cut down excess expenses Using ERP Accounting software

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For a business to increase its profitability, it must perform one of two alternatives:

All businesses would want to increase revenue and cut costs all at the same time. Many strategies are pursued as business chases both goals. Some attempt to cut costs such as wages by laying off staff, cutting back on non-business related expenses, and the smartest businesses being those that don't pay a single cent extra towards software related costs through adoption of FREE open source ERP software!

In this article, we go over how FREE open source cloud ERP softwarecan assist SMEs to cut excess expenses through a variety of clever and yet simple ways.

Variances between supplier orders and actual deliveries

Most inventory purchases which contribute to direct operating costs are managed by first placing orders with suppliers. In the purchase order, the buyer provides a clear description of the goods being ordered from the supplier, the quantity as well as the price and expected delivery date that the goods will be bought for. This procedure should be simple and straight forward in an ideal world but is the area we increasingly see in South Africa as one that businesses benefit a lot when stringent controls are effected around this procurement process. The reasons for this is that suppliers to South African businesses, both local and international, change either the quantity or the price of goods delivered. Failure to stick to promised delivery dates is another headache which impacts the service quality of these businesses to their own clients.

Free accounting software such as ERPNext assists businesses to cut excess expenses that would otherwise go undetected when suppliers deliver different quantities than those agreed to in the purchase document. This is accomplished through automatic checks which give warnings or block the transaction from being captured on the accounting software when differences are detected in both quantities and amounts at the time that the goods are either delivered or invoiced by the supplier. This otherwise simple action saves countless businesses a lot of money that would otherwise be spent unnecessarily had things gone on unnoticed. When the business is still starting, this would be something that can easily be picked up, but as the scale of operations grow, it becomes increasingly difficult to keep a pulse on each and every purchase transaction and hence the critical need to enforce controls around the procurement process.

To fully understand how this problem arises in sizeable businesses, one must first understand that the departments and individuals responsible for each part of the process are more often than not different and independent of each other. One person in the procurement department is typically responsible for managing purchase orders. Another person who could be the warehouse or stores manager, receives the stock when it arrives. The warehouse manager typically is interested in the quantities delivered and checks that the product is indeed the correct one. In South Africa, we've observed that warehouse managers that receive stock rarely concern themselves with its price. This is almost always left off as a problem for the finance department to deal with who are then responsible for the supplier invoice payment.

Without robust ERP software in place to capture discrepancies that may arise, businesses can end up spending more than they should and this undoubtedly hurts their profitability when these problems are not detected and resolved timeously.