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How To Analyse your Accounting Software is a Subset of ERP

Accounting software
The term is used to strictly to refer to the financial aspect of your business operations. These include accounts receivable, accounts payable, payroll, and trial balances. Many vendors bundle accounting software with modules for relevant business activities like billing, sales order, purchase order, general ledger, timesheet, expense, and electronic payment.

ERP
An ERP software solution can have all the accounting software features plus more. It’s a resource management system that aside from monitoring the business’ financials, also tracks the following: tangible and intangible assets, human resources, and materials. Intangible parameters include working hours, product life cycles, key performance indicators, and customer relations. These are not financials per se, but they impact on the company’s finances; hence, they are essential to your accounting.

Integration
Most ERP products today are offered with accounting software as an entry-level package. As your business grows, so does your requirement for automating more complex data recording and reporting processes. You can add activity-specific modules; thereby, transforming your accounting software into an ERP.

For example, a popular accounting software suite offers financial management, planning, and budgeting features as its basic package. But the same package can be integrated with other business operations such as project and supply chain management, reporting and analysis, and human resources management. In some cases, an I.T. management module can be added. Each module is usually licensed separately.

So if you’re just buying software strictly for financial management, make sure you’re comparing two accounting software products to get objective comparative results.

The Future
ERP is fast eating up the market of accounting software products today. Most new product launchings today are ERP, as more businesses demand better integration of their operations. Furthermore, businesses are more intertwined globally today—even a boutique creative agency may have accounts or suppliers in other countries—a situation that an ERP can address better than an accounting software product. But the term “accounting software” won’t likely disappear because users have grown accustomed to using it generically for years now; in short, accounting software and ERP may mean the same thing sooner than later, when both syste
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