Many companies rely on their Enterprise Resource Planning (ERP) solutions for accounting and financial management. While this is a familiar and durable reality, it still tends to throw people off. ERP for finance… really? The technology cannot seem to shake its image as a tool for industrial production management.
Finance is About Operations
There are legitimate reasons for this lingering confusion. For one thing, the accounting modules in traditional ERP suites are sufficiently disconnected from the software’s operational components as to present themselves as completely separate toolsets. Also, accounting and financial management have long been perceived as isolated and apart from business operations. They are not.
Finance is a reflection of business operations. This may sound obvious, but it can get lost in the fog of accounting software interfaces. Consider this situation: A field service technician visits a customer, but discovers upon arrival that he cannot actually perform the required work due to a lack of parts. He uses a mobile ERP app to write an order for the parts, promises to return and then uses the app to book a follow up appointment.
No money changed changes, but this episode is all about finance. The field rep has burned up time, fuel and a deprecating asset (the truck) on a waste of time. It’s the sort of hidden cost that eats away at profitability. It would not appear on traditional financial statements. Now, however, a new generation of cloud ERP, with integrated finance, operations and data analytics capabilities gives the Chief Financial Officer (CFO) the ability to spot such financial problems lurking in the shadows—and a lot more. Learn more about ERP for the CFO.
The New ERP-Finance Connection
Cloud ERP solutions like Acumatica provide all the basic accounting and financial management features the CFO needs to close the books quickly and produce accurate financial statements. They go further, however. They use business intelligence tools to analyze the overall financial health of the organization. They give users reports and dashboards that deliver a real-time view of business performance and future trends.
This capability includes the ability to set up and monitor key performance indicators (KPIs). In the field service example, the CFO could establish a KPI for “Field service revenue per mile driven.” This metric would reveal a negative change in the productivity of field service technicians. If they are going to more useless appointments, that will show up in the KPI. The CFO’s team can then investigate and offer recommendations to remediate the problem, such as improving parts reordering processes to avoid out-of-stock situations.
ERP and the CFO’s Evolving Role
The new accounting and financial management features available in cloud ERP align well with the CFO’s changing role in the organization. He or she is expected to be completely on top of financial reporting, tax, compliance and the like. The CFO job, however, has grown beyond this basic function.
The CFO is part of the senior leadership team. As such, he or she should be able to offer data-driven guidance on business operating decisions and strategic thinking. Being successful in this means having a lot of accurate information about the financial condition of the company, going well beyond the basic financial reports. It involves having data on KPIs and operating issues that affect finance now and in the future. Modern cloud ERPs give the CFO these abilities.
Learn more in Requirements to Becoming a Modern CFO.
We have worked with many CFOs on the implementation of cloud ERP solutions that bring accounting and financial management into the modern. If you want to learn more about how this could benefit your business, contact us for a product demo and free consultation.