ERP Best Practices: Get Control- Reasons why you need a good system for your business
A well-implemented ERP system (Enterprise Resource Planning) will help you get control of your business. How? By making sure critical information to your company (pricing, costs, margins, financial reporting, sales orders, history, purchases, service, eCommerce…) is in one convenient place. If deployed correctly and organized in an understandable way, an ERP system is irreplaceable. Why? ERP will accurately reflect the state of your business, resulting in hard benefits like time and money saving and soft benefits like user confidence. This blog presents this argument from a couple of perspectives.
The most important measure of any business is accurate financial data. Financial data is used to make critical decisions about company direction. Examples include profitability, overhead, cash flow, growth goals and budgets. If this data is inaccurate or is “seat of the pants”, decisions become merely guesses. Guesses that may be detrimental to the health of the business. An ERP system will help by providing accurate financial data, which can then be accessed by authorized users and informed decision makers. When ERP is well deployed, everyone works with the same up-to-date information that accurately reflects the business.
One of the best ways to keep your business under control is through maintaining transparency. Transparency also is excellent for morale. By having objective data, honest conversations can take place about performance. This means having a clear, concise and open view of all aspects of the business. In addition to financials, clear pictures of customers, vendors, products and personnel reside in an ERP. This will track all important aspects of your business, and critical trends, either positive or negative. You will avoid surprises and make sound decisions that can be confidently (and transparently) shared with others. They’ll appreciate it!
Be Ready for Audits
Whether it’s by a customer, the FDA or the IRS, no one likes being audited. But if you're prepared, an audit will be less painful. ERP data can be trusted, and retains all your critical and traceable information: transactions, vendor payments, lot numbers. This retention will also be done in proper order and in the language of auditors. You will easily generate reports and supply data that auditors request, even if the audit schedule does not allow for preparation. An ERP will help you trace changes in your business, such as needed pricing changes and managing vendor and material pricing increase adjustments and proper inventory valuations. A good ERP will ensure that every transaction is accounted for accurately with traceability and history.
Facilitate an Exit Plan
As a business owner/CEO it’s always important to keep your sights set on the future. Whether you plan to retire, seek to sell your company or are ready to merge, it's important to have a solid foundation to help you meet your goals and get a fair valuation. For any ownership change to your business, detailed information and insights about its health are must haves. A good ERP will have this information available. Per the last three points, data is accurate, transparent and auditable when there’s a good ERP. That makes buyers more comfortable and less prone to (unfavorable) negotiating.
If interested, contact us to learn more about process improvements and what we can achieve for your company with a great ERP system like SAP Business One.