Investment in an ERP system can seem like a financial black hole if you’re the person responsible for the financial performance of the business. Time, money and resource can get tied up in the implementation process, and it may leave you wondering if the project will ever end, and start delivering the results you envisioned at the start. But, we’re here to tell you that with the proper planning and measures in place, the right ERP system for finance directors can lead to transformation of your business and capabilities.
The benefits that a successful ERP implementation can bring to the financial operations of a business are almost too extensive to put in a short blog post, but here are some of the key ones.
When evaluating ERP for finance directors, one of your key concerns is monitoring and reporting on the financial performance of the business, enabling yourself and the rest of the management team to identify problem areas and make key decisions to facilitate growth. With the right ERP system, you have all the tools on-hand to help you achieve close to real-time (if not real-time) reporting which pulls all the relevant management information from all areas of the business, as well as different locations (we’ll get to that later).
Not only do the improved reporting capabilities help you make quick decisions internally, they also help you offer more in-depth, accurate and up-to-date figures to key stakeholders. Access to ratios likes EBITDA (Earnings before interest, tax, depreciation and amortisation) – which you won’t necessarily find out of the box in other accountancy and finance packages – helps give you, shareholders and potential investors a clearer picture of the value contained in the business. This type of information is imperative if your business is going to adequately measure progress against your corporate finance objectives.
Being able to accurately budget for and forecast financial performance and spending for the coming year or years is a finance director’s holy grail. Having the data at your fingertips to be able to look in granular detail at past trends, opportunities to consolidate future spending and predictive analytics can you help achieve more detailed forecasting. As finance director, this not only helps you and the management team make more informed decisions, it also helps you manage risk. After all, when it comes to budgeting and forecasting, it’s your neck on the line.
As a growing business, a successful ERP system can help you achieve true scalability. With all your data in a central place, you can manage and monitor multiple locations across the globe easily from one central hub, and connect you to global supply chains. With ERP systems continually evolving to offer more capabilities in the cloud, this brings an additional opportunity to be able to access key and consistent data from anywhere.
And it’s not just about connectivity. An ERP system can help you better monitor and report on performance in different currencies, as well as manage your tax obligations in different geographies. This type of capability is invaluable when you’re expanding your business into different economics.
A risk of trying to succeed in the global marketplace is coming across some shady characters who exist to scam you out of your business’ hard-earned cash. Without the proper processes that adequately span your mutiple global operations, it can be easy for fraudulent suppliers to slip through the cracks and make away with significant chunks of money. Having the correct processes in place that can be enforced and maintained by a centralised system will help to reduce the risk of fraud in your business. You’ll be able to centrally manage the process of setting up new suppliers, handling credit terms and processing invoices, meaning that even with multiple finance teams across the globe, you can deal with any red flags quickly.
With all of your performance and financial data in one place, you have an instantly accessible audit trail for all of your activity. Not only does help you as the finance director and your team make sure that the processes are being followed and everything ties up as expected, it also helps you with external auditing, making the process quicker and less painful than trying to collate information from different systems. This is absolutely essential to meet requirements such as PCI DSS, Sarbanes-Oxley and the impending General Data Protection Legislation (GDPR).
More efficiency in your own team
Another benefit when considering ERP for finance directors is the impact it can have on your own little corner of the business: the finance team. An ERP system can help you more effectively manage things like debtor and creditor days, massively reducing time spent on data entry and improve the efficiency of payroll. You also have the opportunity to leverage e-invoicing and electronic document interchange, which is key to achieving global supply chain efficiencies in today’s internet-enabled era. This all helps you and your team improve the financial health of the business, having a knock-on effect on profitability, cash flow and customer satisfaction. And it makes you look good, which is a bonus.
How can you ensure success?
You’ll notice that many of the benefits mentioned above inexplicably had an element of process to them. An ERP implementation lives and dies by the business process that backs it up. Carefully mapping your business process to your ERP requirements and building the project out from there will ensure that you achieve what you set out to when you decided to invest. As a finance director, you will no doubt be leading the charge for a new ERP system and improving business processes. Being able to sell the rest the business on the benefits and efficiencies that the new implementation will bring, will be easy once you can point to the robust structure that will back everything up.