Company management has no way to know if operations are profitable apart from parsing profit and loss statements.
In many companies, those statements come out of an accounting department black box, and management has little recourse to understand how the data input that feeds the black box relates to the statements that come out of it.
Integrating a company’s accounting software into its enterprise resource process (ERP) systems will shed light on mysterious accounting processes and provide management with a basis for understanding the elements that generate a company’s profits.
Consider, for example, how a manufacturer might benefit from integrating accounting software into its greater enterprise management systems.
Traditional ERP software will aggregate customer order and purchase data with manufacturing, scheduling, and order delivery and installation.
When accounting functions are integrated directly into this cycle, a manufacturer can close out its accounting processes within days of the end of an accounting period without having to wait for all input data to be transferred for processing and analysis into an accounting department.
Integrating the data feed in this manner also reduces data entry errors and any sense that a company’s accounting department is isolated from its operations.
Further, integrating accounting software into an ERP system facilitates information feedback to production managers, who can use real-time financial data to improve warehousing, shipping, and distribution to assure that the manufacturer’s products are available in the right quantities on store shelves.
A company that wants to integrate accounting software into an enterprise management system can generally follow one of two paths.
1. First, it can connect an existing legacy accounting package into a separate ERP system.
2. Alternately, it can install a comprehensive ERP system that includes a dedicated accounting software module.
In either case, the company should will have new tools and mechanisms that give it upgraded business intelligence along with a substantial competitive advantage over competitors that have not taken this next step.
When used correctly, that intelligence should allow the company to reduce costs, eliminate production inefficiencies, and improve productivity and customer satisfaction, all of which leads to improved profitability.
A company that integrates its accounting function with its ERP system will realize the maximum benefits of that integration if it devotes the necessary time and resources to understand the power of that integration.