What is ERP Finance Module? Benefits, Features, & Examples

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%).

Undoubtedly, an ERP Finance Module can streamline your organizational processes and finances. From reducing admin costs to expediting processes, an ERP does it all.

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 financial module in ERP?

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

What Is the Finance Module in ERP?

An ERP finance module, or core finance, 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 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 

The ERP finance module is the first component activated in a system. It is one primary reason why organizations replace traditional accounting software with ERP.

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

The finance module in the ERP system 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 know the finance module in the ERP system, let us look at its common features.

ERP Finance Module Features

By integrating essential features into an ERP system, any organization can stay on top of changing market conditions.

Being a market leader is much easier when all the key processes are automated, and staff can concentrate on increasing revenue instead of administrative tasks. These are some of the standard ERP finance module features:

1. Profit Tracking

   Most finance ERP modules come with a profit tracker that gives you 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 system finance module keeps a comprehensive record of your company’s financial transactions. It tracks income, capital accounts, expenses, assets, and liabilities.

3. Reporting

   Reporting features in an ERP system finance module provide real-time access to data and enable you to produce audit trails for regulatory requirements.

   You also get visibility into your data and the ability to make data-driven decisions and forecast economic trends.

   Most ERP finance modules come with business intelligence (BI) and analytics features that give you a clear view of your revenue.

   Moreover, some even offer dashboards that 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.

4. Accounts Receivable (AR)

   The accounts receivable function in the finance module of the ERP system lets you automate tasks such as generating recurring invoices, payment reminders, and financial statements.

   As a result, you will be able to accelerate collections, make it easier for customers to pay, and be able to provide excellent customer service.

5. Accounts Payable (AP)

   The AP feature of the ERP system finance module lets you easily process many financial transactions and invoices. AP enables you to establish a great relationship with your vendors.

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

6. Fixed Asset Management

   ERP system 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.

7. 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 buy an ERP for logistics if you have an eCommerce business to fulfill all your supply and raw material needs.

8. 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 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.

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 filing taxes.

10. Client Database

    In a centralized location, you can store your client’s information and gather financial data, balance sheets, and personal information about your clients. Additionally, your staff can access this information any time of day or night, making it readily unrestricted.

11. Forecasting

    Comprehensive algorithms built into ERP financial system modules will save you a great deal of work by providing accurate forecasts based on reports and the current situation in your business.

12. Manage Multi-Currencies

    With global customers, managing multiple currencies is critical. Money conversion abilities authorize you to conduct transactions in diverse currencies. Multi-currency administration automates both the buying and selling of different currencies.

Benefits of ERP Finance Module in Business

By automating back-office processes, any company can improve its performance, and ERP software gives access to any data in real time.

It means that any updates and changes are available immediately. Here are some benefits offered by the finance module in ERP software:

1. Streamlines Finances

   Finance and accounting is an indispensable part of every business. How you handle it can differ, but the objective is the same. Here are some of the things you need to address.

   1. Managing wealth and increasing profit margins
   2. Minimizing expenses
   3. Ensuring safety on investments and fund acquisition
   4. Expanding the firm’s valuation

   From estimating capital requirements to cash management, the finance module in the ERP system lets you unify data and bring it 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 pay vendors. But wait, there is more to it!

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

2. Keeps Track of Payments

   The finance module in the ERP system 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, investment management, and profit tracking with enhanced tracking capabilities.

3. Round The Clock Data Access

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

   But what about data security?

   These modules let you set access controls and manage your data seamlessly. Moreover, multiple reporting options and modules eliminate the need to maintain 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 finance module in the ERP system.

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

   It lets you easily gather data from other departments and generate reports. Besides, it allows you to 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 ERP 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 designed to address inventory requirements, manage production functions, oversee crucial business processes, and ensure the quality of finished products.

Examples of The Finance Module in ERP

Businesses invest in ERP modules based on their business model, industry, current obstacles, and other factors. Still, there are several modules most organizations require to run their business operations.

For a company to function, monitor its finances, and pay its bills, it needs a finance and accounting module. Here are some top-rated systems to streamline your accounting practices:

1. QuickBooks Online

Accounting software for small businesses should be affordable, easy to use, and still have the features they need, so QuickBooks is regarded as the best financial ERP solution for small businesses. With affordable pricing and various packages to suit businesses of different sizes, QuickBooks offers elite features in plans that will serve multiple companies.

Setting up and using the platform is straightforward, so you can get your accounting software up and running independently. However, you can ask Intuit’s professionals for assistance in configuring the software. Hence, it works for your business and creates custom invoices and forms for your company’s branding.

Benefits

• It also lowers errors by adjusting your reminders to enhance your cash flow.
• Maintain version histories and time logs to enhance activity monitoring.
• Establish tailored access levels for expense reports, sales, transactions, and deposits for those who have access to sensitive data.
• Create automated workflows for uploading, editing, and distributing invoices, expenses, checks, and bills.

Features

• It enables easy tracking of income and expenses for the bank, credit card, PayPal, and other transactions.
• Assist with converting estimates into bills, confirming e-signatures, monitoring progress, and revising estimates to meet business needs.
• Numerous financial metrics include profit and loss, expenses, inventory, profitability, and more.
• Keep track of inventory, supervise product prices, assess popular merchandise, craft purchase orders, and keep an eye on vendors. It will help you avoid stockouts.

2. Zoho Books

The Zoho Books software enables small businesses to manage finances and company protocols through a cloud-based financial ERP system. Zoho Books automates accounting tasks that would otherwise be time-consuming.

Zoho Books enables you to automate workflows, including sending recurring invoices and automatically reminding clients when they are past due.

The Zoho Books tool helps create an exceptional customer experience for microbusinesses, and customer service is one of their biggest selling points.

You can use the client portal to manage and view your customers’ transactions, get estimates on projects, get reviews for your business, and interact in real time with them.

Benefits

• Enhance the productivity of your workflow by managing and creating numerous projects, assigning new tasks, and delegating jobs to specific employees.
• Process quotes in real time and gets client confirmations, including prices, product data, and contact information.
• The client portal tool makes it easier for customers to sign estimates, make bulk payments, and converse with each other.
• Make repetitive billing easy by attaching landing fees to statements.

Features

• With the iOS and Android apps, you can send invoices, statements, and other documents to customers and add receipt photos to expenses.
• You can customize sales orders with company logos, fonts, colors, and other options. A simple conversion from estimates to sales orders and invoices is also possible.
• To better collaborate with customers, partners, and stakeholders, track purchase orders, and share vendor prices through emails.
• Match documents with bank feed or previous transactions for commerce proof, including invoices, expenses, bills, purchase orders, or sales orders.

Wrapping Up

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

It would be best to 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, let us help you find one and take financial management to a new level!