If they are successful, small businesses quickly outgrow their improvised processes and rudimentary technologies. A company that goes from dozens of customers to hundreds and then thousands, that opens additional offices and that has a growing staff is going to have a hard time managing its affairs with the spreadsheets and paper records it relied on during startup. But the people running these companies are often not sure what type of software they need — basic accounting functionality or something broader. Such companies typically end up weighing the pluses and minuses of accounting systems against those of enterprise resource planning (ERP) systems.
What Is ERP?
ERP is an integrated suite of software applications that businesses can use to run almost every aspect of their organizations. The databases of ERP systems generally include inputs from accounting, human resources, manufacturing, marketing, sales, supply chain and other departments. Thus, business managers can use an ERP system’s unified view of enterprise data to automate business processes and generate insights across multiple departments. Company managers can use ERP systems to identify process improvements and drive efficiencies.
ERP came into the lexicon of corporate technology in 1990 when Gartner first identified it as a distinct class of software. Many of the world’s biggest and most successful companies have been using ERP systems for decades. Now, smaller companies are joining the ranks of ERP users, attracted by the availability of cloud-based ERP systems.
What Is Accounting Software?
By definition, accounting software is focused solely on a company’s financial activities. An accounting system helps companies manage their accounts payable and accounts receivable, along with their bookkeeping activities. For instance, an accounting system helps with the generation of a trial balance, an integral part of double-entry bookkeeping. Accounting software also helps companies put together financial statements, such as profit and loss reports and balance sheets.
What Is the Difference Between ERP and Accounting Software?
The big difference between ERP and accounting software relates to scope. Accounting software helps manage and automate a companies’ financial activities, and in so doing it can move small companies beyond their initial manual processes and spreadsheets. ERP software offers accounting functionality but also has many other capabilities…….
