The difference between ERP and Accounting software
As a business grows, so does the complexity of managing its financials. As this happens, the first thought of many business leaders is to introduce an accounting system. One that will manage accounts payable, accounts receivable, and bookkeeping activities. However, accounting-only software has its limitations. Whilst it can be very useful to analyse financial transactions and generate the trial balance and financial statements, growing businesses find they need further functionalities. Software that can really enhance their business operations.
That software is available – in an ERP (Enterprise Resource Planning) system. Unlike accounting packages and spreadsheets, ERP systems deliver what you need to manage your key business areas such as supply chain, HR, sales and customer relationship management.
In any industry, finance and accounting are essential functions for businesses, and efficient financial management and accounting are necessary to achieve and sustain business growth. Basic financial and accounting tools are sufficient during the initiation phase, however as the business grows, these tools cannot handle complex or large-scale financial and accounting processes.
In this blog we’ll take a look at the key differences between accounting and ERP software.
What is accounting software?
Accounting software focuses on financial transactions, bookkeeping and accounting processes. It enables users to record, organise, analyse and report financial information. Common features in accounting software packages include the following:
General ledger (GL).The GL serves as a repository for recording debits, credits and balances.
Accounts payable (AP).Users track money owed to suppliers and vendors through AP.
Accounts receivable (AR).AR tracks money that customers owe.
Bank reconciliation.The bank reconciliation tool helps users calibrate bank statements and financial records by recording bank fees and identifying discrepancies.
Financial reporting.Financial reporting capabilities generate cash flow statements and balance sheets.
Expense tracking.Expense tracking helps simplify expense categorization, reimbursement processes and expense reporting.
Tax management.Tax management tools help users calculate taxes and generate reports.
What is ERP?
An Enterprise Resource Planning Systems (ERP) is software that helps manage and automate core business processes across departments and business units. The software provides a centralised database and unified system that can help streamline operations, improve efficiency and enhance collaboration within an organisation and between partners.
A leading vendor of ERP software is SAP with it’s SAP Business One application designed specifically for small to mid-size businesses.
Common features in ERP software include the following:
Centralised database.A centralised database serves as a single source of truth for relevant business data to ensure accurate and up-to-date data.
Supply chain management (SCM).SCM capabilities can help streamline the processes for procurement, inventory management, demand forecasting and logistics.
Financial management.The financial management module includes standard accounting features, such as GL, AP, AR, budgeting and financial reporting and advanced features such as budgeting, making tax digital and financial reporting.
Inventory management.Tracks inventory, predicts demand and automates replenishment.
Customer relationship management.CRM capabilities help users manage interactions potential customers and opportunities.
Integration tools.These tools help connect critical processes across finance, accounting, HR, inventory management, supply chain management and other functions.
Reporting and analytics.Reporting and analytics capabilities enable users to generate reports and analyse KPIs to improve decision-making and planning.
The HR module helps users track employees, facilitates scheduling and ensures compliance.
The differences between ERP and accounting software
The key difference between the two systems is that an ERP system covers many aspects of company operations, while accounting software focuses solely on financial management.
Both types of software support accounting and financial management and include GL, financial reporting, AP, AR, fixed asset management, tax management and financial controls.
However, ERP software enables users to carry out other key business processes, like inventory management, procurement, manufacturing and CRM. An ERP system also integrates various business processes across departments, including finance, inventory management, supply chain management scheduling and HR. This integration can help manage workflows across departments and business functions.
A leading ERP solution for SME’s
Designed specifically for growing SME’s, SAP Business One is the ERP system that can take your business to the next level by automating everyday financial tasks and integrating them with other business processes.
An integrated solution like SAP Business One will streamline all the accounting and financial processes in a growing company, including accounts receivable, accounts payable, and posting of ledger and journal entries and recurring entries. And it’s scalable too. This is key because, as the business expands, an ERP solution needs to grow with it. It should support automatic tax calculations as well as multi-currency transactions. It should help manage cash flow and fixed assets, track budgets, and compare actual and planned figures to provide an accurate picture of the business. It should offer powerful reports and data visualisations in dashboards. And it should be accessible anytime and anywhere from mobile devices. SAP Business One provides all this. It’s a reliable, integrated solution that will streamline financial operations, resulting in faster transaction processing and improved cash flow. Flexible and adaptable, the software is available on premise or in the cloud.
Conclusion
Whilst accounting software serves a crucial role in managing financial data, the broader functionalities and integration capabilities that ERP systems such SAP Business One offer make it an indispensable tool for holistic business management. Basic financial accounting tools are sufficient during the initiation phase of a business but as the business grows, these tools cannot handle complex or large-scale financial and accounting processes. This is where an ERP system can provide business value.
Whilst there are many ERP systems available in the marketplace, SAP Business One stands out as the go-to solution for growing SMEs due to it’s comprehensive features, scalability, customisability and robust support. We’ll explore these more in our next blog. For now….
How QBMS can help
If you’re looking at new ways to manage your company financials, take a step back and consider what it is that will really drive your business to that next level. Having read this article, you’re likely understanding that an ERP solution is what you need. However, choosing the right ERP solution is a big decision. QBMS stands out in the market by offering expert consultation and tailored implementation services for SAP Business One.
As an experienced SAP Business One expert, we have a deep understanding of the system’s functionalities, best practices and industry-specific requirements. Our consultants possess extensive knowledge and certifications and are highly competent in delivering successful implementations.
To learn more about how QBMS and SAP Business One can benefit your business, request a consultation or get in touch with our team, please fill out the form below.