Basic Difference Between ERP And Accounting Software

The difference between ERP and accounting software lies in their functionality, range, design, outputs and of course size. Accounting software recently has been used as synonym to ERP which is perhaps most misleading to general people, accounting software has been and will remain one of the most important part of the Enterprise resource planning software as businesses run on the basis of accurate accounting but ERP is much more than only accounting. Organizations does not have only one aspect accounting, there are many other aspects of an organization and as organization grow in size and business volume increases few more aspects come into picture or become very important like SCM, Marketing, Human resource, Multiple Inventory, SFA, logistics etc.

Enterprise resource planning software covers all the possible aspects of small to large organizations including accounting and integrates all the aspects of an organization under one seamless software to allow the information to flow from one department to another in real time and produce consolidated outputs which can reflect status of entire organization. Enterprise resource planning software is resource management software which is capable of dealing with all the activities of an organization, like in case of manufacturing it can start from keeping track of raw material suppliers up to after sales records of finished product. Whereas accounting software keeps track of money flow by processing account receivables and payables and generate reports which display the exact standing of an organization in terms of profit and loss.

The confusion about the difference between ERP and accounting software has grown largely due to the fact that most of the ERP software companies either had established accounting software around which they build an ERP or they took over small accounting software companies to develop Enterprise resource planning software. To identify the huge difference between ERP and accounting software one needs to know that accounting software starts from sale, purchase, cash and bank vouchers and finishes at balance sheet explaining the financial status of the organization with in given period.

Whereas enterprise resource planning goes much beyond than simple accounting and can even predict future losses or profits, changing market trends, better opportunities, ways to increase profit margins, lowering cost of production, improving quality of finished product, identifying new markets etc., and it can provide this whole information to the management in one consolidated format. Hence the difference between ERP and accounting is that ERP is a tool which does not simply explains how business is running but it can also suggest how to run it better for earning higher profits.

With advent of ERP, organizations can conveniently work at multiple distant geographical locations and can still get consolidated status of entire organization at the headquarter everyday. This is another difference between ERP and accounting software. Though quality accounting software can also handle multiple accounting systems and complex transactions but ERP can provide deeper view of each location's day to day working and ensures strict following of general policies and rules at every step without manual monitoring. Changes can be implemented in the working at the head quarters and those get implemented by one stroke at every location, thus Enterprise resource planning software gives far better control to the management and also updated and consolidated information at every step to make correct decisions.