Accounting Software vs ERP: Which Do I Need?

2 apples compared

Written by Laura Schomaker

July 16, 2020

When discussing business software solutions, you will often hear people using the terms “accounting software” and “ERP” interchangeably. Although both offer accounting support, they are actually two distinct solutions with a number of differences that can have a significant impact on your business’ productivity and revenue-generating potential.

Before we discuss which is the best option for your business, let’s first consider the actual distinctions between the two.

Accounting Software vs ERP – What’s the Difference?

To understand the difference between accounting software and an ERP, it’s best to start with ERPs. All ERPs feature, in part, a suite of accounting tools. In other words, anything you would find in accounting software, you will also find in an ERP solution.

ERPs, however, offer a lot more beyond that core accounting functionality. In addition to an ERP’s accounting features— including accounts receivable/payable, revenue and sales tracking, reporting, and invoicing— an ERP will also offer support for a range of other business features related to revenue and the supply chain at a company, including:

  • Inventory/Order Handling
  • Human Resources
  • Project and Supply Chain Management
  • E-Commerce
  • and more

The goal with an ERP is to take an integrated approach to all business processes at a company. In this way, you can get a holistic view of revenue streams, productivity, and efficiencies across your SMB. You are, in essence, given the cloud-based tools you need to manage all of your resources from one place.

Do I Need an ERP?

So, as you can see, an ERP solution offers more… but is that something you need at your company? An ERP may be the right solution for you if your company is experiencing any of the following:

  • Data stored in separate silos by various departments creates redundancies, forcing you to reenter data into multiple systems on a regular basis.
  • The data you need to make high-level, transformative business decisions is stored in multiple locations, making it difficult for you to get a holistic view on your business’ key metrics.
  • Efficiency at your organization or in the supply chain has deteriorated due to interdepartmental communication and collaboration roadblocks.
  • Your business exists in a niche that is not best served by the generalized approach of most accounting software.

As a centralized management hub for multiple departments at an SMB, an ERP will give you a way to address all of these concerns, improving interdepartmental collaboration, allowing you a more performant way to enter and access data, and providing a comprehensive overview of day-to-day operations at your business.

It’s a Matter of Scale

An accounting software solution could be transformative for a smaller business, but its impact would be diluted by the scale of a larger one. Any organization managing multiple departments, expansive and fast-moving supply chains, and a large network of customers and partners would be best served by an ERP. Advanced accounting software might certainly streamline processes within your accounting department, but these improvements will have far less of an impact across your business than you would experience when implementing an ERP.

If you’re still struggling to decide whether accounting software or an ERP is right for you, let us help. Schedule your one-on-one consultation with one of our experts for personalized advice.

Have you made the move from accounting software to an ERP? What do you see as the advantages of either solution? Let us know your own thoughts in the comments below. 

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