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3 Ways ERP Streamlines Financial Reporting

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Many businesses around the globe have turned to enterprise resource planning (ERP) systems to help streamline their financial reporting schema by automating financial reporting functions. This does not mean, however, that every ERP system comes preloaded with the tools required for financial reporting, so companies should look to their ERP vendors to determine whether the system of choice can meet their financial reporting requirements. Several departments should be involved in planning for ERP financial reporting to ensure the maximum benefit of the ERP system itself. When the business has identified a suitable ERP software package that includes financial reporting tools or to which the business can add these tools, that business will find that ERP is invaluable for compiling and returning customized, detailed financial reporting that meets the organization’s requirements. In many cases, using the ERP system to streamline the financial reporting process saves time and money and helps ensure regulatory compliance.
Automating Processes
When a business needs to generate a balance sheet, regulatory data, or even forecasting information, the time, energy, and effort that goes into compiling, processing, and formatting those data can be daunting. When the business adds a new ERP system or an add-on module to to the existing ERP system, many of the tasks associated with preparing the various reports can be automated, freeing valuable human resources that can then be re-tasked to ensure that the reports are within the framework for regulatory compliance and free of errors. In addition, many companies find that when the tasks once associated with manually generating a financial report are automated, fewer accounting staff are required, which saves the company money on labor costs.
Extensible Business Reporting Language
For companies that the US Securities and Exchange Commission (SEC) requires to submit public financial information, the process of automatically assigning metadata through extensible business reporting language (XBRL) becomes a much more streamlined process because the ERP system will simply encode the appropriate accounting category into a format that is both standard and within regulatory compliance. This functionality is especially useful for public companies operating in the United States because as of 2011, SEC has mandated that all companies must use XBRL for all reporting requirements.
Forecasting
Although forecasting is not squarely within the regulatory realm of financial reporting, businesses—especially public companies—need to be able to generate an accurate-as-possible forecast that gives investors and analysts a tool by which to complete a thorough and comprehensive assessment of businesses performance in the months ahead. An ERP system allows the business to quickly gather all pertinent data and develop a forecasting report to achieve this end. Given that the very nature of ERP tracks all inventory and records previous sales data, an ERP system is particularly suited to this task and can reliably generate forecasting reports that will satisfy even the most scrupulous investors.

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