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What’s the difference between ERP and financials?

Although the term “financials” is often used when describing ERP software, financials and ERP are not the same thing. Financials refers to a subset of modules within ERP. Financials are the business functions relating to the finance department of an organization and includes modules for financial accounting, subledger accounting, accounting hub, payables and receivables, revenue management, billing, grants, expense management, project management, asset management, joint venture accounting, and collections. Financials software uses reporting and analytical capabilities to comply with the reporting requirements of governing bodies, such as the International Financial Reporting Standards Foundation (IFRS), Financial Accounting Standards Board (FASB) for Generally Accepted Accounting Principles in the United States (GAAP), as well as for other countries (HGB in Germany and PCG in France, for example). For public organizations, financials software has to be able to produce periodic financial statements for governing regulators, such as the US Securities and Exchange Commission (SEC) (with reports such as quarterly 10-Q and annual 10-K), European Securities and Markets Authority (ESMA), and others. For these types of financial reports, a narrative reporting tool is used. The person who is ultimately responsible for financials is the CFO. While financials handles one area of the business, ERP encompasses a wide range of business processes—including financials. ERP software can include capabilities for procurement, supply chain management, inventory, manufacturing, maintenance, order management, project management, logistics, product lifecycle management, risk management, enterprise performance management (EPM), human resources/human capital management. ERP also integrates with front-office applications to build holistic views of customers, including customer relationship management (CRM) solutions. Additionally, cloud-based ERP applications are often embedded with next-generation technologies, such as the internet of things (IoT), blockchain, AI, machine learning, and digital assistants. These advanced technologies deliver data and capabilities that not only enhance many traditional ERP functions; they create new opportunities for increased efficiencies, new services, and deeper insight across an enterprise. Since ERP systems are comprehensive across an enterprise, their management often involves a partnership with the CFO as well as the CIO, COO, and other key executive leaders. Cloud-based ERP applications are often embedded with next-generation technologies, such as the internet of things (IoT), blockchain, AI, machine learning, and digital assistants.
ERP fundamentals
ERP systems are designed around a single, defined data structure (schema) that typically has a common database. This helps ensure that the information used across the enterprise is normalized and based on common definitions and user experiences. These core constructs are then interconnected with business processes driven by workflows across business departments (e.g. finance, human resources, engineering, marketing, and operations), connecting systems and the people who use them. Simply put, ERP is the vehicle for integrating people, processes, and technologies across a modern enterprise. For example: consider a company that builds cars by procuring parts and components from multiple suppliers. It could use an ERP system to track the requisition and purchase of these goods and ensure that each component across the entire procure-to-pay process uses uniform and clean data connected to enterprise workflows, business processes, reporting, and analytics.
When ERP is properly deployed at this automotive manufacturing company, a component, for example, “front brake pads,” is uniformly identified by part name, size, material, source, lot number, supplier part number, serial number, cost, and specification, along with a plethora of other descriptive and data-driven items. Since data is the lifeblood of every modern company, ERP makes it easier to collect, organize, analyze, and distribute this information to every individual and system that needs it to best fulfill their role and responsibility.
ERP also ensures that these data fields and attributes roll up to the correct account in the company’s general ledger so that all costs are properly tracked and represented. If the front brake pads were called “front brakes” in one software system (or maybe a set of spreadsheets), “brake pads” in another, and “front pads” in a third, it would be tough for the automotive manufacturing company to figure out how much is spent annually on front brake pads, and whether it should switch suppliers or negotiate for better pricing. A key ERP principle is the central collection of data for wide distribution. Instead of several standalone databases with an endless inventory of disconnected spreadsheets, ERP systems bring order to chaos so that all users—from the CEO to accounts payable clerks—can create, store, and use the same data derived through common processes. With a secure and centralized data repository, everyone in the organization can be confident that data is correct, up-to-date, and complete. Data integrity is assured for every task performed throughout the organization, from a quarterly financial statement to a single outstanding receivables report, without relying on error-prone spreadsheets. What AccountWell Does For Businesses! From manufacturing industries to IT companies, AccountWell is there to cater for the accounting needs of all businesses. An effective integration of powerful modules, AccountWell lets businesses access, maintain and evaluate their necessary financial database.
Account well is a complete business accounting and inventory software. Bring everything you need right on your screen, choose AccountWell!

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