Why ERP is Beneficial for CFOs
As the CFOs (Chief Financial Officer) job is to closely monitor the financial responsibilities in a company, they would find implementing an ERP (Enterprise Resource Planning) system highly beneficial. The CFO could easily monitor payroll, and other financial responsibilities such as treasury in a single software suite. These ERP systems tend to be specifically designed for certain industries; however there has been the development of broad-scope ERPS that can be implemented in many other industries with very little need for adjustment or modification.
The ERP systems (and possibly manufacturing systems as well) can dramatically reduce the decision making times for CFOs which results in increased productivity. Detailed financial reports are provided to the CFOs via the ERP system from all different sectors of the company.
A better communication between the accounting departments can be achieved through ERP depending on the security and access levels implemented for each user. This eliminates misunderstandings between departments, increasing productivity.
For the CFO it is important to monitor every department and ensure that they are keeping to budget and not overspending. By enabling the CFO to monitor this via the use of a well-designed system, it is much quicker and easier to notice if and when there are any problems in this area.
Another huge benefit of ERP systems to CFOs is that they can quickly adapt to changes in the International Financial Reporting Standards (IFRS). ERP systems can easily monitor different facets of the IFRS operations and efficiently update their financial instrument monitoring to incorporate this new data and legislation.
An example of when this would be extremely useful is when recent updates in the IFRS has meant that now ERPs must monitor research and development costs as well as the capitalization of fixed assets in particular in larger companies or sectors. Having a full understanding of how to categorize these quite often complex processes and capitalizing on them can be very complex and requires a huge amount of data. Rather than a time consuming effort of data gathering after the fact, ERP allows for real-time data gathering that can be easily and quickly collected on demand into a useful, specific report.
In larger companies where there may be many external contractors or vendors, the payroll and accounts payable records may show large surges of seemingly unrelated costs in the ERP system. Having the option to identify and track these surges enables the CFO to recommend different financial policies to each head of department to avoid future surges leading to disastrous financial quarters or excessive pay-outs that would exceed that time-periods financial allowance. This is of particular use during tax-sensitive periods of time.
The best way of making the most appropriate tax payments is by fully understanding the exact financial situation of the company. It is in the CFOs best interest to have the best control possible over this allowing more accurate financial forecasts and future plans.
The CFO can really take advantage of the advanced technology of the ERP system in that they can customise their reporting to reveal specific data that is relevant to them at the time. They no longer need to waste valuable time trawling through infinite data to create the specific report they may need. By utilising the ERPs existing functionality and adapting it to new data requests, the CFO is not only creating a more efficient method of work, but also a more cost-effective solution.
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