Choosing Between Accounting Software or an ERP Product

Choosing Between Accounting Software or an ERP Product

ERP vs. Accounting Software: How to Make the Choice 

The tough battle of ERP vs. accounting software requires being backed with logic to make the right final choice for your business. Now, a growing number of businesses are facing this dilemma: whether to stick with traditional finance and accounting software or pull out all the stops and commit to a full-fledged ERP (Enterprise Resource Planning) product.

A good case can be made in favor of either ERP vs. accounting software approach, or that makes reaching a final decision difficult. To help you choose the right ERP vs. accounting software foundation for your business, here's an examination of the advantages and drawbacks of both technologies.

Choosing Between Accounting Software or an ERP Product

Many smaller businesses simply don't need an ERP product. If your business is very small, or has only basic accounting needs — and if this situation isn't likely to change at any time soon — basic finance and accounting software is likely your best choice.

If your business is larger or is expected to expand in the near future, an ERP vs. accounting software might be the better option. By providing software modules spanning finance, human resources, sales, manufacturing, and other key business activities, ERP opens new doors in terms of coordinated day-to-day management, strategic planning, information access, and data visibility. 

ERP vs. Accounting Software: The Differences Explained

Enterprise resource planning software or ERP vs. accounting software is a fully integrated solution for businesses, meaning unlike accounting software, ERP software provides all the functionalities of accounting software and more.

Besides accounting functionalities, an ERP also enables companies to observe their human resources and analyze their marketing, inventory, and customer relationship management, among other aspects of their business. A single, consolidated view of the major aspects of a business using an ERP, which can also manage industry-specific functions creates great ease and efficiency.

With increased connectivity and enhanced collaboration across the several departments across an organization, your organization progresses as a consolidated unit. Other key differences when comparing ERP vs. accounting software are:

Scalability of ERP vs. Accounting Software

Scalability — the ability to add users and handle an increasingly higher workload — varies widely between different ERP vs. accounting software and finance applications. Check with ERP vs. accounting software vendors to see if their products can scale to meet your business's current and future needs.

Most ERP products, on the other hand, offer a high degree of scalability. But be sure to question vendors about any absolute ceilings on the number of users or tasks when considering ERP vs. accounting software.

Expandability of ERP vs. Accounting Software

Finance and accounting products usually offer only a limited number of software expansion options, primarily focused on accounting and finance-related tasks.

Most ERP product lines include modules covering an extensive array of applications and tasks. Check with each prospective vendor to see if its lineup includes the modules that your business may someday need. This is important because it can be shocking to suddenly require a particular type of software only to discover that your ERP vendor can't provide it.

Cost of ERP vs. Accounting Software

Due to its inherently limited scope, ERP vs. accounting software or finance software usually costs far less than an ERP suite consisting of several modules.

Nevertheless, it's important to remember that an ERP product may replace several standalone applications supplied by different vendors. The cost of licensing, supporting, and maintaining the individual products may exceed the ongoing costs of an ERP suite.

Training for ERP vs. Accounting Software

As long as the user has a solid grasp of basic financial and bookkeeping principles and practices, learning the ins and outs of most finance and accounting programs usually isn't very difficult. This means that training tends to be simple and inexpensive. ERP vs. accounting software training is often included in the licensing price.

Because ERP modules cover a wide range of applications, training can be complex and costly. On the other hand, the specialized nature of individual ERP modules means that users only need to master the part of the ERP vs. accounting product that pertains to their work, not the entire suite. As with accounting software, training is often bundled into the licensing price.

Interoperability of ERP vs. Accounting Software

A finance or accounting application may or may not work well with your business's other software tools. To verify whether swapping and sharing data between the application and other programs will be possible, talk to the vendor and then run some interoperability trials.

The modules in a vendor's ERP vs. accounting software suite are designed to be fully compatible with one another, functioning as a whole rather than as a collection of units. On the other hand, there are occasional exceptions to this rule and, if your business continues to use programs from other vendors, interoperability may still be a concern.

Vendor Support for ERP vs. Accounting Software

All ERP vs. accounting software vendors pledges total support for their products. Such promises are not always faithfully fulfilled, however. The only way to protect yourself is to read product reviews, seek opinions from other users, and get the ERP vs. accounting software vendor to incorporate its promises into a legally binding contract.

An ERP vs. accounting software must be even more carefully investigated and verified. The stakes will be even higher, as one software vendor will be responsible for software spanning multiple tasks and departments across your business.

Benefits of Using an ERP vs. Accounting Software

Owing to the varying scopes, the list of advantages in ERP vs. accounting software comparison is a lot longer for the former. An ERP software is all-inclusive of the major aspects of a business. Furthermore, it has the undeniably convincing benefit of ERP vs. accounting software providing and maintaining data updated in real-time.

With real-time updates of ERP vs. accounting software and a consolidated and unified interface, ERP systems conveniently provide a comprehensive picture of your business operations and workflows with live and accurate metrics. As for those relying exclusively on accounting software, data needs to be manually compared to other metrics.

In short, the debate of ERP vs. accounting software can be wrapped up with the single, unprecedented benefit of the former that enables you to obtain real-time updates across your entire enterprise. 

After determining which ERP vs. accounting software solution is right for your company, it's time to further investigate the ERP vs. accounting software market and identify an appropriate product.

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