“Financial Management System” and “Enterprise Resource Planning” are two popular terms used in the finance, operations and management departments of a business.
While there’s some overlap between the two (and some people even use the terms interchangeably), there is a clear difference between them as well.
Let’s break down the key differences between FMS vs ERP so as to help you make an informed decision when choosing whichever one is best for your organisation.
What is FMS?
A financial management system (FMS) is the software used by organisations to manage financials — including income, expenses, and assets. It integrates and consolidates all financial operations, data, processes and procedures within a single, centralised platform.
Today’s financial management systems have evolved from what was basic back-office software into mission-critical systems that give finance teams the tools and solutions needed to perform various functions from maintaining audit trails to ensuring compliance with applicable accounting standards.
They are able to do this whilst providing enhanced financial controls and visibility into financial status and performance.
Infor SunSystems is a great example of a financial management system.
Benefits of FMS
- Ad hoc or period-end reporting can be completed quickly
- Multi-company and multi-currency functionality
- Data visibility with a real-time financial transaction
- Error-prone manual inputs are significantly reduced with the help of automation
- Comprehensive and powerful budgeting, planning and forecasting
- Audit trails and sophisticated data reconciliation functionality
- Integrated financial and operational data
- Ability to be hosted in the cloud or on-premise
- Compliance with both local statutory and international financial reporting standards
What is ERP?
Enterprise Resource Planning (ERP) is software that organisations use to manage day-to-day business activities.
ERP is the brain of a company. It streamlines and integrates all aspects of business management, from financial accounting to customer relationship management, making for an efficient business atmosphere that can be customised to run any type of enterprise.
As an integrated system, ERP can support and standardise a multitude of business processes such as sales, procurement, human resource management, project management, supply chain operations, and more.
ERP also enables data transfer between these functions to flow into one cohesive system.
Instead of running multiple standalone databases, the system collects the organisation’s shared transactional data from multiple sources to form a secure, centralised repository. This eliminates the chances of data duplication while providing data integrity where everyone in the organisation can be confident that data is accurate, complete, and up-to-date.
NetSuite is a great example of an ERP system.
Benefits of ERP
- Ability to support and standardise multiple business processes
- Get rid of departmental, technology, and data silos
- Better access to customer information together with faster response times and improved on-time delivery
- Gain improved business insight from real-time information
- Eliminate chaos with well-defined business processes
- Multi-company and multi-currency functionality
- Cloud security
- Error-prone manual inputs are significantly reduced with the help of automation
- Move work faster through streamlined business processes
- Reduced setup and operational costs through cloud computing
- Support for a smooth operation through uniform and integrated systems
Differences Between FMS and ERP
ERP and financial management systems share some characteristics, like accounting functions, financial analysis functions, and financial transaction drill-downs.
However, ERP software is different from typical financial management systems.
What’s the key difference between these two types of business management systems?
At its most basic level, a financial management system is designed purely for managing and powering the financial operations of an organisation. It is a standalone system for accounting functions with support for financial reporting, multi-currency transactions, financial analytics, etc.
On the other hand, ERP has additional operational capabilities. It’s able to support sales, service, human resources, CRM, eCommerce, and so on. It also integrates these different business processes to allow the organisation to run a unified system that’s based in the cloud.
ERP vs. FMS: Ideal Users
Both FMS vs ERP systems are mostly used by companies in sectors such as financial services, manufacturing, insurance, software services, property management, hospitality, and not-for-profits.
These companies use it for keeping track of large volumes of data and business processes.
The systems are not well-suited to small financial processors like an individual shop. The cost of implementation and training could be high, making it difficult to justify the expense for smaller businesses.
In addition, many ERP and FMS software packages can only be accessed online via a network server making them less practical for small businesses with limited budgets.
Financial Management System vs. Enterprise Resource Planning: Which is right for you?
If you’re looking for a solution that lets you manage the entirety of your financials and accounting operations, then FMS is your best bet.
On the other hand, if you want a system that offers a broader range of processes with support for other areas of business management (in addition to accounting operations), then ERP is a sure candidate.
Conclusion
People often mistake FMS and ERP as being the same thing. This is not true, they are very different systems that both have their own strengths and weaknesses.
FMS is short for Financial Management System. This can be used to track financial transactions and assets, as well as forecast future revenue streams based on current trends.
ERP stands for Enterprise Resource Planning. This kind of system provides business management tools like inventory tracking systems or customer relationship management (CRM) applications in one convenient interface so that you have access to all of your resources without having multiple logins across different software.
Whether you’re looking for an ERP or FMS solution, FinanSys is able to help.
We help all organisations improve their ability to capture and view financial and non-financial data to support better business decisions with SunSystems.
Also, our end-to-end NetSuite services range from implementation to training, support, customisation, integration, and process optimisation, and covers all of NetSuite’s products including financial ERP, CRM, eCommerce, and professional services automation.
Get in touch now to get started with the world’s most advanced Financial and Business Management System.
