ERP MODULE “FINANCE”

Present by:

Maheshwari Ashok

WHAT IS ERP?

Enterprise Resource Planning ERP programs are core software used by

companies to coordinate information in every area of the business

ERP programs help to manage company-wide business processes, using a common database and shared management reporting tools.

ERP MODULES

WHAT IS FINANCE?

The management of large amounts of money, especially by governments or large companies.

The science of the management of money and other assets.

The management of money, banking, investments, and credit.

The supplying of funds or capital.

A/F

Customer HR

SCM M/S

Payments

Legal requirements and job information, payroll and benefit expense data

Invoices and credit memos

Sales data and manufacturing cost analysis

Production plans, materials, and inventory data

Sales order data

Cost/profit analysis

Hiring needs and personnel information

WHAT ARE THE I/O ?

Input for A/F include: Payments from customers Account receivable data Account payable data Sales data Production and inventory data Payroll and expense data

Output for A/F include: Payments to suppliers Financial reports Customer credit data

FINANCE

Finance is the study of how investors allocate their assets over time under conditions of certainty and uncertainty.

Finance measures the risks vs. profits and gives an indication of whether the investment is good or not.

Finance can be broken into three different sub categories: public finance corporate finance personal finance

PERSONAL FINANCE Personal finance refers to the financial decisions

which an individual or a family unit is required to make to obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

Debit card Employment contract

Commission Employee stock option Health insurance Pay check Salary

Insurance Retirement plan

CORPORATE FINANCE

Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions.

The primary goal of corporate finance is to maximize shareholder value.

Balance sheet analysis Financial ratio

Business plan

PUBLIC FINANCE

Public finance is the study of the role of the government in the economy.

The purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income macroeconomic stabilization

Central bank Tax Industrial policy

THE FINANCE MODULE OF MOST ERP SYSTEMS WILL HAVE THE FOLLOWING SUB SYSTEMS

1. FINANCIAL ACCOUNTING

for company wide control and integration of financial information that is essential to strategic decision making.

It provides ability to centrally track financial accounting within an international framework of multiple companies, languages, currencies and charts of accounts.

EXAMPLE OF FINANCIAL ACCOUNTING

2. GENERAL LEDGER

The GL is essential both to financial accounting system and to strategic decision making.

The GL supports all the functions needed in a financial accounting system.

This includes flexible structuring of the chart of accounts at group and company level, distributed application scenarios, real time simultaneous update of sub ledgers and the GL, elimination of time consuming, and parallel views of data in both GL and managerial accounting applications.

EXAMPLE OF GL

EXAMPLE OF GL

3. ACCOUNTS RECEIVABLES

records all account postings generated as a result of Customer sales activity.

These postings are automatically updated in the General Ledger .

The Accounts Receivable Module also integrates with the General ledger, Sales and Distribution, and Cash Management Modules.

EXAMPLE OF ACCOUNTS RECEIVABLES

4.ACCOUNT PAYABLE

records account postings generated as a result of Vendor purchasing activity.

Automatic postings are generated in the General Ledger as well.

Payment programs within SAP enables the payment of payable documents by check, EDI(Electronic Data Interchange), or transfers.

5. ASSET ACCOUNTING

for company’s fixed assets management. It is sub ledger to GL, providing detailed

information on asset related transactions. SAP allows you to categorize assets and to

set values for depreciation calculations in each asset class.

Asset accounting also provides integration with plant maintenance for management of machinery and equipment, management of leased assets and assets under construction, and interactive reporting

6. LEGAL CONSOLIDATION

Using different valuation methods , company can plan balance sheet strategies to suit its requirements.

The sub system is closely linked to the financial accounting system, permitting direct data transfer from individual statements into the consolidated statements required by the law

These statements provide an overview of the financial position of the company as a whole

7. CONTROLLING

controlling system gathers the functions required for effective internal cost accounting.

It offers a versatile information system with standard reports and analysis path for the most common questions.

In addition there are features for creating custom reports to supplement standard reports

SAP ERP FINANCIAL BUSINESS BENEFITS

Improve financial and managerial reporting: SAP ERP Financials gives you the flexibility to

report performance by business unit, organization, or cost center.

Improve corporate performance: SAP ERP Financials provides the foundation to

quickly read, evaluate, and respond to changing business conditions with accurate, reconciled and timely financial data.

Achieve faster closes: With SAP ERP Financials, you can streamline

accounting, consolidation, process scheduling, workflow, and collaboration.

SAP ERP FINANCIAL BUSINESS BENEFITS

Improve corporate governance and transparency: SAP ERP Financials provides broader support of

accounting standards, federal regulations, and improved administration of internal controls.

Improve cash flow and liquidity: SAP ERP Financials automates dispute, credit, and

collections management – and offers electronic invoicing and payment capabilities that supplement traditional accounts receivable and accounts payable functions to accelerate and manage cash flow.

Optimize global cash management: With SAP ERP Financials, you can report, analyze,

and allocate cash in real time, and establish in-house banks or payment center.

SAP ERP FINANCIAL BUSINESS BENEFITS

Improve process integration between finance and treasury: With SAP ERP Financials, you can integrate risk

and treasury transactions with core accounting and financial reporting processes.

Reduce overall finance costs: SAP ERP Financials helps you operate effective

shared-services, collaborate with customers or suppliers, and streamline operations to reduce costs and resource demands.

CHARACTERISTICS OR FEATURES OF FINANCE

INVESTMENT OPPORTUNITIES

Investment can be done by:- Creating physical assets with the money (such as

development of land, acquiring commercial assets, etc.),

Carrying on business activities (like manufacturing, trading, etc.), and

Acquiring financial securities (such as shares, bonds, units of mutual funds, etc.).

PROFITABLE OPPORTUNITIES

In Finance, Profitable opportunities are considered as an important aspiration (goal).

Profitable opportunities signify that the firm must utilize its available resources most efficiently under the conditions of cut-throat competitive markets

Profitable opportunities shall be a vision. It shall not result in short-term profits at the expense of long-term gains.

OPTIMAL MIX OF FUNDS

Finance is concerned with the best optimal mix of funds in order to obtain the desired and determined results respectively.

Primarily, funds are of two types, namely, Owned funds (Promoter Contribution, Equity

shares, etc.), and Borrowed funds (Bank Loan, Bank overdraft,

Debentures, etc).

SYSTEM OF INTERNAL CONTROLS

Finance is concerned with internal controls maintained in the organisation or workplace.

Internal controls are set of rules and regulations framed at the inception stage of the organisation, and they are altered as per the requirement of its business.

However, these rules and regulations are monitored at various intervals to accomplish the same which have been consistently followed

FUTURE DECISION MAKING

Finance is concerned with the future decision of the organisation.

A "Good Finance” is an indicator of growth and good returns. This is possible only with the good analytical decision of the organisation. However, the decision shall be framed by giving more emphasis on the present and future perspective (economic conditions) respectively.

REFERENCES

http://www.thefreedictionary.com/finance http://en.wikipedia.org/wiki/Finance http://www.sap.com/solutions/business-suite/

erp/financials/businessbenefits/index.epx