A number of software solutions have helped to revolutionize the world of business over the last 15 to 20 years, but few have had the kind of impact that Enterprise Resource Planning (ERP) accounting software has.
Software intended to integrate with each and every major component of your business and not just accounting alone, these tools can give you a more complete picture of your business than anything else available.
At the same time, not all businesses are sure that making the switch to ERP accounting software compared to “legacy” accounting software solutions is right for them.
Many (understandably) believe that traditional accounting software options are more than enough for their business and aren’t eager about making the switch anytime soon.
Below we dig a little bit deeper into the ins and outs of the ERP vs accounting software options, the benefits of moving to ERP platforms ASAP, and how to be sure that you’re using the right ERP software if you do decide to make the switch.
Let’s jump right in!
What is Accounting Software?
You’d be hard-pressed to find any small or medium-sized business (and certainly any large business) that wasn’t already taking advantage of accounting software.
A game changer in the world of business that has made it a whole lot easier for businesses of all sizes to better understand their financial situation at any point in time, accounting software is a modern miracle – but it’s also very specific in what it does, what it processes, and the kind of information it provides.
Make no mistake about it, having accounting software in your business is far better than not having anything at all. Or trying to do your books by hand!
But ERP accounting software is far more advanced, far more in depth, and far easier to integrate across different areas of your business that traditional accounting software might never have touched before.
You’ll be able to get new insights, new information, and a more complete picture of your business when you move in that direction.
What is Enterprise Resource Planning (ERP) Software?
Enterprise Resource Planning software usually comes bundled with accounting software these days, providing a “all-in-one” kind of package those in the financial software world call and ERP Accounting System.
Specifically intended for more complex small, medium, and large sized businesses that have a real need for complex data recording, complex financial reporting, and the ability to analyze financial resources (and other company resources) in relationship to other areas of the business, ERP tools take accounting software to the next level.
For example, whereas your traditional accounting software might have provided insight into proper financial management, smart financial planning, and intelligent budgeting your ERP solution can also help you manage projects and your supply chain, manage your payroll and human resources, and output far more complex and revealing reports, too.
Think of ERP tools as “accounting software on steroids”.
The Difference Between an ERP System and Accounting Software
As highlighted above, having any kind of accounting software is always better than trying to do your books by hand – but upgrading to ERP accounting software (so long as your business can make the most of the extra leverage and benefits it provides) may represent a huge leap forward for your operation.
That’s because there are some very real, very clear, and very distinct differences between an ERP system and accounting software.
For starters, the scope of these software options is completely different.
Accounting software (like QuickBooks, for example) often feels like it is overly complex and all-encompassing, but at the end of the day you’re really only looking at a handful of key financial details and metrics and working out of a single database.
At the same time, ERP accounting software may be looking at everything that QuickBooks is looking at as well as key metrics, reports, and databases from every other area of your business – including marketing, human resources, sales, logistics, etc.
They are two completely different animals altogether, which is why it makes comparing ERP vs accounting software so challenging. This really is an apples to oranges kind of situation.
ERP tools are taking a wider view of your business and organization, a holistic look at all the different data points that are contributing to your financial health, viability, and overall success and profitability of your business.
Accounting software, at the end of the day, is looking at little more than money coming in and money going out. Sure, the realities of how accounting software works is a bit more advanced than that – but if you were to condense it down to its most essential functions, that’s not a bad description.
ERP software can’t be distilled down to that degree.
Another major difference between ERP accounting software and traditional accounting software is the way these tools are built for different kinds of businesses.
Something like QuickBooks, for example, is a lot more generalized and “broadly focused” than most ERP solutions that are built for specific kinds of businesses and specific industries.
Yes, you can get different versions of QuickBooks that set up databases and reporting uniquely based off of different kinds of businesses.
But ERP solutions are often engineered from the ground up with specific industries in mind, not only providing industry-specific data points, reports, and analytics but also adhering to industry-specific rules and regulations regarding accounting practices, too.
At the end of the day, these are two distinctly different tools for two distinctly different jobs even if they have a lot of shared commonalities with one another.
Why is an ERP Better Than Accounting Software?
First off, the modularity of an ERP makes it a lot better suited for today’s fast-paced, ever evolving, and always changing business landscape.
Most ERPs are built using a structure not all that different from Lego blocks or Lincoln Logs.
You can use the components you need, ignore components you don’t, and activate or deactivate different sections of your ERP as necessary. You can really scale these solutions according to your business needs in a way that is really difficult to do with traditional accounting software.
This modularity gives already tailor-made ERP solutions the ability to be completely customized right out of the box. You’ll be able to hit the ground running with ERP tools that can grow with your business, making the most of the toolsets that they provide depending on what you need your ERP to be in that stage of your business’s life.
Secondly, like we mentioned a moment ago, traditional standalone accounting software just isn’t built with specific industry standards in mind.
No, that software – software like QuickBooks, the universal gold standard for small business accounting software – is purposely built to be as useful and as applicable for as many businesses as possible.
The idea that QuickBooks would be built specifically for one industry or another runs completely contrary to the DNA of this accounting software (and traditional accounting software just like it).
The developers want QuickBooks to be able to work for a small retail shop, for a food truck or a restaurant, for a carpentry or plumbing business – all without having to make dozens of different accounting software options from scratch.
ERP tools, on the other hand, are completely different animals altogether.
ERP accounting solutions are very much built from the ground up to serve specific industries and specific kinds of businesses. Everything about the solutions are carefully crafted to match the demands of the kinds of businesses that are going to run them, which allows them to be “dropped right in” to a business workflow without disrupting things from top to bottom.
The end result is that while you give up some flexibility in how you use something like QuickBooks you end up with deeper insights, better connectivity throughout different areas of your business, and a more robust and complete picture of your operation (particularly when it comes to your finances) than you would have had otherwise.
Smart Integrations with Sales and CRM Components
Traditional accounting software often has some very basic integrations with your sales and marketing backend (and maybe even integration with your CRM), but by and large traditional accounting platforms are designed to handle accounting and accounting alone.
This approach sort of “silos” your accounting apart from the rest of your business.
In some ways that can be highly beneficial, especially when you’re making financial only decisions, but in other ways you might find that you have blind spots created by this kind of disconnect.
With ERP software, though, everything (EVERYTHING) is integrated across the board.
Your accounting information is viewed through a specific lens but can also be infused with insights from your sales and marketing databases and reports as well as tied directly to your CRM.
This lets you sort of zoom out and take a more holistic look at your business to see what’s working, what isn’t, and where you can improve.
Instead of working in specific areas of your business you’re able to work on your business, just because you have a more complete picture of what’s going on (with interconnected relationships across all areas of your business) rather than looking at data separate from everything else that may be influencing it.
Context is king when you are crunching business information, and accounting software (for good and for bad) strips a lot of context out of the reports that it can produce.
You won’t have that problem with ERP platforms.
Real Time Feedback
As we mentioned earlier, we live in the middle of a hypercompetitive business environment – maybe the most competitive business environment that has ever existed.
It’s not all that useful to crunch the numbers every month with traditional accounting software and see how well you did, running through traditional Profit and Loss statements (or something similar) to try and find an edge you can use to build and grow your business.
No, that kind of almost passive approach to looking at your businesses financials – especially when your competitors could be crunching numbers in real time with ERP solutions – is only going to have you wondering why the rest of your industry seems to be lapping you, even if your products and services are superior!
ERP solutions provide real-time information to data across all areas of your business.
In turn that produces real-time insights that you would have missed out on otherwise, insights that can contextualize exactly what’s going on with your operation and shine a light on what you can do better or where you need to refocus.
This live reporting component of ERP tools helps to keep you more fluid, more flexible, and more adaptable to a global market that changes on not just a day-to-day basis, but sometimes on a minute to minute basis even.
There’s a lot of power and a lot of leverage in having speed of decision-making on your side.
Using an ERP while the rest of your industry is still using traditional accounting tools can be an almost unfair advantage you’ll want to press as much as possible!
Of course, you’ll need to choose the right ERP if you’re going to hit the ground running with this kind of technology. You’ll need to choose an ERP with a wide range of capabilities, a customizable, flexible, and modular solution, and an ERP that can be integrated into your operation without causing widespread disruption.
You’ll need something like ERPNEXT, one of the most popular industry-leading ERP solutions available today!
Benefits of Using Wxora ERP Accounting System Based on ERPNEXT Open Source System
In constant development since 2009, ERP started its life as a simple and straightforward accounting module 12 years ago but has grown into one of the most powerful (and popular) ERP accounting systems under the sun.
A major overhaul in 2017 introduced a variety of new capabilities in the Finance, Operations, and CRM components of ERPNEXT. This was seen as a major leap forward for not just this piece of software, but for the ERP community in general.
Developers have continued to improve upon the ERPNEXT platform and continual updates have helped to make this software as “future proof” as it gets.
The core modules of ERPNEXT are advanced yet easy to use, giving business owners almost x-ray vision to better understand exactly what’s happening in their business at any point in time – in real time – with detailed analytics and reporting not available anywhere else.
Some of the core modules that help to separate ERPNEXT from the rest of the pack include:
- The General Ledger – A hugely important part of the accounting system backbone of ERPNEXT, this is where the ledger, sales tax, currency, and fixed asset features are going to be found
- Bank Management Tools – These tools help business owners accept and analyze connected bank accounts
- Customer Relationship Management Tools – ERPNEXT has a fully integrated CRM system for businesses to use, avoiding the often stressful process of having to integrate an ERP or accounting solution with a standalone CRM
- Inventory Management Tools – Provides key insights into the logistics behind inventory management and valuations
- Human Resources Tools – Gives detailed breakdowns of employee data and info on demand
You’ll also have access to:
- Accounts receivable and accounts payable data
- Master planning resources for purchases and production planning purposes
- Production information related to materials and manufacturing tracking
- Product builder tools
- Project accounting tools
- An administrative module to handle the heavy lifting of configuring this ERP
- Sales and marketing data
… And that’s just the tip of the iceberg!
At the end of the day, this is one of the most feature-rich tools for understanding and analyzing your business that you’ll find on the market today.
Best of all, you can either choose which tools you want to use piecemeal (only paying for what you need when buying a license for ERPNEXT) or go “whole hog” and gain access to all of these tools – deploying what you need when you need it, as you need it, moving forward!
When you get right down to it, there’s a lot of leverage and an almost unfair advantage in using ERPNEXT compared to traditional accounting software – or compared to other ERP solutions, even.
ERPNEXT helps you better unify your global financial details across your operation, allowing for faster and more accurate decision-making. It also helps you to quickly and effectively adapt (almost on-the-fly) to different market demands and changes that bigger, slower businesses that aren’t quite as nimble will really struggle with.
Combine that with highly accurate and reliable reporting (in real time) and detailed business intelligence to better understand what’s happening with your operation every time you look “under the hood” and this toolset really becomes a bit of a no-brainer for savvy business owners.
If you’re looking for something that can help you run a smarter operation with improved agility and efficiency – all of which will contribute to a leaner and more profitable business – you owe it to yourself and your financial future to have a poke around the ERPNEXT platform.
The odds are pretty good it’s a perfect fit for you and your business going forward!