It often doesn’t take long for small businesses to outgrow improvised processes for managing operations. You might start with a few dozen customers, but as this grows to hundreds or thousands, you will need to hire more staff and potentially open new offices.
Managing all of this with spreadsheets and paper records is simply not sustainable. This is when companies tend to weigh up the pros and cons of accounting solutions and even more advanced solutions like Enterprise Resource Planning (ERP) Software.
What is ERP software?
ERP is a platform of integrated software applications. These work together to enable you to run virtually every part of your organisation from one place. Using a single database, the ERP modules cover things like accounting, marketing, manufacturing, human resources, supply chain and much more.
Business managers can use this centralised structure to gain a unified perspective of all enterprise data. It also enables the automation of many processes and the ability to gain unique insights across numerous departments. Thus, decision-makers find opportunities to improve and drive efficiency.
ERP has been a core part of the success of many companies for decades now. But, thanks to cloud technology, it has recently become far more accessible to smaller businesses. Having access to this kind of technology can be a game-changer for many companies.
What is accounting software?
As you might guess, accounting software is entirely focused on solutions for managing financial activities within a company. It helps with the management of things like accounts payable and accounts receivable, as well as things relating to bookkeeping.
As an example, an accounting system could be used to help generate a trial balance. This is a key part of double-entry bookkeeping. Accounting software can also help companies assemble important financial statements. Compiling balance sheets and profit and loss reports can be an arduous task to do manually. Accounting software makes it much simpler and more accurate, freeing you up to focus on actually running your business.
How do ERP and accounting software differ?
The main distinction between ERP and accounting software is in their scope. Accounting software offers many useful tools to automate financial activities within a company. This can help move past manual processes and spreadsheets to handle larger amounts of data. ERP offers these functions as well, but it also offers tools to help manage all processes within a business, and link them back to core financials.
What are the key differences between ERP and accounting software?
Many small business owners find themselves spending more time managing the books as their business grows. Doing accounts by hand is fine when your customer numbers are only a few dozen. But as business picks up, this expands to hundreds and even thousands of customers, and the bookkeeping can quickly become overwhelming.
At this point, entrepreneurs often start to look for software that might help manage this kind of workload. The first port of call may well be an accounting solution since their biggest perceived challenge is keeping track of all the sales, payments, invoices and profitability. An accounting package can be a help with these concerns, but it lacks things like:
- Supply Chain Management.
- Inventory Management.
- Order Management.
- Resource Management.
- Project Management.
- People Management.
- Manufacturing.
- Ecommerce.
- Business Intelligence.
Data relating to these things, and more, are all siloed in different places. Accounting data is in one platform, HR data in another, customer data in yet another, etc. It becomes a patchwork of spreadsheets with nothing to tie them all together. You can fix this problem by unifying everything in an ERP system.
This will immediately enable insights that otherwise would not have been possible, helping with decision-making and finding opportunities to be more efficient and productive. These are some of the key differences between ERP and accounting software;
- Scope: ERP can manage virtually all aspects of the business while accounting software is focused on bookkeeping.
- Data Analysis: ERP generates insights for all areas of operation while accounting software only analyses financial data.
- Reporting: ERP produces reports that incorporate financial and operational data while accounting software is limited only to financial information.
- Scalability: ERP scales up and down almost infinitely but accounting software is limited by user seats, licences and customer record numbers.
- Cost: ERP software usually costs more, but cloud-based offerings make it more affordable. Accounting software is fairly inexpensive for small businesses.
- Deployment: ERP is an extensive implementation so deployment can be complex. Accounting software is quite easy to deploy.
- Complexity: There can be a lot to learn with ERP. Accounting software is usually quite easy to learn through self-teaching.
So here comes the burning question!
Do I need ERP or accounting software?
It can be difficult to decide whether your business needs an ERP system or just an accounting solution to meet its needs. There are some things you can look out for that are key indicators of which would be best for you. Here are some questions to ask yourself. If you answer ‘yes’ to any of them, an ERP system may be the better option for you.
- Do you have to undertake a significant amount of manual work to compile and consolidate business data from different spreadsheets?
- Are you using two or more systems that don’t integrate well together?
- Are you finding it increasingly difficult to keep up with suppliers and customers?
- Does it take a long time to prepare your financial accounts when that time of year comes around?
- Are you having to adapt processes and find workarounds to fit your current systems?
- Have you recently undergone a period of rapid growth?
- Has the accelerating shift towards e-commerce had an impact on the way you operate?
- Is revenue growing but profitability isn’t experiencing the same growth?
Final Thoughts
The issues in these questions can be very challenging for growing businesses. An accounting solution may be able to help with parts of those issues. But only an ERP system will address all of them in the most comprehensive way possible. Automation, big data, machine learning, artificial intelligence, smart dashboards, reporting and real-time data will all be available to you in an ERP system, so you can get on top of things and improve efficiency, productivity and profitability.
Why choose Eventura as your ERP implementation partner?
Eventura has been providing robust business solutions to countless organisations (big and small) for over two decades. We are ERP experts and can identify all of your business needs, and deliver a comprehensive ERP solution that works for you.
As Sage 200 Partners and NetSuite Solution Providers, we can help you identify which solution will fit your business needs the best. Our expert team of business analysts, developers, consultants, technicians and support staff can guide you through your entire project, from initial scoping through to implementation and on-going support.
We’re also managed IT service providers meaning we can help you identify your entire IT infrastructure requirements from day one. If you would like to speak to one of our ERP experts to discuss your options or request a free demo, you can request a free call back here.
