SAP B1 blog

An ERP system is modular software. It was developed to integrate a company's business processes into a single centralised system. The financial module exchanges data with other modules. There are almost no areas that are left out. These include warehousing and logistics, production planning, purchasing, sales and even integrated CRM-modules. As soon as a transaction in one of these networked modules has an impact on the finances, it is also accompanied by a transaction in financial management. Some of these transactions are mandatory within an ordinary accountingothers serve to improve transparency and overview.

The finance module - an important ERP module

The finance module is usually the first component to be activated in an ERP system. At ERP implementations In most companies, isolated accounting systems are replaced by the ERP module. The resulting automation of financial accounting helps to ensure accounting accuracy and timely posting. In this way, the increasingly stringent financial regulations and reporting requirements of recent years can be met without additional human resources. In addition, the consolidated financial data provides the basis for measuring and improving company performance.

The financial module is also the component that most distinguishes ERP from other integrated business applications, such as PPS systems or pure enterprise resource planning systems. It is the truly substantial module and often serves as the first building block when introducing or changing ERP software.

The main contents of the finance module

The following areas and contents essentially belong in an integrated finance of an ERP software:

Profit tracking

Determining profits provides a company with a picture of its financial health. The overview of how it utilises its financial resources is the benchmark. With profit tracking or profitability analysis, the company has an overview of where its profits come from. It determines its return on investment (ROI) on the basis of sales transactions and cost data.

ledger

The general ledger is the comprehensive record of all financial transactions of a company. It records, among other things, income and expenses, capital accounts, assets and liabilities. Liabilities.

Accounts Payable

A company uses accounts payable accounting to manage its liabilities to suppliers or creditors. Automating this area minimises errors and helps to optimise cash management. Accounts payable accounting also integrates data exchange with the purchasing system, which can be part of the finance module or a separate purchasing or procurement module. Combined with automatic inbound processing of external documents, a high degree of automation can be achieved. Typical tasks in accounts payable are invoice processing, cash management and bank reconciliation.

accounts receivable

Accounts receivable is the area in which a company manages receivables from customers. It tracks payments and manages cash and invoices. It should be possible to automate the creation of recurring invoices, annual accounts and payment reminders. By automating these processes, a company can generate accurate invoices and speed up debt collection. Optimised cash flow and customer satisfaction are key objectives. Typical tasks in accounts receivable include invoicing, credit approval and reconciliation of invoices with incoming payments.

Fixed asset management

This area is used to track and manage property, plant and equipment. Machines, computers, operating equipment or vehicles fall into this category. With asset management, a company can calculate depreciation, but also take into account legal requirements and tax implications. The overview of the utilisation of its Attachments of a company with all its allocated costs is thus achieved.

Procurement and purchasing

Many ERP financial modules include functions that a company needs for basic purchasing of materials and services. Integration with Accounts Payable usually provides the necessary processing of invoices, ensuring that the supplier's invoice matches the information in Accounts Payable before a payment is made.

Risk management

Risk management identifies events that affect the financial stability of a company. This includes control of credit risks and a healthy cash flow. Possible payment defaults or delays become transparent. Problems related to security, legal obligations, compliance and reputation should thus be avoided.

The reporting system

Integration with all other ERP modules enables comprehensive and comprehensive reports to be created. These can be used for analysis and internal use, but can also cover the legally required financial accounting reports. The insight into the financial data provided by the reporting functions helps the company to make data-based statements about its finances. Business Intelligence (BI) and analysis functions ensure transparency and reliable forecasts. The visualisation in dashboards can also simulate scenarios and create overviews.

Tax administration

Here you can generate and edit information regarding taxes to be paid or possibly reclaimed. These functions provide the basis for tax reports and audits. You can generate the reports that a company needs for its tax return.

The advantages of an integrated finance module

Your business decisions are only as good as your data. If you have several databases or/and systems with overlapping data, there is a high probability that at least one of the systems contains outdated data. However, if all these systems are interconnected, changes in one area are reflected in the others and you can be sure that your data is consistent across systems. This results in further advantages:

• The ERP finance module helps to speed up a company's financial processes and provides audit-proof management of income and expenditure. It enables a company to provide transparent financial information to suppliers, customers, financial partners and authorities.
• Authorised persons in the company receive the information they need to understand their company's financial data.
  Better planning and budgeting is achieved through analysis and reporting functions of the ERP finance module.
• Accounting errors, including data entry errors, are easier to identify and avoid.
• By networking all the information into one Business transaction you can quickly find every detail and save yourself unproductive searching.
• The analysis of receivables and customer accounts to identify payment risks and implementation of measures to promote timely collection ensure an orderly cash flow
• The company can access its financial information in a centralised manner.
• The financial figures can be combined with other data from the ERP system to produce meaningful reports.