Jogeshwari West, Mumbai 400102 +(91) 98333 44 333 sales@globalteckz.com

Difference between ERP and Accounting Software

  • Home
  • Difference between ERP and Accounting Software
difference between erp software and accounting software

Difference between ERP and Accounting Software

You should know about ERP vs Accounting software both these terms are used synonymy. As organization feel that it is the entries in Account that finalize the calculation of products and services offered by the company. Although it’s incorrect financial entries only provide you who purchase the products at what cost and the related effects.

People who are involved in the business world frequently use certain technical terms. They frequently even fail to remember that not everyone can understand those industry jargons. The same is true of ERP software; for experts, they are indispensable tools, but for novices, the term may be confusing.

So, if you’re curious about the differences between ERP and accounting software, it’s a good idea to check out more information on both of these subjects. Although it has been observed that many people use these terms synonymously, ERP and accounting software are actually two distinct things. Their use cases and functionalities differ significantly.

What is ERP Software ?

Enterprise resource planning, or ERP, refers to a module that has the ability to keep track of both a company’s tangible and intangible assets, including inventory management, order fulfillment, production management, invoicing, reporting, and job costing. It also provides support for human capital management and customer relationship management at the same time. Essentially, this tool is made to consolidate every aspect of the company into a single suite with effective management options.

What is Accounting Software?

As its name suggests, accounting software is primarily used to manage a company’s accounts. Practically speaking, accounting software manages the financial aspects of the company while maintaining accurate records of all transactions, journal entries, AR/AP, and general ledger usage. Additionally, it contains information on income statements and balance sheets. The most trustworthy tool for preserving an organization’s financial stability is accounting software.

erp vs accounting

ERP vs Accounting Software 

Accounting software wasn’t created to provide Manufacturing Management, but ERP software is very capable of meeting these demands. Production Planning, a Bill of Materials (BOM), and many other features are part of this feature.

Businesses frequently encounter circumstances where it becomes challenging to manage the supply of shipments and production resources as a result of the rising customer demands. It typically results in missed deliveries, order modifications, and equipment breakdowns as well. Businesses require production management software to handle a variety of aspects with ease in such circumstances. The ERP can be a great solution when accounting software can’t handle the complexity.

Simply put, the ERP solution aids companies in identifying additional growth opportunities in the competitive market while maintaining a satisfied customer base. In fact there is a major difference between these software, from functionality point of view and from output they offer to your business. Even today there are many businesses who sell accounting software in the name of ERP and small businesses are mis leaded by the ERP title.

Many of our clients even pronounce this statement –

“Our Accounts department is using ERP software, Implemented by X Vendor”

One should note that ERP is not implemented for one single department, else it will be considered as a Simple Software for which we covered a blog post on Difference between ERP and Simple software.

One of the most important task of an Enterprise Resource Planning software is to perform more than Accounting functionality. As businesses have different aspects and department which work together to achieve organizational goals therefore ERP covers and handle every department such as Sales, Purchase department, Warehouse Logistics, Manufacturing, and Accounting and Financial management.

It doesn’t matter your business is Small size or Big if you have implemented an ERP software it should cover every department and also integrates well with 3rd party software for seamless working. The final outcome is that no manual work by any department.

The major difference between in an ERP software and Accounting software is that ERP covers every single aspects of your business for example – Manufacturing orders till financial management and even go beyond that by handling Human Resource management, Point of sales in case require. Where as An Accounting ERP will only cover few aspects of Sales, Purchase and billing or more over providing the financial status of the business.

With the growth of variety of software nowadays there is lot of confusion between an Accounting software and ERP software, although we shared the differences between both the software in terms of functionality and feature. Also one should remember that Accounting software can be implemented quickly as these software are specially crafted and serve particular industry.

Whereas implementation of ERP software take time as there are different phases, workflows, forms, integration which needs to be taken care of, Further creation of different users as per the roles, rights and departments are other duties that needs to be perform during ERP implementation.

5 Major Differences between ERP and Accounting Software

5 Major Differences between ERP and Accounting Software

  1. Functionality

Compare to Accounting software there are many other functions and features available in ERP solution In comparison,. ERP software includes modules for a variety of business operations, including supply chain management, customer relationship management, and human resource management, whereas accounting software is designed for financial management. ERP software gives businesses a thorough understanding of the entire business process, enabling them to take wise decisions.

  1. Data Management

ERP software provides centralized data management, where all data is kept in a single database and easily accessible for users to access and analyze. Accounting software, on the other hand, is limited to managing financial data, which is kept in a separate database.

  1. Integration

Financial software only integrates Accounting management, or some of the parts of related department such as purchase or sales.  Whereas; ERP software integrates all business processes, including financial management. Businesses can improve efficiency, reduce errors, and streamline processes by integrating.

  1. Scalability

ERP systems are built to grow with businesses. All sizes of businesses, from small start-ups to massive corporations, can use it. In contrast, small to medium-sized businesses with basic financial management requirements work best with accounting software.

  1. User Experience

Due to its wider range of functionality, ERP software may be trickier to use than accounting software. However, contemporary ERP software has a graphical user interface (GUI) that makes it simple for users to navigate and is made to be user-friendly and intuitive. Generally speaking, accounting software is simpler to use because of its limited functionality..

Conclusion

Accounting software and ERP software are both necessary for businesses, but they have different functions. Accounting software is primarily used for financial management, whereas ERP software is designed to manage all business operations. Compared to accounting software, ERP software provides more functionality, centralised data management, and better scalability. Accounting software, however, is typically simpler to use, so businesses with only minimal financial management requirements might find it adequate..

Other Articles you might be interested in reading 

Facebook Comments

Leave Comment