Think of any global brand and they are almost certainly running their operations on an ERP system or integrated business platform. Small brands with aspirations to grow into mid-size organizations know that if they are serious about scale, they will eventually need a business software platform powerful enough to run its operations. It is the only way to minimize complexity and drive efficiency when you have many employees, products or locations.

There are some clear triggers for reviewing the benefits of upgrading from small business accounting software to a single, integrated business platform.

1. You're Business Operates Multiple Entities

One of the most important indications that a small-to medium enterprise (SME) has outgrown its small business accounting software is the need to operate more than one trading entity. Fast-growing businesses frequently set up multiple entities to service different geographic regions or business lines, such as shop fronts or different divisions of a company.

These growing multi-entity businesses frequently run into issues when using basic accounting software because it's designed for a (single entity) small business. Consolidating financial statements from multiple entities makes reporting slow and labour intensive. For example, with basic accounting software, the finance person or accountant has to export each entity's general ledger individually because the data is stored separately. It then takes more time to locate missing information and then manually enter spreadsheet calculations into the accounting system. Next, they have to create a master company ledger by importing all the general ledgers and crunching the numbers for P&L and other reporting. This process is cumbersome, time-consuming and delays decision making.

In contrast, an ERP system with multi-book accounting functionality, allows finance teams to create multiple sets of books with different rules to account for different financial, taxation and managerial requirements. Currency conversions can be automated for reporting in each subsidiary, country or region during the close process. What's more, this happens in real time, so the general ledger can be viewed across multiple currencies instantly, resulting in easier and more precise reporting, easing the strain on finance teams and ensuring business leaders have the numbers required to make key decisions.

2. Your Data Is Hard (Or Impossible) to Analyse

As a business grows, so does the amount of data that it generates. What a company does with that data is critical to future success. With actionable analysis, leaders can gain meaningful operational and financial insights into business performance across multiple departments and teams, and be confident that decisions are backed by accurate and timely information. However, with basic accounting software data winds up spread across departments, subsidiaries and regions in disparate applications and spreadsheets. Therefore, detailed reporting requires consolidating spreadsheets and/or viewing data across multiple platforms. This effectively leaves businesses running blind for significant periods of each month.

Comprehensive ERP software creates a central hub for data from across a business, including finance, manufacturing, operations, sales and marketing. Pre-built dashboards and key performance indicators (KPIs) provide a real-time business overview, as well as the ability to drill down into reports, offering full visibility. Without these business intelligence (BI) tools, it's near impossible to gain holistic insights for company-wide analysis, meaning scenario planning, forecasting and improving business processes becomes guesswork. By switching to an ERP system it's easier to spot inefficiencies and improve decision-making with up-to-date information from across the business, leading to a more productive and ultimately more successful operation.

3. You're Managing Inventory in Multiple Locations

Increasingly, businesses sell through several locations or channels (in store, online, wholesale, retail, etc.). However, basic accounting software doesn't recognise multiple inventory locations. So, if a business holds stock (or plans to) in more than one location, it will only see a total stock figure, making it impossible to get a real-time view of inventory across all locations and sales channels. This means businesses must keep more stock on hand to avoid stock outs. For example, if you have a high volume of sales through automated online channels, then customers may be able to order products that have already sold out. On the other hand, the business may discover gluts of stock that then need to be sold at clearance.

ERP with inventory management can help businesses reduce inventory costs while providing a better and more transparent customer experience. Furthermore, it supports businesses pursuing an omnichannel strategy, by ensuring they have the ability to organize and oversee data from every channel. Without this, accurate planning and forecasting becomes increasingly hard, and can lead to poor customer satisfaction during busy periods (like the holiday season) if demand exceeds what's predicted.

4. Limited Visibility Over Your Supply Chain

Growing businesses that lack full visibility into their supply chains are at risk of running out of products unexpectedly, causing financial and reputational damage. To overcome this challenge, some choose to integrate new systems or simply rely on spreadsheets to keep track, but these solutions are prone to error and rarely offer a holistic, real-time view. Furthermore, modern supply chains are often global and complex, with international regulatory requirements or government tariffs that must be accounted for. If this isn't automated, it means more manual processes, and less visibility into operations, all of which can lead to dissatisfied customers, because successful businesses are built on having the right products available at the right time and the right location.

This problem is magnified if a business outsources orders to a third-party logistics (3PL) partner. A 3PL partner can be assigned to fulfill all, or some of the orders, ensuring the business meets customer expectations and maximize sales. To achieve this, businesses need to have visibility into items, inventory, orders, vendors and customers and the ability to connect them all together to create a unified view. This is impossible with accounting software, as it's unable to act as the central hub for all the required data. With supply chain accounting for a large portion of a business' operating budget, gaining a unified view also helps to spot inefficiencies and save costs in the long term.

With an ERP system, a business has the ability to understand each link in the supply chain, and by maintaining constant visibility, it can establish better backup plans, develop stronger lines of communication and quickly adapt to new challenges or changing market conditions.

Original text link: https://www.netsuite.com.au/portal/au/resource/articles/small-business/upgrade-to-erp.shtml