Financial ERP is a fundamental tool to manage and control the expenses of a successful company. And this is not just our statement, but a proven fact. According to a SelectHub case study, 88% of organizations believe that ERP implementation was critical to their success. This is directly related to the ease that financial ERP brings to business management. You know, it’s no mystery: managing the finance department is a real challenge. It is a sector dedicated to planning the best use of the organization’s resources, controlling income, expenses and all the factors that influence these figures. And Financial ERP allows you to automate these and other tasks, increasing operational efficiency and contributing to business success. TOTVS is a specialist in the subject, developer of the main ERP in Brazil and a reference in technology. Therefore, we have prepared a complete guide for you to learn everything about the system and how it can be beneficial for your company!
What is a financial ERP?
Financial ERP is a management system that helps you manage your company’s resources. The tool takes care of all account-related entries, allowing you to understand how finances are converted into cash and how they are used. It is an efficient way to identify bottlenecks, overspending, and opportunities to maximize your profits. Financial ERP deepens your understanding of how total cash flow works in the company, so all expenses will be reflected in your interface. The good news is that it can be used by any business, from a small to a large company.
The direct effect of this level of evaluation is that managers will be able to make important financial and budgetary decisions quickly and assertively. It is an action that directly contributes to you and all managers truly understanding the financial situation of the company. This is an essential level of knowledge for the organization to measure its actions, such as the need for investments or cost reductions, in search of a sustainable and profitable operation. How and when did the first ERPs appear? ERP systems have a more distant origin than you think. Its most archaic structure, which serves as a computer system that automates inventories, emerged in the 1960s. It was really old-fashioned software, customized to the extreme, developed within the companies themselves. They were basically attempts, which did not even see the light of day, since innovations like these just if commoditized. The next step in evolution came with MRP (Manufacturing Resource Planning) software, an innovation born from a collaboration between IBM and J.I. Case, a manufacturer of tractors and other heavy construction machinery in the 1970s. It was not until the 1990s that ERP software became established. At that time, what happened was the total integration of the business into a single database, seeking a greater capacity to adapt to market demands. Its main difference with MRP is that it integrates departments that, until then, were considered essential, such as Marketing, Finance and HR. Thus, from the new millennium and with the technological boom that marked this turn, ERPs gained strength, with the incorporation of applications and integrations that allowed ERP to become the multifaceted tool that it is today. No wonder, ERP is suitable for any type of business. And with each new update or innovation, the software served to increase its predictive power. Therefore, the more data sources a management system has at its disposal, through CRM or even MRP, the better the company can respond to changes in demand or new trends in its industry.
What is a financial ERP for?
The Financial ERP serves to help in the management of the company, integrating all the data related to Finance and other operations that directly influence the back office of your company. This organizational potential allows greater decision-making power for a company.
It should be noted that the ERP itself is made up of several modules, including Finance, one of the most important without a doubt.
The complete tool, which allows the management of employees and supplies, as well as the control of all tax and accounting parts.
Therefore, a financial ERP is never just a financial sector management tool.
In fact, it is an integrated management platform that centralizes all business data. That is, it unites each sector of the business through technology.
Thus, the entire operation of the company is recorded in a database. Every decision made, every result, every consequence.
At the end of the day, it is data that can directly help managers manage their sectors and carry them out according to objectives.
What companies can use a financial ERP?
Due to the degree of technology involved in a Financial ERP, it is common for entrepreneurs to think that it is an exclusive tool for big players.
But that’s not true at all.
An ERP can fit like a glove in the robust structure of a large organization, which has multiple sectors and multiple processes or even for better alignment and automation of processes in a smaller company.
It is a solution that helps the company provide a channel for information to flow.
In other words, much more than operational potential, ERP becomes a comprehensive monitoring tool and an inexhaustible source of valuable information.
However, don’t think that small and medium-sized businesses can’t enjoy these benefits.
One of the main advantages of using Financial ERP in small and medium-sized businesses is that the entrepreneur centralizes several operations in a single system.
This avoids unnecessary spending on multiple platforms from different providers.
Among other challenges that these companies face, we can list:
- Incorrect and redundant data;
- Individualized systems that do not communicate with each other;
- Limited systems that cannot map business processes;
- Inability to access platforms and data when out of the office.
In other words, it is difficult for a small or medium-sized business to grow if its systems are not capable of communicating, understanding business dynamics, and transforming this processing into insights for the entrepreneur.
It’s something that can hinder not only daily operations, but also business growth.
With a financial ERP, this difficulty no longer exists.
After all, the entire platform integrates sectors to eliminate these operational barriers.
Another factor is this: ERP automates a series of tasks that are merely repetitive and of little value, but still necessary.
This means a lot, whether for a large corporation or small businesses, freeing up these activities from the manager, allowing for greater focus on the business.
What are the main characteristics of a financial ERP?
When analyzing an ERP, especially in relation to its financial control module, it is important to be aware of the features it offers.
You will notice several functions focused on collecting, storing and processing information.
In addition, Financial ERP also automates a series of tasks in order to facilitate business management.
Check out some of the main features:
Cash flow organization
Financial management is a complex task that involves planning, organizing and determining the best use of funds for a company.
Basically, this involves organizing cash flow.
Financial ERP allows managers to use financial data to make decisions about capital projects, financing sources, investments, and other cash management activities.
Report generation:
Because the information is integrated into the same database, reporting takes less time, with more information relevant to the business.
Its potential for integrating sectors is what allows such a deep reading of the company’s conditions, allowing the issuance of personalized reports that allow it to be evaluated from a micro or macro perspective.
Account control, payments and reception:
It’s easy to get lost in accounts payable and receivable when you have a busy day, especially for small business owners.
But big players are not exempt from this, as the list of financial obligations can be very long.
Financial ERP helps balance this entire process.
It allows you to track, store and analyze financial data such as accounts payable, accounts receivable, budgets and forecasts.
Thus, in addition to automating some processes, such as collection, it also automatically records the payment of debts.
This speeds up a particularly important and often time-consuming task: the month-end close.
With a financial ERP, your company closes accounts in less time, allowing for less rush in the last days of the month.
Client and supplier registration
One of the great differentials of ERP is its extensive cataloging of clients and suppliers.
It is a way to approve the business partners with whom you maintain contact, also centralizing your management of documents, certificates, contracts and other contacts.
If your ERP is complete, with integration to a CRM, it is still possible to add relationship data with these parties.
This way, you will have highly qualified data to analyze the current business or work on new proposals.
The importance of ERP for the financial management of a company
The ERP will work in conjunction with other modules to track the company’s cash flow, from purchasing new supplies to paying employees and issuing invoices to customers.
In other words, the financial ERP will allow an overview of the company’s financial management, allowing leaders to more accurately evaluate each step to be taken.
The software can even help you budget your business, make financial forecasts, and provide information on where costs can be reduced.
95% of companies saw significant improvements after implementing ERP, streamlining processes, increasing collaboration and centralizing corporate data.
This according to data from Datix Inc.
At this point, you may be wondering:
“Okay, but can such an investment in technology bring a good financial return to the business?”
It was the same question that a study by a consulting firm, called Ultra, posed to companies that were implementing an ERP.
Of those organizations, 85% had already projected a deadline to have the ROI.
What the consulting firm saw was that, for 82% of this group, the ROI was achieved in the expected time.
Financial ERP: 7 reasons to invest in a system
After all, why are so many companies suddenly looking for ERP?
Well, the reasons speak for themselves. That’s why 81% of organizations are implementing or have already implemented it, according to a survey by Panorama Consulting Group.
And this number is expressive for several reasons, but let’s highlight one:
Never before have so many companies invested time and money in the implementation of a technology, Financial ERP, if the systems did not provide advantages to their business.
Here, it is also worth noting: most of these benefits are related to one core problem, which is integration.
Data is the most important asset for businesses today, and a successful operation must have the ability to capture it, the space to store it, and the technology to process it.
There are three pillars of ERP performance, regardless of its module.
In the case of Financial ERP, you can collect information from a multitude of sources, from workshop management, stocks, logistics processes, billing, HR, etc.
In this way, it is possible to base all business accounting on the data integrated by the ERP.
But what justifies opening the doors to technology like this? We explain:
Data and information security
Financial ERP is a technology that understands the importance of data flowing between your company’s computers and cloud servers.
After all, when dealing with such sensitive business data, security is a paramount issue. Without that, there is no way to achieve any success.
ERP protects your company’s information through high technology, such as encryption.
In this way, only those with authorization are allowed access.
Therefore, the company can define permission levels, limiting the viewing, sharing and editing of data, documents and other files.
Standardization of activities
By centralizing processes, their execution can be standardized and even bring sectors together, making communication more transparent.
So, for example, sales has the same information that shipping, customer service, and finance use.
That is, if finance decides to freeze a customer’s account, or if customer service changes the record and changes a customer’s address, other departments can see this immediately.
These are small details that make a difference in everyday life, avoiding the need for urgent phone calls or emails.
Decision making assistance
In the modern world, decision-making ability is intrinsically linked to how well your company uses data.
The power of analytics allows employees to collect a wide variety of information and turn it into actionable insights. We talk about things like:
- Cost reduction;
- Fraud detection;
- Identification of new business opportunities
- Better ways to optimize current operations;
- Ways to promote better customer service.
An ERP can help leaders make well-informed decisions based on meaningful data.
The platform allows the manager to analyze practically any business process, with access to assertive reports, presented in different formats.
Cost reduction
Process optimization that translates into operational improvement and, of course, cost reduction.
This is a common journey in today’s business world. It is an absolute objective, inherent in almost all cycles of a company that seeks to grow.
And it is precisely at this point where a Financial ERP can help.
It was something Hubspot discovered when asking about the ROI of ERP implementation for some organizations.
For 40% of them, the main benefit of the tool was reducing IT costs. The second, for 38% of these companies, was the reduction of inventory levels.
Furthermore, 35% of them also targeted a reduction in cycle time.
Look: These are three essentially expensive areas that, for most of these companies, showed a significant reduction in direct or indirect costs.
Process optimization
ERP offers the ability to automate a company’s repetitive tasks, something that no entrepreneur can avoid, but that can be solved.
These include: payroll, order processing, invoicing, reporting and more.
Automation minimizes time spent on manual data entry, reduces errors, and allows employees to focus on higher value-added tasks.
In addition, the Financial ERP also makes all the data entered available to users throughout the organization (taking into account their access levels).
So, for example, the Inventory Control module can automatically trigger a shipment and invoice when a unit is available.
These are small tasks that ultimately translate into more revenue and a better customer experience.
Deadline control
What else identifies a financial sector but its obligation to meet deadlines?
After all, that’s what everyone says: time is money.
With a Financial ERP, the sector team can carry out regular control of deadlines, ensuring that accounts payable are made and that receipts actually come into cash according to their due date.
It is a feature that improves the financial health of the company, allowing it to operate in the blue and can count on assertive cash predictability.
More organization
ERP allows companies to track, identify and understand business metrics, a powerful resource.
The tool facilitates enterprise-wide access to near real-time data, avoiding the formation of information silos and providing reporting and analysis for all aspects of business operations.
Data centralization enhances these processes, strengthening sector compliance and promoting the organization of information.
5 tips on how to choose a financial ERP for your business
In fact, Financial ERP can transform your business in several ways.
The efficiency of the process is just the beginning, because with technology, its development has no limits.
But it just takes a little internet research to see how many developers are available.
So what should count in your decision to choose an ERP? We show you some factors that can be considered!
Know your needs
Before making a decision, you should look within your organization.
What are your business needs, priorities, improvement opportunities and strengths?
And how can technology contribute to better deliveries overall?
What we mean is that you must perform a business assessment, understanding the processes that need to be automated.
Mapping of industry processes
ERP implementation depends on a number of factors, in particular the maturity of the company’s processes.
Are you sure your structure can handle such a level of technology?
But don’t worry, this is a task that can be done together with the developer.
The ideal is to map the processes, to understand which ones need reformulation, which ones are priorities, which are the best practices to adopt in the company, among other things.
Supplier search
A fundamental step that requires patience: finding the right supplier.
Opt for reputable companies, whose solution is comprehensive, although customizable to the needs, size and time of your business.
Additionally, look for alternatives with truly functional functionality that suit your operation.
Specific issues, such as transparency regarding updates (which should be regular) and quality technical support, should count as points in your choice.
Consider the financial investment
There are several ERP options on the market, for all budgets and structures.
100% cloud-based solutions tend to be cheaper, more flexible, and scalable.
This means you can adopt it when your operation is still very small and use it to the point where it becomes a real business.
That is, from the beginning, you can save resources on implementation, paying only a fixed monthly fee that covers all use of the tool.
Prioritize systems that are easy to implement
Today, no entrepreneur has time to lead or follow the process of implementing a solution.
What is expected is speed and practicality, something that Financial ERP in the cloud offers.
Simply contact the provider, sign a plan, and voila – you and your entire team have access to the tool.
Installation is very easy and fast, since all processing is done in the cloud.
So, just download the interface and functionalities, perform a quick data integration to start operating the 1st.
TOTVS backoffice system
Organizing your company’s financial routine has become easier by investing in technology. With TOTVS Backoffice you can take full control of your finances and with the possibility of automating financial and administrative tasks, with integrated data updated in real time.
TOTVS Backoffice is a complete and customized solution to serve companies of different sizes for efficient and organized management.
The system is available to run both on your own servers and in the cloud. TOTVS Backoffice allows you to carry out everything from purchasing and supply management to tax management, including inventory, finance and accounting.
Conclusion
Throughout this content, we present all the details about the Financial ERP.
If you have come this far, you already know what this solution is, its main characteristics, the importance of having it in your business and how to choose the best ERP for your company.
Technology is, without a doubt, the right arm of organizations.
Having a solution like an ERP is the true first step for your company to establish itself in the market, presenting strategic competitive advantages.
For that, you know you can count on TOTVS.
TOTVS ERP has multiple functionalities as well as a flexible infrastructure to be absorbed by your business and its processes.
In this way, it acts as an operational complement and a strategic gain that can optimize processes, driving results.
