ERP vs Accounting Software: What's the Difference?

 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.

Key Differences

When they reach a certain size, many small businesses find themselves spending more and more time managing their books. An entrepreneur who starts a business making and distributing meal kits — home-delivered ingredients with easy-to-follow cooking instructions — might be perfectly happy doing their accounting by hand, or on some sort of spreadsheet, when they have 50 or 60 customers. But if their business booms and they end up with 1,000 customers — and then 5,000 and then 10,000 — the accounting and bookkeeping will get overwhelming pretty quickly.

This is the point at which entrepreneurs generally start looking for software systems to make their businesses run more efficiently. Their first thought might well be of an accounting package, since their biggest problem when they are growing rapidly is organizational: keeping track of sales, collecting payments, paying suppliers and calculating profitability. An accounting package can certainly help with these things, but no accounting package on its own can keep track of suppliers, help manage a growing staff or provide a view of warehouse costs and activities.

Instead of entrepreneurs having their data in separate places — the accounting data in one software package and the HR, manufacturing and customer data in a patchwork of spreadsheets — they can have it all centrally located and get a view of their entire business in one ERP system. In doing so, small businesses can gain insights they wouldn’t otherwise have and make decisions that increase their companies’ profitability.

 ERP vs Accounting Software: What's the Difference?


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