With business owners increasingly talking about Enterprise Resource Planning (ERP), it’s high time to take a good look at this solution, its capabilities and what it entails to invest in one, especially from the perspective of a small and medium-sized business (SMB).
ERP manages the assets of a business, both the tangibles and intangibles. It spans across various functions such as finance, human resource, inventory, production and sales. It integrates these processes so everything is organized, allowing optimal use of company resources such as employees, equipment, supplies, etc.
Large organizations use ERP software. It helps bring operational efficiencies within the organization so that capacity is fully utilized, production schedules are met, inventory is just right, delivery dates are achieved and staff work hours are accurate, among others.
At the very core of ERP is the centralization of data across various departments that comes with the integration. This centralized information gives managers and key decision-makers what they need to act fast to satisfy customers’ needs and seize market opportunities.
A unified database also improves the quality of information because it eliminates redundancies. Thus, business units get reliable information in performing their daily tasks. Likewise, it allows greater transparency on business data culled from various units so the company gets a clear view of which department, products or customers are profitable.
As another advantage, ERP gives visibility into the workflows to resolve bottlenecks. Since it streamlines processes, it gives a holistic and accurate view of what’s going on within the organization. Lastly, it allows better collaboration among employees and across business units so they can work more efficiently.
The challenges to ERP adoption
Having established the benefits of ERP, how can a business owner tell if his company needs one? Adopting this technology would mean some adjustments on the part of the business and its employees. It is not always painless and can be met with resistance from the staff since it would mean learning a new system that would add to their workload.
Not to mention that ERP can be complex because it is a comprehensive solution after all. SMBs are not too fond of complex systems because they simply don’t have the time to deal with the birth pains. The day-to-day operations already take much of their time.
Another challenge to SMBs is the cost to roll out enterprise resource planning system, which doesn’t come cheap. This could even be the biggest factor when they decide whether to go for it or not.
In shifting to a new system, SMBs place a high value on easy-to-use software. The solution should be simple enough to deliver what it needs in order to serve its customers and operate effectively. Compared to ERP, the latest accounting systems in the market today can also provide the necessary business tools to keep things running smoothly day in and day out.
Beyond basic accounting
At the minimum, an accounting system lets SMBs easily prepare and send cost quotation, sales invoice, purchase order, payment voucher, official receipt, etc. It handles accounts receivable and payable, timesheet and payroll, general ledger and reports such as balance sheet and profit and loss statement.
Accounting fully automates the company’s transactions and records all bookkeeping and financial data. It is actually the backbone of ERP. While it is just one part of ERP, SMBs looking for simplicity in their processes can already do more with accounting solutions.
Nowadays, there are accounting solutions with good inventory control systems. Aside from being bundled with other related software, they can handle large quantities of data fast so SMBs can also enjoy the planning and implementing capabilities provided by ERP and get the competitive edge.
The latest accounting solutions, which are more affordable compared to ERP, can manage data from several branches and business units. They can even handle multiple currencies.
An accounting software package that includes a comprehensive business information system can give the management the insight it is looking for to make the right business call. For as long as the accounting solution can aid in the decision-making by generating customized reports in real-time, SMBs can experience the advantages of having ERP at a fraction of the cost.
There are accounting software that can give companies a clear view of which business units are generating revenues and who among the customers are slow payers or have outstanding balance. Because the accounting solution itself can already let SMBs see what’s happening in the organization given the financials and customized reports, business owners have a tool they can readily use to help make everyday decisions.
What about your company?
Do you consider ERP or Accounting Software? Remember to comment and tell us about your thought!