ERP vs. Accounting Software: How it all “adds up”

Deciding between accounting software, such as QuickBooks, and an Enterprise Resource Planning (ERP) system, can be a tough call, at best. Both software solutions effectively help organizations to automate and streamline specific operational business tasks, but they vary greatly in terms of scope and functionality.

Accounting software solutions automate only the financial and accounting aspects of a business, but an ERP automates and streamlines most operational business processes, including, but not limited to, finance and accounting. ERP includes basic modules such as HR, customer relationship management (CRM), inventory management, sales and marketing, product management, and more. Specialized ERP solutions also offer niche features and functionality, such as field management, retail POS, eCommerce, and others.

What does an accounting software solution do?

Accounting software solutions help businesses to manage their general ledger, and record their accounts payable and receivable. Many comprehensive accounting tools also help businesses to manage their billing and invoices, implement payroll services, and integrate inventory management data.

However, growing businesses will eventually need to automate other business processes such as sales and marketing, inventory management, project management, HR, operations management and production management. Consequently, they may have to purchase multiple software systems. It can be exceedingly costly to purchase standalone solutions for each of these business processes and put a strain on organizations that do not have the necessary in-house IT resources to manage and support the software.

What does an ERP do?

An ERP is a comprehensive software solution that automates and streamlines operational business processes. As a result, organizations have all their business data on a single platform, continuously synced and updated, and always available and accessible. With a single source of data, companies can eliminate duplicate entries, gain greater insights, and make more accurate forecasts. An ERP helps businesses to enhance communication between departments, improve backend operations, and deliver high-level customer support and service.

Implementing an ERP system requires time and effort, but it pays off in the long term. However, it’s important to plan a system implementation project, and conduct a detailed needs analysis prior to implementation, to define business objectives, required business processes, data migration, and more. It’s also mandatory to train employees on how to use and master the new system, to avoid hurdles and bottlenecks along the way.

This table accurately represents the differences between an ERP solution and accounting software:

ERP Software Accounting Software
Comprehensive business management solution Limited to finance and accounting only
Complete solution for generating reports, forecasting, and making insight-driven business decisions Generates reports based on financial data but may lack predictive insights
Has a steeper learning curve and requires user training Easier to learn and deploy, and training manuals are more than sufficient
Usually more costly, but SaaS models are subscription based, and are affordable Affordable for most small businesses
Requires planning, data cleansing and migration; companies must conduct a needs analysis prior to implementation Can be purchased ad-hoc, and implemented quickly 
Easily scalable and customizable, and can be integrated with other software products Can be integrated with other software products but results can vary, and expenses increase with integrations
No duplicate entries of data, as all business operations are streamlined and synced in real-time Duplicate entries are possible, a result of integrations not working correctly, or due to human error 

ERP adoption is increasing at an unprecedented rate

Although many small businesses continue to use standalone accounting software such as QuickBooks, the market is changing – and fast. To gain a real competitive edge, even small and mid-size organizations need to automate their operational business processes, and not just finance and accounting.

In a survey conducted by Panorama Consulting Group in 2020, 34.24% of businesses indicated that they chose to implement ERP solutions to move away from legacy solutions. A further 23.32% adopted ERP as an upgrade from existing software solutions. These trends reveal that more businesses will adopt ERP to enhance scalability and productivity.

ERP is a comprehensive automation solution for businesses of all sizes

Accounting software solutions are limited in functionality and can automate only accounting and finance-related operations. Integrating them with third-party solutions tends to be costly, and the results may not enhance efficiency or productivity. On the other hand, an ERP is a comprehensive software solution for all types of organizations, no matter their size or scope. A modern, open, and flexible ERP reduce valuable time, resources, and costs in the long term, with the ability to grow as the business grows, ultimately, increasing efficiency, productivity, and the bottom line.

If you’re thinking about ERP for your business, we’re here to help. Contact us for a no-obligation call with one of our ERP implementation experts.

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The Author
Todd McElroy
Head of Sales, Priority U.S.

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