31 Jul
What is the difference between ERP and Accounting Software?
There is a common misconception that ERP and Accounting software are the same. However, this is not the case. This article will explain what ERP and Accounting software are and how they differ.
What is ERP?
A single integrated system for managing all aspects of business operations and transactions is called ERP (Enterprise Resource Planning). Among the essential functions managed by ERP are human resources, financial transactions, customer service, inventory management, and supply chain management.
An ERP system automates business processes within a company, ensuring optimal efficiency. It is a powerful and robust software because it incorporates multiple business applications into a single and unified system.
ERP systems can either be cloud or server-based. Cloud-based ERPs are hosted in the cloud and can be accessed directly via web browsers without requiring installation. Whereas for server-based, the application is installed locally on centralized servers. Users within an organization can then connect to the server and use the application.
A unique feature of the ERP software happens to be the capability to scale up and down, making it useful for all types of businesses.
Popular ERP software includes Oracle Cloud ERP, MS Dynamics 365, SAP, and Oracle NetSuite.
What is Accounting Software?
Accounting software is a standalone computer program that manages the financial operations of a business, such as payrolls, expenses, and revenue. They are easy to use and help accounting workers reduce errors and save time.
Accounting software can help track company cash flow, send proposals and provide insights into business performance. In addition, most accounting software provides invoicing capabilities and lets users create and send invoices whenever needed.
Different types of accounting software are available based on functionality. As an option, they can be accessed via the web browser or using a dedicated desktop application. Its simplicity and convenience makes it popular among small businesses. Hence, with little training, any accounting employee can use the software.
Some common examples are Xero, Quickboocks, Sage and Zoho Books.
Differences between ERP and Accounting Software
ERP and Accounting software differ mainly in the following aspects:
- Simplicity and Ease of use: Accounting software is simple and convenient to use because it is developed specifically to handle an organization's financial transactions. However, ERP consists of business applications (modules) used by numerous departments in an organization, which can make the software difficult to use.
- Versatility: ERP is multi-purpose and applicable to different business processes, as opposed to accounting software which is based solely on financials. Moreover, ERP can be used by everyone in a company, unlike accounting software used solely by the finance team or accounting department.
- Cost: Since ERP is a single software that consists of many business applications, it has more advanced features which are beneficial to a company, making it more expensive to procure than accounting software. It is, for this reason that a lot of small-sized businesses prefer to buy accounting software to automate their financial processes.
- Flexibility and customisation: Most accounting software is ready to use out of the box, with little configuration needed. However, ERP usually allows in-depth customizations and integrations with other systems. This capability makes it easy to incorporate features unique to a business and its operations into the software.
- Scalability: Many small and medium-sized businesses start with accounting software and then move to ERP as their business grows. Because ERP can provide real-time data and manage all of the company's operations using a single integrated system, it is ideal for businesses.
ERP or Accounting software? Which is more appropriate for a business?
Choosing the “right” software for a business depends on its specific needs and not necessarily its size. Whether it is a small or large business, if the organization needs dedicated software for accounting and financial management, they may decide to use Accounting software. On the other hand, if a company would prefer an all-in-one solution designed to handle the needs of all its employees, regardless of their functions and departments, then an ERP system may be the best solution.
In order to leverage the desirable features of both ERP and Accounting software, organizations can choose to use either one or both. In the end, what matters most is the purpose of the software and whether it is suitable for the daily operations of the company.
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1 Comment
Fletch Skinner
Nice post