Accounting Software vs ERP

Accounting Software vs ERP

Accounting software and ERP (Enterprise Resource Planning) are business tools to facilitate day-to-day operations. However, both offer different features and functions. Accounting software is used solely for bookkeeping. ERP systems provide comprehensive features that extend beyond bookkeeping and cover customer management, sales, human resources, supply chain, inventory, manufacturing, and more.

Below are four key differences between accounting software vs ERP

ERP is comprehensive business management solution

ERP is an all-encompassing solution to manage your day-to-day business operations. The functionality of ERP enables you to manage both tangible and intangible assets including financial resources, inventory, materials, manpower, and more. ERP software covers customer management, sales, marketing, inventory, warehouse, manufacturing among others. Conversely, accounting software solely covers bookkeeping and accounting functions which include accounts payable, accounts receivables, sales tracking, budgeting, cash flow, ledger, and balance sheet.

Accounting is a subset of ERP

Businesses often use accounting software to handle basic finance functions. ERP solutions cover a broader range of functions including accounting. ERP is also used across different departments to share and automate information flow. In essence, accounting software are usually confined to finance usage while ERP solutions are used company-wide to perform day-to-day business operations.

Managing the lifecycle of a customer

Accounting software is capable of tracking the financial element of a customer, however, it does not have the function to manage the entire customer lifecycle. ERP solutions enable you to manage leads with the in-built CRM features, track emails and/or communications, track historical purchases, predict deliver timeframes, make forecasts of future purchases, and more. The ability to analyse every step of the customer’s lifecycle enables a business to make better business decisions, improve product/service offerings, and improve the bottom line.

Manufacturing and inventory management

For businesses that have manufacturing facilities, ERP offers the ability to track stock levels, resources (manpower, machinery, etc), lead time, customer orders, purchase requisitions, and more. Accounting software does not have the feature to manage manufacturing processes or complex inventory scenarios.

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