Accounting or ERP software: here’s everything you need to know

A sound finance and accounting department is necessary for businesses of all sizes. Without having a global view of your investments, you cannot make precise financial decisions. Thus, basic accounting software is essential for businesses in all industries. It automatically manages financial accounts which eliminates human error and allows staff to focus on other important tasks. The growing demand for accounting software has made it more profitable and expanded its functionality. For example, basic accounting software can handle invoices, payments, payroll, purchase orders, and quotes. Additionally, through cloud-hosted applications, accounting software can be integrated with third-party applications that can further expand their capabilities.

But is it enough?

Businesses must work on multiple fronts in the face of growing customer demands and global pressure. Finance & Accounting, although one of the most important departments in any business, is not the only one. Sales and marketing, warehouse and inventory, production and manufacturing, and customer service also play an equally vital role.

This article will help you learn the main differences between ERP systems and accounting software and help you choose the best one according to your needs.

What is accounting software?

The main purpose of implementing accounting software is to securely record and store financial transactions. Essential accounting software modules include Accounts Payable, Accounts Receivable, General Ledger, Fixed Asset Management, Financial Reporting, Purchasing, Budgets & Accounting, Account Reconciliation, Cash Flow Reporting , balance sheets, profit and loss statements, income statements and many more. .

Advanced accounting software also offers additional features such as quotes, purchase orders and simple inventory management in some cases. However, an ERP software has several functionalities to assist several business departments. So let’s move on to the next section to better understand ERP software.

What is ERP software?

Enterprise Resource Planning (ERP) is a complete enterprise management solution that organizes and manages a company’s operations on a single integrated platform. Stakeholders from different business departments can create, access, modify and share critical data anytime, anywhere and through any connected device. Unlike accounting software, ERP handles multiple departments, such as manufacturing, supply chain, inventory, finance and accounting, sales and marketing, purchasing, human resources, CRM, and more. others.

The ERP provides a shared database that is well connected across each department. Hence, you no longer need to depend on multiple platforms to handle different functions. Instead, you can make accurate decisions, identify changing market realities and customer preferences, and forecast future trends appropriately through a single integrated platform.

Differences between accounting software and ERP

From the two sections above, it is clear that accounting software only provides a handful of features compared to ERP software. While accounting software only focuses on maintaining proper financial accounts, ERP software caters to the needs of every business department.

It is a general practice for businesses to start their operations by purchasing accounting software. But as businesses grow, they find themselves faced with additional complexities, such as managing multiple currency transactions, multiple sub-units spread across different parts of the world, multilingual employees, managing huge transaction volumes, security and compliance, data cross-referencing and finance integration with multiple business units.

Moreover, accounting software is a generic solution with limited possibilities for customization and configuration. On the other hand, each ERP system is customized differently based on the challenges of a particular industry. For example, vendors, suppliers, and distributors face inventory and warehousing challenges. Similarly, a company belonging to the food industry needs modules such as recipe management, regulatory compliance management and real-time traceability.

Therefore, basic accounting software is the best alternative for small and medium-sized businesses that only require limited banking, accounting, and reporting functionality. On the contrary, businesses looking to gain significant benefits such as real-time visibility, detailed information, smart manufacturing capabilities, and smart business reporting should opt for full-fledged ERP software.

ERP software or accounting software — What should be your last call?

ERP software is designed to handle complex business challenges. Ask yourself the following questions before you take the final call:

  1. Are you ready to make significant IT investments?
  2. Do you have a large IT team to troubleshoot technical/software issues?
  3. Do you have multiple departments in your company to handle various functions?
  4. Do you need smart reports and an accurate estimate of future trends to make the right decisions?
  5. Do you want the software to adapt quickly to your changing needs?
  6. Do changing market trends and customer preferences matter significantly to you when thinking about strategies?
  7. Do you want to send automatic responses to customer queries?
  8. Want to track stock status in real time?
  9. Want to view real-time sales reports?
  10. Want to automate manufacturing operations?
  11. Would you like software capable of automatically sending a purchase quote to suppliers as soon as the quantity of raw materials falls below the defined threshold?

If your answer to most/all of the above questions is yes, you need to implement ERP software. It is a complete business solution that will solve all your business complexities, increase your business efficiency, eliminate human error, reduce operational costs and help build great relationships with customers and suppliers. .

So, ERP software is your best bet if you have immediate plans to invest and grow your business. But if you are a start-up or running a small business, accounting software is the best alternative for you.


Nishant Joshi enjoys reading and writing about the technologies that form the foundation of the modern era like ERP, CRM, web applications, machine learning, data science, AI, and robotics. His expertise in content marketing has helped develop countless business opportunities. Nishant works for Sage Software Solutions Pvt. Ltd., one of the leading CRM and ERP solution providers for small and medium enterprises in India.

You can find out more about him on his Linkedin profile.

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