Enterprise Resource Planning: Financials
ERP Solutions Consultant at OSIR-ERPIS
ERP Financial Management
ERP Financial management is one of the modules in the software, that handles accounting, financial functions, and financial reporting in Enterprise Resource Planning (ERP). It contains all the records related to accounting such as general ledger, accounts receivables, accounts payable, assets, etc; financial records such as transactions, expenses, and revenue; and financial reports such as Balance sheets, Income statements, and Cashflow Statements.
Purpose of Financial Management
The purpose of ERP financial management is to connect all organization’s business processes into a single system with a common database. All the data that is entered into financial management is shared with other business functions inclusive of production, inventory, customer relationship management (CRM), sales, etc. In other words, when a transaction in one of the business functions has a financial impact, it automatically enters the changes in ERP financial management database. As a result, instead of having a database in each business department separately, a company has a single database that is shared across all departments. It enables the company to have a single source of truth and eliminates any misunderstandings between the departments.
Example: Oracle ERP Financial module
For example, the Oracle ERP Financial module has 7 main features: General Ledger (GL), Accounts Receivable (ACR), Accounts Payable (ACP), Fixed Assets (FA), Purchasing, Tax Management, and Reporting. Subledger Accounting (SLA) is an accounting engine that centralizes all sub-ledgers (ACR, ACP, Inventory) and enables GL to debit or credit the accounts. General Ledger is a system that keeps all company’s financial data in a data warehouse and holds accounting information, that is used to generate financial statements. Oracle software enables companies to customize the components of SLA. Some of the components are:
- Mapping Sets, which define segment or account combination value for one or more transactions.
- Account Rules, which determine from where the accounting flexfield value is taken.
- Journal Line Rules, determine whether a sub-ledger journal line will be a debit or credit line.
- Accounting Method refers to the rules in the way of reporting revenue and expenses.
Also, Oracle BI Analytics enables managers to track the financial indicators and forecast more Return on Investment (ROI) accurately. Other main benefits of ERP Financials Oracle and ERP financials in general are:
- Financial transparency. Analytic dashboards allow users to track financial records online. Which makes the company’s managers stay up to date.
- Reduce human errors, which is the important purpose of ERP Financials. ERP Financials automizes business processes and reduces the number of manual entries and interventions.
- Centralization. All the financial data and accounting records are in one place and shared across all departments.
- Eliminates overdue payments. AP has a notification function to remind you to pay on time unpaid invoices.
- Finally, ERP Financials improves productivity. Since the processes are automated and the need for manual interactions is reduced to a minimum, financial processes become more productive.
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