ERP Financial

Management
A Presentation By Group 6
 OBJECTIVES
1. Differentiate between financial and management accounting

2. Become familiar with functionality in the Financial Accounting

and Management Accounting modules of an ERP system

3. Understand functionality in the Asset Management module of

an ERP system

4. Recognize functionality in the Travel and Expense

Management module of an ERP system
 AGENDA

Management Travel and Expense

Accounting Management

Financial Asset ERP

Accounting Management System
 INTRODUCTION

In today’s information economy, accounting

and finance professionals must manage an
increasingly wide array of complex business
processes and synthesize and interpret data
from a variety of sources.

Modern ERP systems include modules for

both financial accounting and management
accounting.
What are the Benefits of
ERP Financial
Management?
 ERP Financial
Management Benefits
● Can provide real-time insight and
overall performance
● Quick and Strategic analysis and
response to business changing
conditions
● Can generate financial statements
faster and more efficient
● Improve financial and managerial
reporting
● Optimize Cash Management by
reporting, analyzing, and allocating
cash in real time
 Financial Accounting
vs.
Management Accounting

Financial accounting is geared toward

producing financial information, in the
form of periodic financial statements, for
external decision-makers.

Unlike financial accounting, which

primarily involves the preparation of
financial statements for external
decision-makers, management
accounting supports the information
needs of internal decision-makers.
 Financial Accounting
Financial Statement
Income Statement, Statement
of retained earnings, Balance
sheet, Statement of cash flows
Accounts Payable
Supplier invoice and
payments, Company
debt
Module
General Ledger Accounts Receivable
Journal Entries, Subsidiary Ledger, Credit,
Accounting Cycle, Customer record and
Parallel Accounting payment history
Credit Management Cash Management
Credit Check, Customer Credit Check, Customer
credit limit and payment credit limit and payment
history history
01 Financial
Statement
“Are written records that convey the
business activities and the financial
performance of a company.”
 Example
Financial
Statements
 Example
Chart of Accounts
(COA)
02 General
Ledger
“Is a record of all past transactions of a
company, organized by accounts. General
Ledger (GL) accounts contain all debit
and credit transactions.”
 Example
General Ledger
(GL)
03 Accounts
Receivable
“Are the funds that customers owe your
company for products or services that
have been invoiced.”
 Example
Accounts
Receivable
Subsidiary Ledger
04 Accounts
Payable
“Is money owed by a business to its
suppliers shown as a liability on a
company's balance sheet.”
 Example
Accounts Payable
Subsidiary Ledger
05 Credit
Management
“Refers to the process of granting credit
to your customers, setting payment terms
and conditions to enable them to pay
their bills on time and in full, recovering
payments, and ensuring customers (and
employees) comply with your company's
credit policy.”
06 Cash
Management
“Also known as treasury management,
involves collecting and managing cash
flows from operating, investing, and
financing activities.”
Management Accounting
“Also called managerial accounting, management accounting involves
identifying, measuring, analyzing, interpreting, and communicating
information to internal constituents for the purpose of pursuing the
company’s goals.”
 Management
Accounting Module
Product Costing Overhead Costing Activity-Based
Direct and Indirect Costs, Cost Object, Cost Cost Costing
of Activities,
Bill of Material, Routing Allocation, Cost Drivers ABC Methodology

Profitability Analysis Cost Center Accounting Profit Center Accounting

Profitability Segment, Cost Center, Profit Center,
Unit Sales Price, Manufacturing Costs, Investment Center,
Costs, Profit Margins Cost Management Profit Management
01 Product
Costing
“Is the process of tracking and studying
all the various expenses that are accrued
in the production and sale of a product,
from raw materials purchases to
expenses associated with transporting
the final product to retail establishments.”
 Direct Costs
vs.
Indirect Costs
Direct Costs Indirect Costs
Some costs, such as Other costs are not so
wages of factory easily traceable and
workers or materials are known as indirect
used in production, are costs. Examples of
treated as direct costs indirect costs include
because they can be rent and utilities for the
easily traced. manufacturing facility,
and depreciation on
plant equipment.
 Example
Bill of Material
(BOM)
 Product Costing
Questions
● Do variances occur when producing a
given product? What type of variances
are there (price, quantity, scrap)?

● How can an organization arrive at more

favorable variances?

● Can the company reduce the cost of

making a particular product?

● What is the total cost of goods

manufactured by sales order or plant?
02 Overhead
Costing
 ”Overhead or overhead expense refers to
an ongoing expense of operating a
business. Overheads are the expenditure
which cannot be conveniently traced to or
identified with any particular revenue unit,
unlike operating expenses such as raw
material and labor.”
 Overhead Costing

Cost Object Cost Cost Drivers

A cost object is any Allocation
Indirect costs are Traditional methods for
product, service, normally assigned to allocating overhead
contract, job, project, cost objects using costs to cost objects
work center, or other cost allocation, which are machine-hours or
unit for which a is the process of direct labor hours.
dividing a total cost These activities are
discrete cost
into parts and called cost drivers,
measurement is
assigning the parts to because they “drive”
desired. relevant objects. costs to the cost object.
03 Activity-Based
Costing
“This method, known as activity- based
costing (ABC), assigns costs based on
activities that drive costs rather than
traditional methods such machine–hours
or labor–hours only.”
 In ABC, costs are allocated to activities,
which are procedures or processes that
cause work to be accomplished. Activities
consume various resources, and products
consume activities.

The first step in the ABC methodology is to

“identify activities that drive costs”.

The second step is to “identify the cost driver

for each activity”.

Once costs of the necessary activities are

identified, a proportion of the cost is
attributed to cost object based on the extent
to which the cost object uses the activity.
For example, if there were 227
inspections a month on
finished products at a total
estimated cost of $8,000, a job
that consumes five
inspections would be charged
$176.
 Activity-Based
Costing (ABC)
Questions
● Are activities being conducted
efficiently?

● Are certain activities even necessary,

or do their costs outweigh the
benefits?

● Are certain groups within the

organization performing activities
better than others?

● Do specific materials or tools help the

company complete certain activities
more efficiently?
04 Profitability
Analysis
“Profitability analysis is a component of
enterprise resource planning (ERP) that
allows administrators to forecast the
profitability of a proposal or optimize the
profitability of an existing project.”
 Profitability Segment
A profitability segment can be any number of
entities, including products, companies,
customers, geographic regions, or the
intersection of these.
Managers will analyze data such as unit sales
prices, costs, profit margins, and units sold to
answer questions such as:

● Who are our most profitable customers in

the Southwest region? Least profitable?
● How can we change the product mix to
maximize our profits?
● What are our profit margins for each
distribution channel, for instance,
wholesale vs. retail?
05 Cost Center
Accounting
“Also called cost pools, are distinctly
identifiable departments, units, or
divisions in a company that are deemed
to be accountable for incurring or
influencing costs.”
For example, an IT help desk may be
designated as a cost center in a company
because it does not directly generate
revenue but instead consumes labor,
supplies, and overhead.

However, other cost centers, such as the

accounting department, may use the
services of the IT help desk, and thus part of
the help desk’s costs should be allocated to
the accounting department.

A reasonable cost driver for allocation of

the IT help desk costs may be number of
employees. The more employees in a
department, the more IT help desk costs are
assigned to it.
06 Profit Center
Accounting
“Is a management tool to assist with
strategic decisions. The concept is to
allow a closer review of small portions of
the overall agency to evaluate how each
of these segments are performing.”
For example, a hardware store
could make each department its
own profit center, such as lawn
and garden or tools.

Profit centers could also represent

divisions.

For instance, an equipment dealer

could have profit centers for sales
and service divisions.
Asset Management
The Asset Management module is designed to handle the life cycle of a
company’s fixed assets, also known as property, plant, and equipment
(PP&E) or capital assets.
 Asset Management
Companies will implement Asset Management to
give them global visibility and control over their
fixed assets. Certain information on fixed assets is
captured, managed, and shared thus, this module
can also be thought of as a subsidiary ledger. with
other modules, including:

● Date of acquisition and description of the asset,

possibly including manufacturer, serial number, and
model
● Cost of asset, useful life, accumulated depreciation, and
book value
● Depreciation method and calculations for tax and
financial statement preparation
● Where the asset is located and who has control over the
asset
● Amount asset is insured for and related deductibles and
premiums
● The current fair market value of each asset for valuation
under IFRS
 Fixed Asset
Life Cycle
The fixed asset life
cycle begins from the time
when the company acquires
any asset, and it ends when
the company disposes of the
same asset.
 Fixed Asset Life
Cycle
● Planning and Approval
● Procurement
● Deployment
● Use
● Maintenance
● Upgrade or Overhaul
● Disposal
 Travel and Expense
Management
High- performing companies use a Travel and Expense Management
module in an ERP system to automate and streamline the planned
trip-to-payment process.
SUMMARY
 Acumatica
Acumatica is a, cloud-based
enterprise resource planning
(ERP) platform designed to help
small and midsize businesses
reach their organizational
goals. The suite of applications
includes financial management,
customer relationship
management, project
accounting and distribution
management tools.
 History of Acumatica
Acumatica's
distribution software
came a year later in
April 2010.
in the fall of 2014, it
published the beta
version of its new
suite, Acumatica 5.0.

Launched its first Former Microsoft

product, Vice President Jon
Acumatica ERP, Roskill was elected
in November CEO in March 2014.
2008
 History of Acumatica
That same year, the
Acumatica 2021 R1 and On February 16,
R2 product updates for 2022, John Case
full ERP usability and
was appointed as
capabilities were
introduced. the new CEO.

Acumatica's London In January 2022,

office opened in July Acumatica acquired
2021. Its cooperation IBS Imperium, a
with Shopify was property
revealed in October. management
application.
 Benefits of
Acumatica
• Cost Savings

• Can easily open on a web

browser

• High Security

• Scalability
Interface of Acumatica
 Thank You!

Rufi Santi Golden Leinard

Carl Pranillos Sagadraca Jace
Lagaras Quintos
A Presentation By
Group 6