ERP software has been around for a while. The term ERP – Enterprise Resource Planning – gained traction in the early 90s. It represents a holistic, centralised approach to business. Instead of each department functioning independently, they were interlinked. This co-mingled network could be run from a single workstation operated by computer software.
In any well-organised business, there are eight main areas of focus:
- Job management
- Planning and monitoring
- Support and training
If your organisation is poorly run, these departments feel they are in competition with each other. This leads to clashes over resources, to the detriment of the whole business. It’s important to instil in your team that each section needs the other. It’s the only way for your business to thrive. Implementing a central business management system is a good start.
Why do businesses go broke? The biggest reason is cash flow. A lot of money may be coming into the business, but if it’s not well managed, you’ll soon be bankrupt. Many businesses assume all incoming funds are profits. This cash is then spent before getting to the relevant channels. Often, the cash is taken by top management, who are beyond question.
Cash in, cash out
This kind of a boss may be unfamiliar with ERP software. The day-to-day running of the business is Greek. They don’t know the volume of business expenses, and they don’t realise that by spending all client payments, they could be affecting salaries, production costs, or overheads like rent. The issue occurs frequently with start-ups and funded organisations.
In such cases, the owner or founder doesn’t take a salary. It may be a point of image and prestige, or it may be the assumption that all profits go to them anyway. The problem recurs when they choose to use these ‘profits’ as a personal piggy bank, making withdrawals at will. They may lose track of how much money they’ve taken, or they might not care.
The best way to manage this kind of behaviour is to offer oversight. Install the software and run the boss through it. At a glance, he can see how much cash the business needs to stay afloat. He can review large expenses like payroll and rent, but he can also check overlooked costs like fuel and parking fees. These can swiftly pile up.
Once he sees the current cash coming in and compares it with what is going out, he will realise exactly how much (or little) cash he can use for his personal needs. ERP tools can also help him plan his expenditure. He can instantly see that by taking cash out of the till, other areas are affected. He can see when and how the damage occurs.
Keep your people happy
Installing ERP software gives employees a wonderful tool to ‘manage’ the boss. Junior accountants may not feel confident enough to deny the boss petty cash. A fleet manager may feel she lacks the authority to stop the boss from ‘borrowing’ one of the company cars. Yet these actions can compromise the entire business.
With a good ERP system in place, the employee simply needs to log in and show the screen to the boss. It will show him all the reasons why his impulse cash withdrawal is a bad idea. In terms of the overall business, interdepartmental streamlining is easier. In the same way the boss can see how his actions affect others, department heads can observe each other.
Team members at all levels can see how their activities are influencing the rest of the business. Want the warehouse team to work overtime? Show them the production chain and delivery deadlines. Truckers dilly-dallying with their invoicing? Show them how late payment requests lead to delayed salaries and allowances.
Some workers resist job management software because they feel it ‘prefects’ them. It may feel like big brother is watching, and that can inspire resentment. This is why training is such an important part of any monitoring initiative. Employees will soon recognise the benefit. Rather than infantilising them and giving them orders, the software facilitates autonomy.
Workers go from ‘following orders’ to understanding why they should do a certain task. Adults require a solid reason to undertake any task, and job management software gives them multiple reasons, right on their screens. The software offered by Eworks has computer and mobile phone components for ubiquitous ease and portability. Speak to Eworks today for more information about the benefits of ERP software for your business.