Prepare Your Credit Department for ERP Implementation

Enterprise resource planning (ERP) systems help organize all operations in the credit department and in the business. These systems manage essential business processes such as accounting, production, customer services and financing.

Each ERP system works differently depending on how it is set up. For example, not all systems have robust credit and collections or AR functions, said JoAnn Malz, CCE, ICCE , CCE, ICCE, NACM chair elect and director of credit and collections at The Imagine Group, LLC (Shakopee, MN). “They don’t always come equipped with tools to help the credit team specifically manage their receivables or the risk associated to those receivables from a credit standpoint,” said Malz. “From an accounting standpoint, ERP systems are heavily equipped with those tools needed.”

Some companies may limit their use of ERP to only a few specific functions, where others use them for every function within the business. But before implementing an ERP system, what exactly should your credit department know?

Prepare your data.?When undergoing an ERP upgrade, migrating data from old systems can be tedious. The most important tip is to keep your data fresh and clean before transferring it over. One way to keep your data clean is to review your active and inactive accounts beforehand along with credit limits and customer contacts.?Do you have any accounts still assigned to those who have left??Are any salespeople assigned to accounts that no longer exist?

These are questions to ask before transferring your data to a new system, said Marlene Groh, CCE, ICCE , regional credit manager at Carrier Enterprise, LLC (Salisbury, NC) during Credit Congress session?Lifeline for Implementing New ERP/Software Program. “Make sure to include a collector, analyst or cash app person who can give you input as well,” Groh said during. “Remember, you are not alone in this process—it should be a team effort. If you have a documented system of processes, you will have something to build on.”

Other data to analyze before migrating to a new system could look like old credits needing to be applied, bad debt to be written off and balances out of place on customer accounts. “When we first went live years ago with JD Edwards, the data we had in our previous system needed to be cleaned up a bit,” said Val Hardesty, CCE, CICP , director of credit at Elevate Textiles, Inc. (Charlotte, NC). “Naming conventions were one of the biggest issues we had where some customers were listed twice in our system. So, it’s essential to go through and cleanse the data to make sure it makes sense once migrated into the new system.”

Hardesty said it took her company nearly four years to fully implement and now her company uses ERP start to finish. “It was a very lengthy process,” she said. “It uses all of the company’s data to run the business.”

Consider change management practices before implementation.?Change management plays a vital role in successful ERP implementation and should be prioritized at the beginning of the process. It also is necessary to address any employee fears and concerns around ERP system implementation. Additionally, you should focus on what kind of reporting your management expects to get out of the system and assign who will take over the administrative work of maintaining the behind-the-scenes processes that keep information current and accurate.

Some employees may fear the system will “replace” their job or potentially make their daily job more difficult. The key to success is a leadership buy-in, said Hardesty. “Try to make those pivots where necessary so that the process will go smoother.”

Build a database for learning and training. Learning a new system or new technology can be difficult for anyone. A guide and training sessions for end-users to be able to ask questions is an effective way to do so. “It can get overwhelming,” said Hardesty. “So, creating standard operation procedures is essential.”

Here are a few tips for training:

1. Create a learning library for those who are new to training.
2. Know your team well enough to distinguish visual learners versus physical learners.
3. Undergo live training sessions if possible.

A comprehensive training and communication plan is needed in order to get your team members on board with key milestone dates in the system implementation. Everyone should know?who?will own the system documentation and?where?it will be stored for easy access.

Test before going live.?Tests are one of the most vital steps to avoid disaster during ERP setup. It can take several rounds of testing over a long period of time before going live, but it is necessary in order to be successful. For example, have your team run a scenario to test a new customer, set up cash-in-advance customers or create SOPs to build test requirements.

During testing, it is best to know exactly who is in charge and who has access to what—and document every customization you make. Customizations do not transfer over automatically from one system to another, so special attention to detail is key. “We typically write out the steps needed to make sure our tests are completed to satisfaction and run it through start to finish,” said Hardesty. “We will run them over and over again because you cannot go live if you haven’t tested the potential failures.”

ERP systems can be a great tool if used correctly. When you implement an ERP or bolt-on, you do not know all of the decisions you have to make in advance, said Malz. “Having an organized system and a knowledge base with your team will help you navigate ERP systems effectively.”