Difference Between ERP System And Accounting Software

Difference Between ERP System And Accounting Software by Dr Andrew Napier

Business Management Software has undergone a lot of changes and upgrades. Every big organization is looking for including Enterprise Resource Planning software. Since long all have been using accounting software and it is essential to know what the difference between ERP and accounting software is. Enterprise Resource Planning or ERP covers functional areas like Human Resources, Sales and Logistics, Finance, Production, Customer Relationship, Payroll, etc. This is used for making optimum usage of the resources of a business organization. 

The ERP system is utilized to enhance the production, sales, schedule production, utilize full capacity and reduce inventory. The functionality of ERP software is to manage the intangible assets, human resources, financial resources and materials. It covers a range of functionality which is not covered by accounting software. It also involves intangibles like customer relations, human work hours, product lifecycle and performance units. The difference between ERP and accounting software lies in this factor. 

Accounting is like a subset of an ERP system. Software for accounts deals with accounting transactions like accounts receivable, accounts payable, balances and payroll. The modules often used in software is General Ledger, Expenses, Sales Order, Purchase Order, Billing and Timesheet. The difference between ERP and accounting software is not recognized by all and the term is often used interchangeably. As the industry is moving ahead with times, the accounting software usage is fading away as more and more people are using ERP software. 

Slowly the ERP software may take over the accounting software completely in future. The business all over the world is feeling the need to do away with the traditional accounting system and adopt the advanced ERP packages available in today's market. The basic and primary difference between ERP and accounting software is that the accounting software handles individual business accounts whereas Enterprise Resource Planning or ERP software handles the entire business accounts and functions of an organization. The ERP caters to all the possible functions of the business and helps to provide a platform to integrate the business functions. It allows for seamless flow of information between these functions. The accounting software does not provide for this kind of functionality. It focuses more on the statistics and numbers of the resources, budgets, departments and reports. 

The difference between ERP and software for accounting is that ERP systems can analyze the trends, improvise on the turnover times of the business functions and recognize the shortcomings. All these things aid in optimizing the resources such as materials, man power, machinery, etc. This feature speeds up the client's business process as it complies by the best standards used in the relevant industry. The need to switch to ERP system or continue with the traditional accounting system depends on the business and the requirements of the client. If the client is expecting growth, the client should opt for enterprise resource planning system instead of a conventional accounting system. This will ensure that the growing business adapts well and makes optimum use of the resources. It is essential to understand the difference between ERP and simple software for accounting to know which one will suit your organization better.

Read about Disadvantages of ERP Software. Also know Tally 9 Features, Advantages. Read about Top 10 ERP Software.

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