Managing your debts demands a thorough knowledge of your company's current assets. Your liquidity ratio is the most basic way to measure your ability to pay your debt obligations and maintain your business.
In 2021, Forbes magazine said that ERP solutions should be on every business owner's list of New Year's resolutions. This article explores everything you need to know about enterprise resource planning software.
What is enterprise resource planning?
What does ERP mean? ERP is a broad term that refers to specific electronic systems that a business uses to manage its day-to-day activities. You can use enterprise resource planning systems for important activities like:
- Supply chain management
- Resource planning
- Financial reporting
- Project management
- Human resources management
- Customer relationship management
- Risk management
- Regulatory compliance
An enterprise resource planning system can streamline and simplify multiple processes, bringing them together into a centralized platform. This effectively bundles the functions of your existing business software solutions and helps you manage your business functions all in one place.
The goal is simple: to integrate your major business processes, making your organization more efficient and reducing human error. Additionally, the right ERP system can minimize your need for personnel, further reducing your overall operating costs and maximizing the efficiency of your existing team.
What is enterprise resource planning software?
Most ERP systems use a centralized software platform to integrate multiple business processes into one convenient hub. Authorized users can access these functions through a dashboard and even use the software system to automate certain business activities.
Generally speaking, you can expect enterprise resource planning systems to offer the following core features:
- Integration options with a centralized dashboard
- A central business database
- Real-time data from multiple sources
- Support for various applications and other software components
- A shared user interface for authorized users
Additional features are also available through certain customizable ERP modules, which expand the functionality of the program's core features. The best ERP systems can integrate with your existing business management software or accounting software, providing an all-in-one solution for your organization.
However, the implementation of an ERP system can vary by provider. The following are the three most common types of ERP systems available to business owners today:
On-premises ERP systems
On-premises ERP solutions rely on physical office space and the company's own computers. The software is installed on the company's computers or servers, and the company retains full control over the entire ERP software system once it's been installed and activated.
Cloud-based ERP software
Many software providers offer cloud ERP systems that you can implement without needing the physical infrastructure required for on-premise solutions. For example, many ERP systems are available through a software-as-a-service (SaaS) model.
A SaaS ERP software system will require you to purchase a regular subscription, but the advantage is that the software provider would be responsible for tech support. Additionally, authorized users can access company data from anywhere using a smartphone or other mobile devices.
Hybrid ERP solutions
Depending on your provider, you may be able to implement a cloud-based ERP in conjunction with an on-premise system. This setup gives you the best of both worlds: the flexibility of a cloud-based system with the control that comes from overseeing your own ERP implementation.
How can enterprise resource planning help your business?
Regardless of the technical infrastructure, the best ERP systems connect multiple functions within your company, helping you refine your business strategy and keep track of your organization's financial health and performance.
Here are just a few of the key benefits that come from ERP implementation:
By using ERP software to automate your core business functions, you'll reduce the demand placed on individual workers or departments. This approach means that you and your employees will likely spend less time on administrative details and more time on revenue-generating activities that move the business forward.
Access to accurate data
The enterprise resource planning dashboard typically gives you instant access to your company data, and cloud-based ERP systems provide you with access to this data from anywhere in the world. Not only does this enable you to monitor multiple areas of your company from one common interface, but it also means that you can view this information in real-time.
The best ERP systems give you a comprehensive picture of your company's overall performance. This will help you manage your finances and cash flow. You’ll also be empowered to stay on top of regulatory issues and remain in compliance with legal or industry standards.
Simplified technical implementation
Many companies rely on disparate systems to handle their key business functions, leading to a "silo" effect where departments are unaware of what's happening company-wide.
That can change with an ERP. Enterprise resource planning systems can provide your various teams with a bird's-eye view of the company and make it easier to integrate software solutions into one convenient hub.
Faster response to new opportunities
Perhaps most importantly, ERP technology doesn't just help you manage your company's past data or current activities. Small business ERP systems can also give you access to real-time data, ensuring you're equipped to respond to business opportunities as they arise.
Too often, business owners are unable to seize new opportunities because they're unaware of the details of their company's performance, such as cash flow or projected growth. But an ERP system puts this information in the palm of your hand, helping you make informed decisions and stay ahead of the competition.
Common ERP modules
As mentioned, many of the important features of an ERP platform come from modules that you can use to customize your overall platform. The following are just a sampling of some of the best ERP modules that benefit today's small business community:
The financial reporting module is often the foundation of the entire ERP system. This module ensures that company leadership has access to the data they need to monitor their cash flow, accounts payable, accounts receivable, and other financial data.
Customer relationship management
You may already be using a customer relationship management (CRM) platform. These software systems can help you communicate with your customers and also perform some surprisingly-advanced marketing functions.
But a new ERP system can accomplish these features and integrate them into a core platform. You'll never have to worry about missing communication with your clients, and you can also use these solutions to manage customer reviews.
Supply chain management
These days, business owners have to work hard to overcome supply chain issues. But supply chain management can be easier with an ERP system, highlighting patterns in customer behavior and helping you anticipate needs in advance. ERP software can assist you in avoiding the stress of last-minute ordering.
Enterprise resource planning systems can also keep track of your existing inventory. The inventory management features allow you to monitor the current levels of various product SKUs, providing better inventory forecasting based on prior sales data.
Workforce management and human resources management
Workforce management (WFM) and human resources management (HRM) modules are also available in many ERPs. The WFM module keeps track of hours worked, attendance, and employee productivity. It's also possible to use an HRM module to maintain employee records, track performance trends, and monitor productivity at every level of the organization.
Modern ERP solutions support online retail, allowing you to integrate your company's sales channels into your central ERP solution. Businesses can integrate both eCommerce and financial reporting tools, so you’ll have a faster picture of how sales are contributing to your bottom line.
Many enterprise resource planning solutions offer marketing modules that let you manage your content across multiple digital channels, helping you coordinate your social media calendar with the broader life cycle of your business.
Additionally, you can use automation tools to communicate seamlessly with your customers and clients. This software works in tandem with the customer relationship management software you may already have. Depending on your provider, you may also have access to marketing templates that you can use for social media or email marketing campaigns.
How to choose the right ERP system
With so many ERP applications available, how can small business owners choose the right platform? Here are just a few things to consider when evaluating ERP vendors:
Make a list of features you want
Start by listing all the digital or manual processes that go into your business at the day-to-day level. Be as thorough as you can. Your goal is to find an ERP solution that integrates with or automates these core business processes.
Additionally, don't be afraid to dream big. Include some features you'd love to have in a perfect world and search for ERP software that offers these advantages.
Focus on ERP implementation
It's easy to get overwhelmed by the sheer number of on-premise and cloud ERP options that are available. But your main goal should be to find ERP software that's easy to install, learn, and use.
Ease of use is critical for your busy employees, so don't forget to evaluate the implementation timeline. Migrating data from your legacy systems to the new ERP platform may take some time and cause some headaches.
Admittedly, this may not always be avoidable, but you can at least strategize the best time to implement a new ERP system to prevent a dip in your business performance.
Just because your business is small doesn’t mean it couldn’t benefit from an ERP solution. Consider an enterprise resource planning platform that can help you manage and grow your business, providing seamless integration.
What business software are you currently relying on? Implementing a new ERP system will require you to integrate this software into your new platform. Make sure that the ERP software is compatible with your current software, or you may need to be willing to upgrade your other business software to better match the performance of your ERP system.
Decide on a cloud-based, on-premises, or hybrid ERP system
Many business owners will be content with a cloud-based ERP system that can be operated right from the phones in their pockets. Others may need to consider whether they also want to have control from an on-premises ERP software solution. If you can't decide, consider a hybrid approach to start, then reevaluate this model after the first year.
Ask about customer support
If something should go wrong with your ERP software, you don't want to have to wait until the next business day to address the issue. Make sure to investigate the customer support and IT options the ERP provider can bring to the table.
Some ERP systems come with online chat features, 24-hour tech support, and other important features that will help keep your business up and running.
How BILL can help with enterprise resource planning
BILL can help balance core business processes by automating your accounts payable and accounts receivable processes. Learn more about how BILL can save you time and help you build your business.