Manage accounting with the ERP Software’s : doubts and opportunities

In my professional experience, I have had the opportunity to collaborate with different companies ERP Software’s in various sectors and I have always dealt with the various administrative aspects, especially management control.

The various companies with which I collaborated adopted different management programs, and I had the need to learn to work with different work methods. I had the opportunity to work with traditional management software and with integrated  ERP Software’s . What I will try to do with this article is to share my experience and the critical issues / opportunities I have encountered.

Generally here in Dubai, administrative staff is used to reasoning by accounting logic. That is, the recording of the accounting facts takes place above all by manually entering the debit and credit. It is no coincidence that the management software developed over the years by the UAE software houses is largely built to support this logic.

This software, in fact, places the emphasis on management documents and also inserts the flow in accounting.

At the beginning, this change of paradigm displaced me, I found myself unprepared in the recording of the accounting facts and I had some initial difficulties in understanding the logic of the functioning of accounting according to these schemes.

[Do you have little time to read the article? Download the guide How to organize accounting with ERP software]

So what are the main differences between accounting systems and ERP Software’s?

The fundamental difference, and perhaps the most difficult in the initial phase, is the fact that I no longer have to reason for each single registration, but I must make an initial effort to correctly set up the accounting rules.

ERP software, by integrating document flows into accounting, automates the writing process. The registration of the document means that the accounting facts are also recorded.

In this way, any purchase invoice will automatically record the costs in the income statement and automatically record the debt to the supplier in the balance sheet.

For example, in the case of registering a professional invoice, in a traditional system several steps would be necessary in order to detect the social security compensation and the debt to the tax authorities for the withholding tax. With an integrated ERP, on the other hand, it will be sufficient to enter the amount of the remuneration, leaving the burden of the various surveys to the system (this is also needed for checking the supplier invoice).

Even when recording a collection / payment, the integrated ERPs automate the writing to be made. Using the document flow, the system requires the combination of invoice (s) and collection / payment. In this way, with a single click, I proceed to register the accounting fact.

Another automatic registration is that of reconciliation of the bank account statement. In classical systems, I proceeded to enter a journal entry for each entry / exit to be detected.

By inserting a movement, choosing it from a drop-down menu, I can select the most used types of operations, simultaneously recording any commissions. Example: in the bank statement, I find the payment for the invoice of a supplier that includes bank charges. With the automated system, it is sufficient to enter the total invoice and the amount of expenses to obtain the writing of the accounts of both operations at the same time.

To conclude the examples of automatic registration, Intra and Extra CEE purchase invoices are also made automatically, simply by recording the purchase invoice.

Those just listed are just some of the advantages that can be obtained by using an integrated ERP.

We must also include the certainty of data integrity on the weighing pan. The system, following the document flow, ensures that the documents are in a single database, unifying the data and reducing the possibility of errors due to the duplication of the documents themselves.

Furthermore, accounting must no longer be seen as a stand-alone satellite, but must be integrated within the company system. In my experience I have seen several times how “all the nodes come to a head” within the administrative office. As we know all transactions must be recorded and if colleagues make mistakes, they are only detected at the time of registration.

With an integrated ERP system, documents and transactions are also checked in real time by the administrative department which can thus verify their correctness and compliance with the rules.

Last but not least, an additional advantage is in the time savings that an integrated system allows us. Once configured, in fact, the system performs a whole series of automatic writes that no longer require user intervention. In this way, the administration can focus on less operational and more strategic aspects.

Based on what has just been seen, the change of accounting mentality to approach an integrated ERP can save us time and costs, improving the company’s performance.

My experience with the Aaa-Cas ERP management system has saved me at least half the time compared to traditional software, making me concentrate on business strategies and ensuring data consistency within the system.

The advantages of the Cloud ERP System

To conclude the analysis of ERP systems, I cannot help but mention, at the current state of the art, the possibility of choosing between an ERP Cloud and one installed on company servers (on-site).

The fundamental difference between an on-site ERP and the ERP cloud is clear: the on-site solutions are installed locally on the company’s hardware and servers and then managed by IT staff, while the ERP cloud is provided as a service. With this type of distribution, a company’s Customized ERP Software’s in UAE and its associated data are managed centrally (on the Internet “cloud”) by the ERP provider and are accessible by customers using a web browser.

The on-site installation involves greater investments both in terms of hardware and for the management of the same, having to engage IT staff also in the updating and maintenance of the system.

With an ERP in the cloud, however, the initial expenditure is much lower and the total cost of management (TCO) is much lower as seen in the graph below.

Furthermore, after making an investment in the IT infrastructure to host an internal server in the company, I will hardly be able to change the service provider. If the ERP software purchased fails to meet the particular needs of my company, it is likely that it will have to put its hand back in order to acquire a new infrastructure for the management of the new ERP.

With an ERP cloud, on the other hand, data is stored remotely on very secure and scalable systems, I can work from anywhere and I don’t have to worry about system updates. I don’t need to invest in hardware or expensive upfront licenses, so no amortization costs. With the Cloud, the expense of the ERP service becomes a current expense, with enormous advantages and management flexibility. For those who, like me, deal with administration and management control, this aspect also has.

 

 

 

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aaacas

The firm was established in April 2014 by a team of experienced Chartered Accountants already in public practice. The firm consists of dedicated professionals who have the ability to provide industry-focused services in order to enhance value through the application of what we call "BEYOND THE NUMBERS". Our understanding of your industry and your individual circumstances allows us to contribute far more than accountancy advice. Our Audit specialists can provide an efficient and independent report to your shareholders about the company profitability and state of affairs. We go further to provide insight into the areas to focus to enhance the performance of your business.

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