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How ERP becomes the Key to Success For Trading Business

People involved in any trading business know how hectic it is to manage the day-to-day operations. On the one hand, they have to keep a regular liaison with vendors; on the other, there is the actual business of selling the product. And in the midst of all this, there is inventory management, cash flow management, keeping tabs on the financial aspect of the business, and so many other things to take care of.

The problem is, sometimes, we get so overwhelmed with managing the affairs of our trading business that the actual work – growing the business – takes a backseat. But there is a solution to this issue – Automation. Managing the operations of a trading business can largely be automated with ERP implementation. A well-implemented ERP software for trading can be the key to success in this hyper-competitive world.

ERP Implementation Solves the Problem of Information Bottlenecks

Picture this. A customer buys a product from your trading business but pays 70% of the price. The remaining 30% will be paid after 3 months. Now in between this period, the point of contact for that customer changes. The salesperson of your company knows that, but the accounts department still has the old PoC details. So as the third month approaches the end, the accounts department tries to call the PoC, but since it has the old record, it could not reach the customer. This waste of time can take a dire turn if it becomes frequent. This is just a simple example. The information bottleneck can obstruct a company’s way toward success.

An ERP software for trading will solve this problem of information not flowing from one department to another. The ERP system acts as a single point of truth, and the platform keeps each of the departments connected. So when you update something, every department gets access to the updated data. You don’t need to inform the concerned department about the update manually.

Address Cash Flow Issues with an ERP

Trading businesses, especially those that have just started, have the danger of falling into cash flow issues. When a company doesn’t have a centralized view of how much money is going out and how much money is coming in, it can severely impact the liquidity of the business. An ERP implementation is an easy way to fight this issue. How?

  • And ERP helps you stay on top of A/R invoices that have been pending for a long time. That way, you can expedite the process of receiving a pending amount from your customers.
  • Poor budget planning is another reason why companies suffer from cash flow issues. Since an ERP handles the Accounting part, you can use it to set up a predefined budget. Now, since every transaction is recorded in an ERP, you can use the budget set to block transactions that exceed the budget. It is also possible to get an alert when a transaction exceeds the budget. When we say transaction, we mean everything – from purchasing to miscellaneous expenses like travel costs, etc.
  • The most apparent reason why a company suffers from cash flow issues is the lack of profitability. With an ERP implementation, a company can have a centralized view of the profit and loss report with a break up of which item or service offering results in more profit or more loss.

An ERP System Streamlines Inventory Management

Inconsistent inventory management can get in the way of business growth. If the operations team doesn’t have real-time knowledge of inventory levels, which product is being overstocked, and which product is getting understocked – this lack of knowledge can snowball into more significant issues. For example, lack of inventory visibility can directly impact cash flow, make internal operations inefficient, result in the loss of inventory, and inability to deliver on time. Above all, it can negatively impact profitability.

Since the Best ERP software in India connects each part of the trading business, you can use it to have complete visibility of the inventory. Here’s a scenario. Suppose you have 100 laptops in your inventory. You are selling 5 laptops today. Once the delivery note is created, the system automatically updates the inventory level. You don’t need to do that manually.

The Best ERP software in India can manage the inventory in a 360-degree way –

  • Most ERP systems map the inventory with the item master data. So any transaction with regards to the items will reflect in the inventory as well- be it Sales or Purchase.
  • A good ERP software for trading offers ERP customization that enables a trading business to set up inventory-level forecasts. This is a fantastic way of never running out of products.

An ERP Implementation Empowers Businesses to Manage Money Matters Efficiently

So let’s talk about money now. The best ERP software in India automates the management of financials with minimal human intervention.

  • Most ERP implementations automate the update process of G/L accounts. So when your trading business earns profit, the profit and loss G/L account from your chart of accounts automatically gets updated.
  • Gain a bird’s eye view on A/R and A/P invoices – both pending and completed – enabling you to maintain the financial health as well as the reputation of your business.
  • Set up budgets, enable bank reconciliation, and visualize the financial report to gain insights- an ERP system can significantly reduce the workload of your finance department, making it more efficient and less prone to mistakes.

Data is the key in today’s world. If your trading business finds it difficult to pass on business data from one department to another, we are sorry. It can never be successful. But fret not! This is where the ERP implementation comes in. Of all the ERP software discussed above, the best ERP software in India for business use is certainly SAP, as it has many offerings for different types of businesses. An ERP system is the thread that binds all the aspects of the business together. It is the lifeline through which data flows freely. Data is power. And the ERP system unlocks that power.

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