Accounting Software vs ERP

  Civic John   ·  

25 October, 2021

  ·  4 min read

Accounting software is the most reliable tool to maintain the financial health of an organization. It also includes details about balance sheets and income statements. ERP stands for Enterprise Resource Planning. This tool packs the entire business into a single suite with efficient management options. It can track the intangible and tangible assets of a company including inventory management, order fulfillment, production management, invoicing, reporting, and job costing at the same time extending support to Customer Relationship Management and Human Capital Management.

The accounting software is not designed to offer Manufacturing Management, but ERP Software can handle these needs very well. This feature includes Production Planning, Bill of Materials, and many more.

In simple words, the ERP solution helps businesses to find more ways to grow with a satisfied customer base in the competitive market. But you need to understand the differences between ERP and accounting software before you can decide which will suit your needs better. The differences are,

  1. Cost

    Accounting software usually costs less, which makes it an ideal candidate for small businesses. Whereas the cost of implementation and maintenance of ERP can be highly expensive even for medium to large-sized companies.

  2. Personnel required

    Accounting software can be managed entirely by the small business owner. But it requires a team of professionals to maintain an ERP system.

  3. Flexibility

    While both are important for your business in their unique ways, ERP is more flexible than accounting software and it lets you manage different tasks more conveniently. It all comes down to the needs of your business and the size of the business.

  4. Functionality

    ERP can help in resource planning and managing a highly complex production line. Accounting software lacks such functionality.

How does ERP help Accounting Software for Small businesses?

ERP helps you to get a better view of all your business areas. It provides your company with a swift and accurate decision.

  1. Analytics/Reporting

    ERP systems help in analyzing the data for insights and trends. It helps every business to realize how a small problem or change in one department can affect the rest of the departments in a company.

  2. Data Quality and Financial Management

    An ERP system for accounting contains an automatic data transfer. In addition, the data management is accurate, consistent, and faster.

  3. Maintains Customer Relation

    ERP helps small businesses to deliver their product or services to their clients at a faster pace. Customer satisfaction is instrumental in maintaining a successful enterprise. You can attain this through ERP software.

  4. Coordination between Employees

    An ERP helps in integrating all your processes, that way the coordination between employees is significantly boosted.

  5. Risk Management

    An ERP solution can help you identify risk factors. As an ERP system anticipates all possible events you have an opportunity to forecast all your risks. A reliable, accurate ERP system greatly reduces the probability of errors.