Accounting, in general, is a highly specialised function that requires both skilled professionals and modern tools. However, accounting for manufacturing businesses takes the complexity factor a notch higher.
In addition to performing the conventional tasks, an accountant working in the manufacturing industry is also expected to keep a track of inventory, processing costs, selling price and a host of other items to determine the profitability of a company’s product lines.
In such a scenario, a basic accounting software or MS Excel often fail to address the complex business needs. As a result, most small to medium manufacturers end up investing in systems that optimise production, standardise data reporting and ensure tighter business control.
Enterprise Resource Planning (ERP) is defined as a system of software applications that manages and integrates a company’s finances, operations, reporting & human resource activities amongst others. An ERP brings together a range of business processes under one umbrella to create a fluid system that facilitates flow of information & collaboration.
While ERPs were traditionally designed for manufacturing companies, these systems have also proven to be successful in sectors such as healthcare, hospitality and higher education. Most manufacturers, however, tend to focus on the production & supply chain benefits of ERP, often discounting their potential in transforming a company’s accounting.
QX leveraged workflow automation & process reengineering to transform F&A for a rapidly growing manufacturer in the UK. Read the success story here.
Let us look at the top six ways in which the accounting function of a manufacturing business can benefit from an ERP system:
Rapidly expanding manufacturing businesses often end up struggling with a complex accounting structure spread across multiple locations. A dedicated ERP can centralises data and integrate accounts from different locations to automate payroll, branch accounting, bank reconciliations and other finance functions. As a result, businesses are able to facilitate seamless accounts management – saving costs and ensuring smooth capital allocation and cash flow management.
The laborious and repetitive nature of many accounting tasks can lead to the establishment of a workflow wherein qualified accountants spend a major chunk of their time in routine tasks. This can hamper productivity and take the focus away from business-driven initiatives. Introducing an ERP with a strong accounting module helps finance teams automate recurring functions, optimise existing processes & drive focus to core business activities.
Irrespective of the business type and size, inventory plays a crucial role in every manufacturing setup and the same holds true for their accounting teams as well. Manufacturers expect their finance teams to keep a track of the company’s raw material inventory, WIP and finished goods, all in real-time. Performing these tasks manually in a high-volume scenario can be extremely time consuming and make accounting prone to discrepancies.
An ERP, on the other hand, allows analysis of transactional data to facilitate seamless inventory management and reporting. In addition to enabling businesses to take advantage of data-driven insights, ERPs also generate custom reports that convert accurate data into easily consumable information.
More often than not, businesses end up using different software for key functional areas like production, inventory, finance & HR. For a function like finance that depends heavily on the data received from other departments, working with different systems can affect accuracy, hamper efficiency & increase TATs. Implementing an ERP standardises data across departments, facilitating collaboration and providing a standard system to allow seamless flow of data.
As the modern-day business scenario continues to get more dynamic, analytics has emerged as a key component for finance teams in the 21st century. The role of an accountant has grown beyond traditional tasks with business owners expecting them to leverage financial data to study patterns and share insights to make key business projects and decisions. Using a reliable ERP system, accountants can gain access to the company’s cost, budget & customer sales analysis, allowing them to improve forecasting & contribute to business growth.
Learn how QX streamlined accounting for a leading aerospace manufacturer through Oracle implementation. Click here to read the case study.
Accounting is often an expensive but essential functions for any business. For setups where accounting is done manually, highly skilled accountants end up spending a major chunk of their time in day-to-day activities. An ERP system can go a long way in automating tasks that are repetitive and time-consuming in nature. In the long run, the efficiencies translate into significant costs savings.
QX provides outsourced finance & accounting services to businesses across industries. Over the last decade and a half, we have enabled transformation for some of the leading manufacturers in the market. We follow a unique partnership that allows us to better understand your organisational needs, identify specific solutions & ensure seamless transition to revamped systems.
Our range of services is highly flexible in nature and our team can work with all industry-standard software. In addition, we are also capable of identifying and implementing any additional software that suits your business scenario.
Partner with QX to get the support you need for transforming your finance operations. Contact us to set up a free, no-obligation consultation now.
Originally published Mar 25, 2021 08:03:27, updated Jan 06 2022