Be sure to choose the right costing method when setting up your ERP system

In the world of accounting and inventory management, selecting the right costing method is crucial. Different industries and businesses have unique needs, and the choice of costing method can significantly impact financial reporting and decision-making.

Some common costing methods that can be applied when you implement an ERP system are weighted average (average costing), standard costing, and first-in, first-out (FIFO). Each method has its advantages and disadvantages, and understanding these can help you make an informed decision for your business.

Here is a breakdown of each of these methods, along with some of its pros and cons:

Average cost method

The average cost method, also known as the weighted-average method, calculates the cost of inventory items by dividing the total cost of goods purchased or produced in a period by the total number of items. It offers a straightforward way to assign costs to inventory.

The calculation is simple, and it evens out the costs of stock throughout the year.

Businesses that prefer the average cost method are often those in industries with high stock movement and where basic or simple analytical tools are required.

Pros:

  • Easily understandable.
  • Evens out costs of stock during the year.
  • Stock adjustments can be done over all stock quantities, including specific stock items.

Con:

  • Less suitable for tracing variances within stock movements and pricing.

Standard costing

Standard costing is a practice used to estimate the expenses of a production process based on historical data and probable future changes. It is used by manufacturers to plan their costs for the coming year on various expenses, such as direct material, direct labour or overhead.

This method involves comparing budgeted costs to actual costs. It is more complex and requires a detailed historical dataset of stock prices and movements to accurately implement budgeted figures.

Standard costing is the preferred method of businesses that want to trace variances regularly and in more depth, including price and quantity variances for materials, labour and overheads.

Pros:

  • Provides beneficial analytical information when implemented correctly.
  • Allows tracking of variances and costs in a structured way.

Cons:

  • Requires established accounting teams and detailed historical data.
  • Involves a significant initial time investment in determining budgeted costs.

FIFO

FIFO costing tracks the price of items based on their cost at the time of purchase order receipt. It applies this cost to each shipment of the item until the receipt quantity is exhausted.

FIFO is calculated by adding the cost of the earliest inventory items sold, ensuring that the oldest stock is used first.

Industries that require the sale of the oldest stock items first, such as those dealing with perishables, prefer FIFO. It also helps monitor stock obsolescence.

Pros:

  • Easily understandable.
  • Accurate gross profit at a given point in time when implemented correctly.

Cons:

  • Less suitable for tracing variances within stock movements and pricing.
  • Stock adjustments can be more complex and time-consuming, as they need to be done per cost layer.

The choice between these methods may vary depending on the focus of your industry or the reporting requirements of your company.

Below are a few examples of where you can apply the above costing methods depending on your stock movement:

For businesses that stock or buy to order, all three methods can be applicable.

  • FIFO is highly beneficial in industries dealing with goods that have a limited shelf life, such as food products. FIFO is also advantageous for businesses with specialised stock and low quantity movement.
  • In industries with high quantity movement and similar items, all three methods can be considered.
  • In industries where stock prices are highly volatile, both average and FIFO methods can provide advantages.

For manufacturing-focused businesses, streamlined processes may make average cost methods or standard costing more appropriate

In short there is no single costing method that trumps all others. The choice of costing method should align with your business’s unique needs, industry focus and analytical requirements.

Contact epic ERP for an assessment. We will help you chose the right costing model for your business. 

5 Business Problems Oracle’s ERP Solves

5 Business Problems ERP Solves

Are your financials taking longer to reconcile, are sales forecasts based on guesswork not data, is inventory in a mess, and is customer satisfaction faltering? You are not alone! Derived from an infographic by Oracle Netsuite, we share with you the latest stats on some of the most prevalent frustrations businesses face, and insight into how a new ERP system could solve them for you.

1. You have lots of different software for different processes.

Do accounting, sales, the warehouse and so on, all use different applications? When front- and back-end systems run separately, it can wreak havoc on the processes designed to ensure the business runs smoothly. ERP software integrates these systems so every business function relies on a single database.

 

2. You don’t have easy to information about your business.

What’s your sales margin, average orders a day, sales to date, or net profit? For companies that rely on siloed systems and spreadsheets that need to be updated constantly and reconciled manually, it takes ages to find out. ERP delivers greater visibility and sharable, real-time data for faster decision-making.

3. Accounting takes longer and is more difficult.

Often, the first noticeable signs that your company needs ERP software will come from accounts. Paper-based invoices and sales orders, repetitive processes and manual entering. If it takes ages to consolidate or resolve financials across systems and spreadsheets, an ERP solution can make a massive difference.

4. Sales and the customer
experience are both suffering.

If sales, inventory and customer data are maintained separately, serious problems can emerge across your company. If a customer calls to inquire about an order and staff can’t track it to see if it’s shipped – or even in stock – your company will start to develop a poor reputation. The right ERP can turn this around.

5. Your IT is too complex
and time-consuming.

Customising disparate systems, integrating them and maintaining them with patches and upgrades can be complex, costly, and sap critical resources. Rather than add more software and complexity to an ineffective system, ERP can give you the agility to respond to changing business needs rapidly.

Looking to Solve your Business Problems?

Sources
1 TechnologyEvaluation.com research
2 Okta’s Businesses@Work report – number of apps per company
3 Panorama ERP Report 2018
4 SelectHub research report
5 Allied Market Research report – APAC
6 Business-Software.com Top 20 ERP for 2020 report

6 Key Stages for a Successful ERP Implentation

6 Key Stages for a Successful ERP Implementation

Implementing an enterprise resource planning (ERP) system can be a complex undertaking that affects many parts of the business. As with any major initiative, a carefully designed implementation plan is critical. When partnering with an ERP specialist, they should divide the implementation process into phases, each with clear objectives, in order to maximise your success. Discover what actions your ERP partner should be focusing on when implementing your cloud-based ERP system. Read the full article from Oracle NetSuite here.

Planning

1. Discovery and Planning

All ERP projects start with a discovery and planning phase, which includes researching and selecting a system, setting up a project team and defining detailed system requirements.

Design

2. Design

The design phase works from detailed requirements and an understanding of current workflows to develop a detailed design for the new ERP system. This includes designing new, more efficient workflows and other business processes that take advantage of the system.

development (1)

3. Development 

Armed with clear design requirements, the development phase can begin. This involves configuring and, where necessary, customising the software to support the redesigned processes.

test

4. Testing

Testing and development may occur concurrently. For example, the project team may test specific modules and features, develop fixes or adjustments based on the results, and retest. Or, it may test one ERP module while another is still in development.

Deploy

5. Deployment

This is what you’ve been striving toward: the day the system goes live. Be prepared for potential issues, since there may be a lot of moving parts and possibly some befuddled employees, despite your best efforts to prepare them for the change.

support

6. Support and Updates

Nurturing your ERP implementation after deployment helps to keep users happy and ensure the business achieves the desired benefits. The project team may still be responsible for the ERP system during this phase, but its focus will shift to listening for user feedback and adjusting the system accordingly.

Looking for more help with ERP Implementation? Let us know.

Number 1 Cloud Financial Management System

The Number 1 Cloud Financial Management System

We are proud Oracle NetSuite partners, and they are guaranteed to improve your business performance with real-time metrics and role-based dashboards, accelerate the financial close while maintaining compliance with applicable accounting standards and drill down into the underlying details to understand the impact on your business. Read the full article from Oracle NetSuite here.

Financial and Accounting

NetSuite’s cloud finance and accounting solutions seamlessly couple core accounting functionality with real-time financial visibility and business insights to drive financial excellence.

Billing

NetSuite’s billing management capabilities integrate your sales, finance and fulfilment teams—improving accuracy, eliminating billing errors, strengthening revenue recognition processes and driving fulfilment accuracy and efficiency.

Revenue Recognition

NetSuite’s revenue recognition management solution helps companies comply with accounting standards and report financial results in a timely manner.

Financial Planning

Shorten cycle times, engage business users and enrich your planning process with an intuitive planning, budgeting and forecasting solution. 

 

Financial Reporting

From reporting and analytics, to insight and decision-making, gain a more complete picture of your business on-demand and in real-time.

Global Accounting and Consolidation

NetSuite provides unprecedented “close to disclose” capabilities that accelerate close time, maximise transparency and ensure compliance.

GRC

NetSuite Governance, Risk and Compliance (GRC) solution addresses the issues of corporate governance, enterprise risk management, and effective corporate compliance with technology and processes.

Looking for more help with Cloud Financial Software? Let us know.

9 Best Practices for Implementing ERP

9 Key ERP Implementation Best Practices

Implementing an enterprise resource planning (ERP) system is a big step for any organisation. ERP software supports an organisation’s primary business processes, such as accounting, budgeting, inventory management, supply chain management, order processing, human resources and payroll.

Because an ERP implementation is a major project with a broad impact, it’s important to follow best practices throughout each phase of the process to make sure the ERP deployment proceeds smoothly, and to ensure that you get the most benefit from the system.

These best practices cover each major ERP implementation stage, from defining requirements to training and providing support. As you work your way through your implementation checklist, they can help ensure that your ERP implementation meets your business goals, minimises the risk of delays and cost overruns, and enables employees to use the system effectively. Read the full article from Oracle NetSuite here.

1. Project Team

Establishing a strong project team is critical. Typically, an ERP implementation team includes an executive sponsor, a project manager and representatives of key business groups involved in the project. Having an executive sponsor who can adjust business priorities and pull in additional resources when needed is vital to success.

2. Key Requirements

In any ERP project, it’s vital to establish clear requirements, which should be linked to your business goals. Those goals might, for example, include automating processes to save time and reduce costs, improving your ability to respond to customers and enabling better analysis across the business.

 

 

3. KPIs

With an understanding of key requirements, it’s possible to identify specific KPIs. These KPIs can represent targets to measure the success of your ERP implementation. For example, a manufacturer might want to improve cycle time, inventory turns, demand forecast accuracy, order backlogs, costs and downtime. 

4. Project Management

An ERP implementation can take three months up to a year or more in big companies. It’s important to establish a project management framework that will guide your ERP deployment to success over the entire implementation period. At a high level, project management should focus on aligning the ERP initiative with business needs, keeping the project on track, and ensuring that key senior managers and other stakeholders are able to provide input.

5. Collaboration and Communication

Successful projects revolve around building a mutual understanding of the goals and objectives of the ERP implementation. It’s crucial for everyone—from the CEO to end users—to be in sync. Everyone needs a clear understanding of why the company is implementing the ERP system, what the system will do, the benefits it will bring and what to expect during the ERP implementation process.

6. Data Mitigation

Migrating data to the ERP system is a critical step in the implementation, and one that requires careful preparation and planning. With any migration, there’s a risk of losing or corrupting data, especially if you are consolidating and standardising data from a variety of different applications.

7. Training 

It’s unrealistic to expect that workers will immediately be proficient with the new ERP system. Targeted, ongoing training that matches the needs of different groups and roles can help users accept the system and get the most benefit from it.

 

 

8. Support

A go-live date is a reason to celebrate. But once people begin using the system, it’s more than likely they can come across issues and begin asking questions. It’s wise to prepare by providing several resources. 

9. End-user Feedback

Gathering end-user feedback can be extremely useful throughout the entire implementation process. In the early stages, it can help you gain deeper insights into how people work, how they interact with other employees and customers, and the obstacles they face daily. 

Depending on your organisation’s needs and budget, you’ll likely have a variety of ERP systems to choose from, including cloud-based and on-premises solutions. Many organisations select cloud-based ERP systems, which can be easier and faster to implement and don’t require capital investment in hardware.

Looking for more help with ERP implementation? Let us know.

5 Signs it is Time for an ERP System

5 Signs it is Time for an ERP System

Is it taking longer and longer to reconcile financials at the end of the month? Are your sales forecasts based more on guesswork than solid figures? Or perhaps your business is having trouble keeping up with its order volume and customer satisfaction is faltering as a result. Or it’s a pain to find out exactly how much inventory you have in your warehouse. If this sounds like your business—or close to it—then it may be time to consider an ERP system.

This infographic on the 5 difficulties an ERP system would solve for your business is a great place to start, and has been derived from a blog by Oracle Netsuite

Let us know if you would like to discuss your ERP needs?

As an Oracle Netsuite partner, we are always happy to discuss your business needs. Leave your details and we’ll get back to you.

SuiteAnalytics Could be Your Software Soulmate

Falling In Love with SuiteAnalytics

As a Netsuite partner, we have fallen head over heels for SuiteAnalytics’ powerful reporting capabilities and how it can empower businesses like yours to discover new insights and confidently make decisions that accelerate your success. So we are sharing the love with you here, inspired by Oracle Netsuite’s article.

The Benefits of SuiteAnalytics

A Single Version of the Truth

Single source data combined with visual analytics generates meaningful, timely and actionable insights.

Real-Time Transparency

See company performance across all business functions—from summary level to transaction level.

Self-Serve, Personalised Experience

Easy-to-use reporting tools without requiring programming or technical resources.

Simple Integration

Easily integrate data, charts and graphs into NetSuite dashboards as portlets.

Looking for more information on Oracle Netsuite solutions? Let us know.

Some of SuiteAnalytic's Highlights

SuiteAnalytics Workbook leverages an intuitive modern user experience, expanded analytical capabilities and is designed so that even inexperienced users can perform complex data analytics tasks. With Workbook, users can easily and securely explore their data, create sophisticated criteria filters with real-time visualizations. Data can be further analyzed using theWorkbook pivot and chart capabilities, with intuitive drag and drop interactions. Workbooks can be saved, shared, reused with content easily deployed in NetSuite dashboard as portlets.

  • Saved Search is a valuable tool for filtering and matching data to answer various business questions.
  • NetSuite Reporting provides a set of standard and customizable reports for all transaction types.
  • Workbook enables users to understand why things are happening in their business.
  • Business users can create Workbooks on the fly without writing a single line of code or complex queries, to seek the desired information quickly.
  • Data can be analyzed using the Workbook pivot and chart capabilities with easy drag and drop interactions.

epic ERP Commits Significant Investment into Africa to Help Local Customers Become More Competitive

– featured in Cape Town Guy and After 12 Magazine

Johannesburg, March 2021 – Covid-19 has given all businesses cause to reflect on their use of resources, processes and efficiency. Lockdown restrictions, closed borders and weak trading environments have forced adaptation to new production processes, sales channels and physical space requirements. Now it is time for business management platforms to follow suit.

During lockdown, Stuart Scanlon, MD of epic ERP, met with his fellow directors and business advisors to rethink the enterprise resource planning (ERP) requirements African businesses would have since the pandemic has shifted business globally.

“With a key focus on helping businesses grow and overcome real-world problems, we are massively optimistic about the prospects for South Africa and the rest of the continent,” says Scanlon.

Our company event celebrating the addition of Microsoft Dynamics and Oracle NetSuite to our offering.

Dr Daneel van Eck, Director of Strategy for Epic ERP, said, “Delivering cloud solutions in Africa has unique requirements. Although our existing solutions are exceptionally strong in several verticals, we realised in order to service a wider customer base in an effective way we needed to take on additional, complementary ERP solutions.

“As a result, we have now teamed up with Microsoft Dynamics and Oracle NetSuite to provide their ERP products alongside our Epicor offering. Despite the obvious credentials of all three providers, it’s not about being vendor-driven – our rationale is that we need the flexibility to meet every possible customer requirement to unlock maximum value in their business. Ultimately, our focus is on our customers and ways to help them grow. We feel we can do that better by being solution-agnostic. Our strategy is #CustomerFirst,” van Eck explains.

Scanlon says epic ERP has moved closer to the company’s original strategy, which was built around a multi-vendor approach.

“We short-listed five potential vendors and called in external consultants to help us assess their strengths across various metrics so that we could cover the scope of customer needs we defined. Ultimately, the three vendors we have in place complement each other as a best fit for our vision for helping African mid-tier organisations grow and succeed in their sectors. ERP is in our DNA, so we needed to present the strongest line-up we could, and we believe we now have that in place,” says Scanlon.

“As a solutions provider we have to preserve our focus and agility in putting customers first and providing vendor-neutral, honest advice. In this model we can leverage the best-fit ERP system based on multiple factors. Going forward I am also confident that we will have more news of exciting acquisitions and vendor relationships to share because the operating environment will be increasingly digital and that will play to our strengths in helping our customers stay competitive globally,” van Eck concludes.