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Difference between ERP and Accounting Software

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Accounting Software and ERP Package

Businesses worldwide are gradually feeling compelled to do away with conventional accounting systems and adopt the advanced ERP packages that have emerged in the markets. This has made it necessary to ponder on and highlight the differences between accounting software and an ERP package.

The one difference that is most self evident is that conventional Accounting packages only cater to individual functions of accounts of a business. Whereas, an ERP system caters to all possible functions within the business such as Finance, Human resources, production functions, the sales and the logistics. Unlike a conventional accounting system, an ERP system not only helps with the various statistics and reports, it also helps to provide a platform to integrate all the business functions and seamless information flows between these functions.

Accounting software does help you account for the statistics of the departments, resources, budgets, reports, etc. The focus is on the numbers, the counts, and the statistics.

ERP systems on the other hand have now evolved to such great extents that it can analyze the trends, show the shortcomings and improvise on the turnover times of the business functions. This helps optimize the whole business chain and brings about efficient planning for the most optimum use of the primary resources of the business such as man power, materials, cash flows, and machinery.

One important consideration here (and again, as against mere accounting systems) is that the popular ERP systems in the industry have been structured and organized to comply by the best standards and benchmarks in the relevant industries. For example an ERP package adapted to the pharmaceutical industry will have its components simulating business functions in such a way that it complies by the best standards and practices as prescribed by the pharmaceutical industry experts! Thus the enterprise resource planning package not only speeds up the client's business process, it also earns the client accreditation in its ecosystem.

The decision on whether to move to an ERP system or stick to the good old accounting system is however very subjective to the clients' business and requirements.

If the client is a new entrant in the industry and the business does not comprise complex functions and information flows; if the count of resources is well within the capabilities of a simple accounting software, then it is understandable if it opts for an accounting software as against an exorbitant ERP system with its myriad functions, most of which will be useless to the current business.

However if the client is midsized, has been established in its own way and is expecting to have rapid growth in its scales, it is pertinent that it considers moving to an enterprise resource planning system. This will prove insightful in the future and will ensure that the business adapts systematically to the expansion. Instead of growing into a large sized organization with a conventional accounting system which eventually will snap under the pressure, the business can avoid wastage of it precious resources by adapting to a perfectly scalable ERP customized to its needs.

 Read Related Articles

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