might face repercussions like financial losses or even business closure in the worst scenario.
Suggested Read: What Is ERP (Enterprise Resource Planning) & Why Do You Need It?
- Tax Management
Businesses can store tax-related data from different financial documents in a centralized database. The data stored in the tax management section can be used at the time of return filing. Further, it comes with pre-built tax intelligence to easily calculate sales tax for different jurisdictions compliant with the regulations. You can also generate different reports for task planning.
- Multi-Currency Management
Multi-currency transactions management is important especially when you have a global customer base. An ERP finance module helps with currency conversion to easily make and accept payments in different currencies. Thus, businesses streamline their payment procedure for global customers.
- Client Database
The client’s database would enable you to store all the data related to your customers in a centralized platform. This information may include personal details, purchase history, payment history, etc. It would make it easier to understand your clients better and access their data anytime.
- Financial Analytics
Through financial analytics, users can gain a complete visibility into their financial data and generate reports for sales, expenses, assets, liabilities, etc. These reports can help in making data driven business decisions to boost efficiency and improve profitability.
Further, you can also view all the data through different graphs and charts to understand your business processes better.
Benefits of Finance Module in ERP
Finance Module in ERP helps organizations to accelerate the key accounting and financial procedures. Further, it also lets users share relevant financial information with the outside vendors and customers. Some of the benefits of finance module of ERP are-
- Better Budgeting: You can create a better budget with real-time forecasting and reporting.
- Invoices Tracking: It lets users organize and track all the invoices and documents in real time.
- Meeting Compliance: It helps you stay compliant with multiple accounting standards including GAAP.
- Better Reporting: You can store data from different software to quickly generate financial reports.
- Data Rectification: With it, you can easily detect and rectify multiple financial errors like missed entries.
- Task Automation: By automating financial tasks, users can save their valuable time and improve productivity.
- Assets Visibility: You can get real-time visibility into both tangible and intangible assets.
- Improved Auditing: It accelerates the auditing procedure by automatically generating and presenting multiple financial statements.
Use Cases in Finance Module of ERP
Here are some of the user cases where the finance module of the ERP system can be used-
- Cashflow Management: A manufacturing company can track and record all the receivables received from their vendors in a specific period. Using this information, they can find the expected cash flow in the next financial year.
- Asset Management: A medical facility can keep track of all the equipment and machinery present in the facility via ERP finance module. The tracking can help in finding depreciating equipment, calculating their maintenance or depreciation cost.
- Multi-Currency Payment: An e-commerce business can leverage ERP’s finance module to accept and make payments in multiple currencies to global customers. It can also use a currency converter to calculate tax in different currencies.
- Meeting Compliance: A banking facility can maintain both external and internal compliance specific to their industry with ERP finance module. Further, the facility will also be notified in case of any gaps in maintaining compliance.
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Finance module is a key element of the ERP system. It has made it easier for businesses to combine data from multiple departments and automatically create financial statements. Any organization that wants to track its assets in real-time, predict profitability, or manage business risks, can explore the finance module of the ERP.
- What is finance ERP?
The finance module of the ERP system helps users in consolidating data from different business processes for reporting and analysis. Through it, users can generate different financial statements like balance sheets, ledgers, profit and loss sheets, etc. Further, you can also manage all the financial transactions and generate multiple invoices with the finance module of any ERP solution.
- What is ERP finance module?
The ERP finance module, also known as ERP core finance, helps with profitability analysis and revenue management. It analyzes the data related to account payables, receivables, balance sheet, fixed assets modules, and so on. By analyzing these details, you can easily understand the current financial status of your organization.
- Which ERP module includes investment management?
Investment management is included in the asset management module of ERP. Under this module, you can track and manage all types of investments and analyze their effect on the overall profitability of the business.
- How will the ERP finance module help improve auditing?
With the ERP finance module, you can easily keep track of all assets and eliminate any hidden costs. Therefore, it will help you to save money and enhance efficiency. The complete visibility into the assets can help you avoid unnecessary capital investments and maintenance costs.