Know The Difference Between An ERP System And Accounting Software

Posted By : Devesh Singhal | August 13, 2018

ERP system and accounting software

Business market has seen a lot of changes in recent years happening to business management tools. These tools have evolved with time and are better than before. Nowadays, ERP systems are one of the fastest growing technology in the business market. Accounting software is equally as important as an ERP system in a company. Many of the business leaders don’t have clarity about the differences between the two. In fact, several people use these two concepts interchangeably, but, technically, both the tools are different. So, interpreting how accounting software is different from an ERP system software can help companies utilize software in the most efficient way. If you are unfamiliar with the distinctions of an ERP system and accounting software,  only then you can take the wrong purchasing decisions.

So, let’s understand the difference between an ERP System And  Accounting Software, one by one.




Accounting software:

Accounting software takes charge of how cash moves in a company. It is designed to deal with the financial aspect of operations such as accounts payable, accounts receivable, payroll, and trial balances. This accounting software only fails to provide predictive analysis reports. You can also say that the accounting system is a subset of an ERP system.



ERP software:

An ERP system solution considered to be quite cost-effective as compared to having separate software systems designed for different modules. An ERP software would have multi-functional and time-saving capabilities. So, it can have all the accounting software features and other modules’ features as well.
So, you do not need to buy an individual accounting software. It’s a business management tool that not only handles with the business’ financials but also keeps track of tangible (working hours, product life cycles, key performance indicators, etc.) and intangible assets, human resources, other resources, and materials.



An ERP system and accounting software integration

ERP vendors offer ERP products that come with accounting software’ features incorporated with them. When a business grows in size, complexity also grows. In this situation, you require a software that can automate more complex form of data recording and reporting processes. Your existing accounting software can also be integrated with an ERP system. Means, you can add other business operations such as project and supply chain management, reporting and analysis, and human resources management in your accounting software.



Also, the ERP system can use data to forecast sales, accounting things etc. But,  accounting software fails to do this. ERP with accounting integration or accounting features is better than an accounting software. An ERP solution can integrate with various third-party accounting tools and make payment process go smoothly and efficiently.



An Accounting Software generally lacks many features. It has limited capabilities like basic tracking of inventory through the addition of desktop and web-based add-ons. They also do not have manufacturing management features. On the other hand, an ERP can have manufacturing features and as well as accounting features. ERP and accounting integration enhances inventory accuracy and customer service levels and, at the same time, reduce your stock carrying costs, labor costs.



So, before making an investment in any software, make sure you compare the functionalities.


To Read Next: When It’s Time To Upgrade QuickBooks To An ERP Software

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Devesh Singhal

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