6 Ways ERP Software Positively Impacts the Bottom Line
Whether it’s a legacy system, or a cloud-based Software as a Service (SaaS) product, enterprise resource planning (ERP) systems have been the go-to software solution of many businesses, regardless of size. Some organizations have even turned to hybrid integration, wherein they combine their existing ERP with a SaaS product. Most companies choose an ERP because they’re able to streamline several critical functions such as human resources, supply chain management, e-commerce, customer relationship management (CRM), and accounting.
Having your entire company or enterprise on the same page as it relates to communication, efficiency, and the ability to scale, are just some of the reasons organizations utilize an ERP model, rather than separate solutions for each function. Overall, implementing ERP software can positively impact your bottom line. Here’s how:
Organizations without an ERP often have redundancies in their processes without realizing it. Duplicate work is potentially being done in a few different departments, and could go months or even years without being identified. Further still, tasks are being done manually, leading to an overall waste of time and a lack of best use of your human capital. An ERP streamlines workflow, freeing up time to be channeled in other ways. This improves the processes overall, making them more effective and ultimately, providing more value.
Improved Production Management
Inventory has a significant impact on the bottom line, which is why it’s crucial to get your arms around it. An ERP allows you to do reduce overages and improve production and delivery schedules. You’re no longer at the mercy of best guesses about volume, and can make intentional, smart inventory decisions based upon clear data and clean processes.
Defective materials not only delay delivery of products and hurt sales, it’s damaging to your brand reputation. ERP software that manages your supply chain helps you evaluate and document which suppliers and supply chain carriers are your preferred partners, and helps you easily document quality and service issues.
Your customers have become accustomed to receiving their products within a short timeframe. A manual tracking process is time consuming, labor intensive, slow, and frustrating, especially when dealing with lost, stolen, damaged or returned items, and late deliveries. ERP software will not only assist you in determining the best shipping options available to you, but managing the process will be more automated, saving you time and money, and delighting your customers.
Better Cash Flow
The way your company handles its invoicing has a large impact on your cash flow. Manual processes not only leave a large margin for error, they lengthen the order-to-cash cycle. By utilizing an automated process, you stand to significantly reduce day sales outstanding (DSO). Not only does this provide better cash flow, but it improves the headcount required to process invoices, or frees up those workers for other tasks.
Regulatory and Tax Compliance
ERP software can help you maintain compliance by giving your team the ability to manage and secure data and produce the correct reporting with regard to regulations such as the Federal Information Security Management Act. An ERP will also help you make sense of the ever-changing trade and tax rules, especially for those businesses that are part of a supply chain. Utilizing an ERP tool helps you assess your risk with regard to buying from and supplying to vendors. Automation of your sales tax ensures that your invoices, collections and remittance of sales and use tax is simpler to validate, and accounts for resale or tax-exempt products and services.
Making the move to an ERP, whether it be a legacy system, a SaaS solution, or a hybrid integration, means streamlining processes within your business. Bringing critical business functions together means eliminating wasted time, better communication between teams and departments, less manual intensive labor, and a bigger picture strategy within your organization.
To determine which ERP software solution is the best fit for your businesses, assess your ERP requirements and how you hope that ERP will benefit your organization and clients. Improving core business functions and the way they operate together allows you to scale your business, improve customer relations, create better efficiency, and significantly impact your bottom line.
Jessica Barrett Halcom is a contributor for TechnologyAdvice.com, with specializations in human resources, ERP, and operations. She holds a bachelor’s degree from the University of Wisconsin, Green Bay and currently lives in Nashville, TN.