How Does ERP Help Accounting?

  • 1 June 2016
  • CTND
Categories: ERP


An effective Enterprise Resource Planning (ERP) system can positively affect just about every aspect of a business. This includes (and is especially true) when it comes to accounting and managing the financial health of your operations. With tax management, bank reconciliation, capital management, purchase management, account receivables and more, an ERP system goes to great lengths to support an organization’s management of their bottom line. An ERP can help you analyze your costs and associate them with the various aspects of your business.

Real-Time Review and Prediction

With a real-time finger on the pulse of company financials, it’s easy to manage every aspect of the accounting process. This includes being able to review individual aspects of the business at a moment’s notice, such as:

  • Costs by unit, quantity, hours, size, and more
  • Categories, forecasts, budgets, and projects
  • Forward-facing predictions and rear-facing impact reviews
  • Cost flow analyses and historical cost variance reviews

Managing costs through a detailed review is another important benefit of ERP software. By offering the ability to scale production, accounts payable, accounts receivable, and inventory to exact specifications, costs can be more carefully balanced over time, and configurations can be tweaked to meet an ideal financial environment.

Variance Management

ERPs can also assist accounting by helping set standards. By taking the cost of manufacturing and any related expenses and providing a clear baseline, expenses for any project can be more easily reviewed and adjusted to meet expectations. With the ability to quickly identify and address cost variances in comparison to the allotted budget, a business can quickly assess exactly why the variance is happening and remediate it before it begins to cut into profits. If the costs are cheaper than expected, then new standards can be set and favorable conditions can be preserved.

ERPs offer the ability to review costs over a period of time or according to a specific classification. This allows for multiple cost balances to be referenced and cost tables to be created to help analyze cost allocations and make better-informed decisions.

An added benefit of more customizable and comprehensive sorting, classifying, and grouping costs allows a business to produce more valuable financial reports, offer key stakeholders a more transparent financial view, and in turn create more profitable financial plans.


Being able to predict and speculate accurately is vital to creating a successful financial plan. By using historical reports and current cost analyses, businesses with an effective ERP system can create financial models and compare alternate budgets and costs to find the most amicable balance between them. Creating best estimates to provide stakeholders with more accurate profit predictions increases a business’s ability to accurately report profitability. By being able to report profitability information all the way down to the customer and product level, stakeholders can make informed decisions that positively affect every facet of the business.

ERP software can help an accounting department process, record, and manage accounts payable, accounts receivable, and payroll, and then process that information into meaningful information. With the ability to classify, categorize, review, and predict, the accounting department can provide financial reports and predictions that are easily digested by stakeholders and can be leveraged to make changes and revisions that can provide the business with a more profitable future financial plan.

With the right ERP system under its belt, a business can streamline and automate manual accounting practices. Comprehensive automation and customization capabilities can help accounting departments provide real-time data to key individuals throughout the business, keep a close eye on cost comparisons, produce intricate financial data, and review historical financial performance to help plan for future financial success.

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