Fundamental Comparison between ERP and Accounting

Enterprise Resource Planning Software or ERP and Accounting software, both play a pivotal role in the growth and development of an organization. These two types of software have helped the business world immensely to make their processes and ways more advanced, comprehensive and automated, which have added to increased profitability. However, there is a general misconception that, ERP and Accounting software are fundamentally the same, but in reality the difference between these two types of software lies in their fundamental structure as well as their application, outputs and size of the course. Here is a point wise discussion which highlights on the fundamental differences between ERP and Accounting software:

• Accounting makes one of the most vital parts of any business of any size, and there just cannot be a business without an accounting division. The accounting software is designed with the aim to automate the process of accounting so that the company can reap the benefits of a more comprehensive, and easy to use platform. On the other hand, the basic purpose of ERP is not restricted only within the Accounting division; rather it covers the total enterprise and all its resources, providing a unified platform for different business processes.
• ERP software includes all the small and large divisions of a business starting from SCM, marketing, human resource, inventory, logistics, SFA to accounting; and acts as a single software to facilitate the planning of all the business processes. Accounting software has a much smaller span compared to ERP, and it only takes into consideration the accounting part of the business, and offers the accounts of a business a robust platform for management and planning.
• The range of accounting software starts with the purchase, sale, cash, bank vouchers and ends on the balance sheet, and helps to explain the financial status of an organization within a particular time period. Whereas, the application of ERP goes much beyond simple accounting and has the potential to predict expected losses and profits of the business.
• The Enterprise Resource Planning software can calculate changes in the market trend; it can point out better openings for the business, help in improving the quality of the products, lower production cost and improve profits, as well as can also help in identifying new markets. Accounting software does not bear any of these features, and they merely represent the accounting of a business.

In brief it can be said, that accounting software makes only a part of ERP, and they can explain only how the business is running, but ERP can suggest how the business should be run to earn better profits.