Today, with the help of modern cloud technology, you can make use of customized accounting software and ERP (Enterprise Resource Planning) software like SAP, Oracle to manage your financial transactions and ensure stress-free bookkeeping. This can be easily deployed in the cloud and used a subscription service instead of installing your own servers and purchasing software licensing.

But you need to understand that both are different from one another, before you can decide which will suit your needs better. Let’s find out the three major differences between accounting software and ERP:

1. While the best free accounting software manages company’s accounts or how your money moves,
ERP is a business software that helps you to track your inventory management, tangible and intangible assets, invoicing, order fulfillment, job costing, etc. In accounting, you deal with the general ledger, account receivable and payable, payroll, expenses, and more. But enterprise resource planner (ERP) helps in managing issues that are not addressed in accounting. In other words accounting functions are subset of ERP software. ERP is an account software plus much more.

2. Usually there is a big difference when it comes to cost of ownership of software between ERP & Accounting software. While Accounting softwares are usually low cost, a small business can easily afford an accounting software. Whereas cost of implementation and maintenance of ERP can be highly expensive even for medium to large sized businesses.

3. Another major difference is the amount of personnel required to manage the software. While accounting software can be managed entirely by the small business owner. Maintain an ERP system would require a team of professionals to keep it up and running. Learning curve is also usually steep for ERP software.

4. The accounting software has restricted or basic inventory tracking,
along with the web-based add-ons. On the other hand, the ERP system is flexible enough to set the users free from the shackles in accounting software. It also enables you to increase the accuracy and customer services of your business. Meanwhile, ERP helps you in reducing the stock carrying costs, inventory write-offs, and labor costs. In addition, the ERP’s inventory management module helps you in making faster and accurate decisions that are critical in today’s complex international inventory environments.

5. ERP can help in planning your resources required for your business like amount of raw materials required for production process, also help in managing highly complex production line, however an accounting software lacks such kind of functionality.

While both are important for your business in their own unique ways, the ERP is more flexible compared to the accounting software and lets you manage different tasks more conveniently. It all comes down to the needs of your business and the size of the business. Usually a small business can be quite happy with accounting software for quite long time, where as comparatively big business or business handling lot of manufacturing and inventory would need ERP software to manage their business effectively.