The Differences Between Accounting and ERP Software Explained

To many people, accounting software and ERP are interchangeable. But if you’re in discussion with a potential software vendor or consultant, they can mean very different things.

In our experience, a lot of people misunderstand what ERP software does and how it differs from other business management platforms, such as CRM. This means that many businesses risk missing out on the many benefits an ERP system can bring – particularly in areas like accounting and finance.

In this guide, we’re setting the record straight on how accounting and ERP software differ. That way, you can approach your next business software investment with greater confidence.

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What is ERP Software?

ERP (enterprise resource planning) software is a business management system that allows you to unify multiple processes and workflows on a single platform. It offers a standardised way to manage business functions from a single location – boosting efficiency and practicality in the process

A modern ERP system is capable of supporting a business’ entire operational infrastructure. Unifying processes and functions, it interconnects teams and departments, facilitating effective collaboration and improved day-to-day management.

man working at his computer

Typical ERP Software Uses

ERP software offers far-reaching functionality, with intuitive features and modular integration allowing businesses to customise their platform in line with current requirements and objectives. It’s used in all sorts of different ways, including:

  • Track and manage stock and inventory throughout complex supply chains
  • Monitor project workflows to reduce bottlenecks and increase efficiency
  • Unify data sets for cross-departmental ease of access and collaboration
  • Enhance mobility and facilitate flexible working practices
  • Managing HR assets, including employee information and payroll
  • Simplify the order and sales process
  • Improve customer service with faster response times
  • Aid sales counter interactions and management
  • Integrate essential business functions onto one system, including accounting, sales and marketing
  • Develop strategies for key business functions

The Benefits of ERP Software

Whatever your business goals and objectives, ERP software offers attractive benefits, including:

  • Standardised workflows – one of ERP software’s greatest assets is its ability to unify workflows and interfaces, providing enhanced accessibility and intuitive functionality across all operational areas.
  • Advanced supply chain management – whatever your industry, ERP facilitates enhanced supply chain capabilities, from batch tracking perishable goods to identifying pain points and efficiencies within the manufacturing cycle.
  • Improved reporting – with a unified database, all departments benefit from advanced reporting and business intelligence capabilities.
  • Software spend control – instead of multiple business management platforms, ERP software gives you one, unified system. That means greater control over software spend, for better budgeting and long-term cost savings.
  • Fully customisable for a tailored approach – modern ERP systems are fully customisable, so they’re able to offer tailored support whatever your business management strategy.

This is a handful of the benefits you can expect from a modern, up-to-date ERP system. For more information on the features, functionality and benefits ERP software can provide, read our in-depth ERP software selection guide.

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What is Accounting Software?

Accounting software is any program that records and reports a business’ financial transactions. It’s used by accountants and bookkeepers to track, monitor, and maintain an organisation’s financial records, ensuring complete accuracy and accountability.

There are lots of accounting platforms available, each offering different functionality and capabilities. Some systems simply help firms manage their day-to-day cash flow and margins, while others offer advanced features designed to streamline auditing and financial data management.

What Are the Main Differences Between ERP and CRM Systems?

On paper, ERP and accounting software may seem worlds apart. Such systems perform wholly different tasks, so why do some people make the mistake of thinking they’re the same?

Well, the field of accounting is a broad church, with hundreds of unique tools and platforms used to make tracking finances simpler. While SMEs and the self-employed tend to use off-the-shelf accounting products that offer basic functionality, larger corporations rely on bespoke, tailored accounting solutions – and that’s where the similarities with ERP software begin.

The bespoke accounting tools used by large firms integrate and combine vast amounts of financial data from multiple departments, compiling information across a complex supply chain. This makes it possible to audit and monitor real-time financial data – a business-critical capability for firms that rely on up-to-the-minute fiscal transparency.

The nature of these custom-built accounting programs means there is often overlap with ERP software. For example, accounting platforms developed by Oracle, SAP and Microsoft share many similarities with modular ERP systems – particularly features like expense reporting, point-of-sale integration, LIFO and FIFO inventory reporting, batch management, and multi-currency transaction recording.

And the similarities don’t end there: where and how both ERP and accounting software are deployed is also comparable. For instance, accounting platforms are available on-premises, in the cloud or as part of a software-as-a-service (SaaS) agreement – the same as ERP technology.

woman looking at her computer monitor

So, there are clear similarities between the two software types, but how do they differ? Let’s take a look:

  • ERP offers more than accounting functionality – as covered earlier, ERP software supports a whole variety of business functions, not just accounting and financial auditing. Think of it as a one-size-fits-all solution for a range of business requirements.
  • Accounting software can be integrated with ERP – the great thing about ERP software is that it can be customised and expanded, with modular development allowing you to integrate the platform with different applications – including accountancy tools.
  • ERP software can be a huge benefit for financial planning and transparency – one of the primary reasons to invest in ERP software is to benefit from the range of efficiency-boosting and cost-saving advantages it can bring. These benefits feed into improved accounting capabilities, with businesses better placed to make data-backed decisions about their financial future.

We hope this guide helps you to differentiate between ERP and accounting software. By understanding how such platforms differ, you stand to reap the unique benefits they can bring.

For more information on ERP and related business management tools, click here to explore the JS3 Global blog.

At JS3 Global, we offer expert ERP services to businesses in all sectors. Whatever your aspirations for the future, we can help you invest in the solutions that will get you there. For more information about our ERP consultancy services, visit the homepage or call us today on 0161 503 0866.