4 Key differences between ERP software and accounting software

ERP vs. Accounting software has been a topic of heated debate that needs a quick solution. 

Although many people use them interchangeably, there are various differences between Enterprise Resource Planning (ERP) and accounting software. On one hand, accounting software deals with topics such as accounts receivables, accounts payables, handling day-to-day sales orders, counting revenues, and financial reporting. On the other hand, an ERP system is a business management suite that consists of multiple modules such as manufacturing, finance & accounting, sales, marketing, supply chain & logistics, warehouse and inventory, purchasing, and human resources. So, in effect, accounting software is a subset of ERP software. 

This article will shed light on the differences between ERP and accounting software and end this debate forever. 

Why a stand-alone accounting software is not enough?

We live in a world where faster turnaround time has become a necessity. Companies also need to maintain a robust and long-lasting relationship with customers by sending instant replies to their queries and understanding their needs, desires, and ambitions. Sales and marketing no longer depend on hearsay and intuition. Instead, their reliance on data is increasing every day. Maintaining excellent relations with vendors, suppliers, and distributors have become the cornerstone for transforming into a market leader. Stand-alone accounting software, as the name suggests, will help you with accounting & finance-related challenges only. But what about the other domains?

4 Key differences between ERP software and accounting software

Here are 4 things you must keep in mind while doing an ERP vs accounting software analysis. 

1. ERP system provides an enterprise-wide solution.

ERP system is a business management software that provides a 360-degree perspective of your entire business. It has the following modules:

1. Sales Management
2. Marketing Management
3. Accounting & Finance Management
4. Human Resource Management
5. Supply chain & logistics Management
6. Inventory & Warehouse Management
7. Customer Relationship Management

In short, the fundamental difference between ERP and accounting software is that the former efficiently manages all the business modules while the latter handles only the finance & accounting module. 

Also Read: Tips to find the Right Accounting Software for your Business

2. Accounting software and ERP software are not always GAAP compliant.

Many local vendors sell accounting software and ERP systems that aren’t Generally Accepted Accounting Principles (GAAP) compliant. Before investing in either accounting software or ERP system, you must confirm whether it is GAAP compliant or not. Complying with GAAP norms, tax laws, and government regulations is necessary if you don’t want to land yourself in trouble.

3. Accounting software doesn’t provide rich details about the customer.

In today’s world, maintaining a robust and long-lasting relationship with customers is a must. No company can afford to continue its operations without having a substantial customer database. Companies that fail to understand customer’s needs, desires, and ambitions often fail to retain them. On top of that, research reveals that acquiring new customers is approximately five times more expensive than retaining the existing ones. ERP software has a Customer Relationship Management (CRM) module that instantly solves customer inquiries. On the contrary, accounting software doesn’t have a CRM module.

4. ERP systems use the power of the cloud effectively.

Cloud systems have become a necessity in today’s business environment. It allows companies to operate from anywhere and at any time. Salespeople no longer have to wait to return to the office to upload/change the documents. They can do the same from the client’s place itself. The business departments can transfer information and get access to real-time data. But most accounting software systems are devoid of cloud capability, which restricts companies from making practical decisions based on real-time intelligence.

Also Read: 5 Tell-Tale Signs Your Business Needs a Cloud-based Accounting Software

Conclusion

This article brings out the differences between ERP and accounting software and why the former is better than the latter. We strongly suggest you investing in ERP software as it will provide you a comprehensive business solution, make effective decisions, thereby allowing you to emerge as a market leader. 

At Sage Software Solutions (P) Ltd., we are home to world-class ERP software and CRM software that will solidify your business tech support fundamentals and enable you to build a customer-centric organization. To know more about it, SMS SAGE to 56767. You can also write to us at sales@sagesoftware.co.in

Disclaimer: All the information, views, and opinions expressed in this blog are those of the authors and their respective web sources and in no way reflect the principles, views, or objectives of Sage Software Solutions (P) Ltd.