Your Guide to Software Selection

7 Critical Functions of ERP Financial Management Software Modules

Financial management software does a lot for businesses. Many of these platforms function as an overall, comprehensive set of resources for figuring out enterprise finances on both a short-term and long-term basis. But there are also specific key things that businesses want out of these software tools.

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Profit Tracking

One of the most fundamental uses of financial management software in business is for profit tracking and cost analysis.

On a general level, the financial management software will help provide a birds-eye view of how the business is using its financial resources, and of its overall financial health.

In terms of profit tracking, financial management software can help determine the return on investment for any buy, while also assessing where the majority of profits are coming from.

On the other side of the coin, financial management software can also help companies to track costs. This can involve evaluating individual cost centers, looking at procurement from the top, or otherwise evaluating how the business is spending money.

The end result with these types of tools is to make changes that will increase profits for a business. Think of financial management software as providing a road map for business leaders who need to understand their best moves in their current business environments.

Invoice Tracking

Here is another core feature of financial management software.

Most businesses of any significant size have a lot of receivables lying around. Many of these are in the form of invoices. Collecting on invoices is not a one-size-fits-all solution. Some companies even use third parties to manage invoices, for example, selling receivables to an invoice buyer.

Handing over receivables work to another firm costs money. Financial management software can help streamline the whole process of managing receivables, to help companies keep on top of responsibilities without outsourcing a lot of receivables handling.

Keeping Tabs on Investment

Investment strategies can take a significant amount of work.

Financial management software packages that can help automate or streamline investment decision-making can be a real boon to a business.

This Investopedia definition of ERP helps to describe how financial management ERP can work with a business architecture to support smart planning, in investment and elsewhere. As the “glue” or connective tissue in an enterprise system, ERP platforms can shunt the right types of data to where they are needed, for instance, in specific financial management modules, to make sure that investments and other business decisions are based on an informed view.

Budgeting

Most good business leaders understand that budgeting is a major part of business, at least until the point that the business becomes fully established and starts generating predictable revenues. In reality, however, budgeting is always a priority.

Financial management software can show businesses how they’re doing in terms of spending. For example, aspects of these software packages can assess marketing and advertising campaigns. They can assess business processes and supply chain utilization. In the end, a well-built financial management package can make the difference between financial waste and struggle, and a leaner, more efficient business model that leaves the company with more revenue to reinvest.

Audits

Most businesses need to have an outside audit on a regular basis. Financial management packages can help the business prepare for the audit. Preparation and attention to detail will help the company “ace” the audit, while also enhancing business intelligence.

Financial management software can also provide for things like e-discovery. When there is a legal question, or some kind of outside investigation into businesses finances, having these types of ERP software systems can make it easier for the business to be transparent and respond, showing the relevant details, and resolving the issues that come up.

Cash, Liquidity and Debt

Businesses also need to know what money is in which of the enterprise “pots” at any given time.

There is the responsibility of debt management, where it’s incumbent on business leaders to look at interest payments and other aspects of bonds or loans, and then there is the handling of liquid cash. Just like a personal investor, businesses have to run the balance between too much liquidity, where cash loses potential for capital gains, and over-borrowing that can restrict the company’s ability to survive and thrive.

Risk Management

In the end, so much of a business is about risk.

Business leaders want to know that they are on firm and solid ground, no matter what they’re doing, no matter what their products and services are.

Financial management software can help with risk analysis. Again, it gives leaders a clearer picture of what’s happening. Rather than “just guessing” about finances, they can use transparent intelligence to drive informed decisions.

Look for financial management tools that offer all of this functionality for business.

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