The globalization of the contemporary business market has raised the bar of competition very high. This is why organizations need to have a clear perspective of their data to perform the business processes with ease. As a result, several systems, applications and tools have been designed to aid the smooth functioning of the internal organizational processes. To run the various aspects of business in a company, certain applications and software have been developed that cater to the individual business needs. For instance, the Accounting software tends to tackle only the accounting needs of the user company. On the other hand, a certain suite of applications can consist of several capabilities that can cater to all the business needs of a company in a unified way. In this context, the development of ERP accounting systems deserves a special mention.
What is an ERP Accounting Software
An ERP accounting software can be simply defined as an Enterprise Resource Planning software system that is adept with accounting facilities. In simple words, in the modern competitive market, a successful ERP implementation is expected to have solid accounting facilities.
As per data from Wikipedia – In 2019 the global ERP software market grew by 9%, resulting in a worldwide value of approximately $39 billion in total software revenue.
Such software systems provide certain basic advantages that prove to be beneficial for the user organization. These benefits can be enumerated in the following manner
- Helps the user company become cost-efficient.
- Aids in improving customer experiences.
- Easy to buy, deploy, learn and extend across the organization.
- Increases the pace at which the user company works.
Meaning of Accounting Software
The term accounting software refers to a software system that performs several accounting and bookkeeping tasks. It also performs the function of storing financial data related to the user organization’s business. More often than not, the system is also used to perform several business transactions.
Enterprise Resource Planning Software: Meaning
The term Enterprise Resource Planning is also abbreviated as ERP and refers to a system used by organizations to manage and integrate the crucial business processes relevant for their operation. In general, ERP Systems are important for companies because they help in implementing resource planning methods for optimal functioning and simplified administration through a unified system. Thus, in simple words, an Enterprise Resource Planning system is capable of integrating the methods of planning, purchasing, inventory creation, sales and marketing, accounting, finance management, human resource management and much more.
Over the years, these systems have evolved into becoming major web-based applications that users can access from remote locations also. Some important advantages of the use of ERP Systems include the simple process of deriving business insights in real-time, data reporting capabilities and the free flow of data and information between the various applications used by the user company.
ERP vs Accounting Software – Understand the Differences
The ERP Systems win the competition existing between them and the accounting software because of their ability to seamlessly manage all the internal business processes upon which the management of the user company depends.
In the recent past, the accounting software industry has suffered a certain setback from which it is not likely to recover.
On the other hand, the ERP System is relatively coping better with the changes in the market which is why the ERP System is better suited for companies in the contemporary market. This is a result of the constituent financial accounting feature.
As per the data by Software advice – Financial accounting functionality is the outlier, with 84% of buyers desiring this particular feature
Difference between Accounting Software and ERP
- ERP is a collection of features that can perform several activities within a company. Accounting software can perform only financial functions.
- Accounting Software fulfills specific needs while ERP can fulfill several business needs.
- Accounting software does not include sales or customer relationship management features that ERP includes.
- ERP can provide real-time data and data mobility while accounting software is incapable of performing such functions.
More often than not, the terms ERP and Accounting software are used interchangeably. But, in reality, these two terms are far from being similar. In simple words, ERP is the abbreviated form of the term Enterprise Resource Planning which includes a range of functions required by an organization within a single integrated system. These functions include accounting abilities and other tools that are used in managing the supply chain of the user companies. On the other hand, the term Accounting Software refers to a system that is designed to help the user organization manage one specific area of the business. But, although this software has only one ability, it can perform this ability to its fullest potential which helps the user to tackle all the financial operations of the business
The difference between ERP and other Accounting Softwares can be provided in the following way –
| ERP System | Accounting Software |
|---|---|
| Include the Accounting abilities along with the ability to tackle all other operational aspects of the business | It simply has only Accounting abilities |
| It is considered to be an end-to-end business management solution as it helps in managing almost all business operations | It is designed to only perform Accounting operations which it does to its fullest potential |
| The various parts of the system are fully integrated which implies that the data flow between various parts is quite smooth | This system stands apart from other systems implemented within the user company’s internal structure |
| Intangible assets can be managed by the ERP system | Accounting Software cannot manage intangible assets |
| This helps in managing the entire business | This helps in managing only the financial abilities |
Benefits of Using an ERP & Accounting Software
The accounting abilities of the enterprise resource planning suite include a range of advantages that can be derived by the user company, after the successful implementation of the same. These benefits include the following:-
- Highly detailed financial reports – The reporting capabilities in simple accounting software are basic and include the general report templates like the income statements, balance sheets and others. But, the accounting capability of the ERP System is adept with advanced reporting techniques including cash flow projections that are based on inventory management, order status reports and customer order pipeline.
- No duplicate data entries – Separate systems for individual business processes implies that manual re-inputting of data is essential. But the integration of ERP and the Accounting facilities decreases the load of this tedious process of data entry and makes it fast and consistent.
- More Automated – Automation has proven to be effective for business productivity. When the ERP and Accounting software is integrated, the workflows become automated and all the major financial workload can be completed more quickly.
- Lesser errors – Manual data entry in Accounting software tends to lead to several errors which result in inconsistent accounting activities. But the automated methods of data entry in ERP Systems decrease the tendency of causing errors.
- Increasing control – The accounting capability of ERP systems gives the user company increased control over the business activities that impact the decision making patterns within the organization.
Basics of ERP Software
The ERP software is designed to aid the user organization in performing daily business activities with ease. These activities include finance management, supply chain management, risk management, human resource development and several others. The consistent change in the global business structure has led to an increase in competition in the market.
This is why the companies irrespective of their size, need to implement software structures that are equipped and up to date to tackle the changing demands of the market. To understand the importance of ERP Systems, the features have to be understood clearly. These can be enumerated in the following manner:-
- The system has a hassle-free deployment method which makes it easier for organizations to implement
- The security and privacy systems related to company data are way stronger than other applications.
- The sustainability of the system is largely characterized by its pocket-friendly nature.
- The system provides certain fluidity to the business processes of the user company.
Best ERP and Accounting Software by Microsoft
Microsoft Dynamics 365 Finance and Operation is the best ERP accounting system developed by Microsoft and is also one of the leading ERP based accounting applications available in the market. The journey of Microsoft in the professional ERP Accounting Software market began in 2006 with the Dynamics AX.
After this, the application was renamed Microsoft Dynamics 365 for Operations in 2016. Finally, the system was branded as the Microsoft Dynamics 365 Finance and Operations in 2017. Some of the core elements included in the application can be enumerated in the following manner:-
- General Ledger
- Bank management
- Customer Relationship Management
- Accounts receivable
- Accounts Payable
- Inventory Management
- Master Planning
- Production
- Product builder
- Human Resources
- Administration Module
- Sales and Marketing and some others.
Role of Dynamics 365 Company in Business Central ERP implementation
At times, organizations that had previously employed individual accounting software for performing the finance management function outgrow the capabilities of these individual software structures. In such situations, these companies can implement the Microsoft Dynamics 365 Business Central. This application helps the user company to connect and integrate the business methods across the finance, supply chain, manufacturing, HR and several other departments.
Being a part of the Dynamics 365 suite of applications, the Business Central is easy to implement and can seamlessly integrate with other Dynamic 365 applications like the Dynamics 365 for Sales, Customer Service and many more. Also, the application can integrate deeply with Office 365 to provide an end to end business seamless work experience.
Conclusion
Thus, in conclusion, it can be said that ERP Systems are the most advantageous suite of applications that an organization can use for performing internal business activities in a hassle-free manner.
Frequently Asked Questions
The term ERP is the abbreviated form of the term Enterprise Resource Planning. These systems have a quite important role to play in helping organizations to streamline their accounting processes through the integration of company data. In simple words, the ERP Systems provide the user company with the ability to view the fundamental areas of business in a unified way that helps in making more accurate decisions. Subsequently, this has a positive impact on the operations of the organization.
In this competitive global market, organizations need to be financially productive to consistently grow and expand their business. This financial productivity is gained by implementing a system that provides specific insights into the financial data of the organization. The ERP Systems play this crucial role within the accounting department of the user organization which makes it cost-efficient.
ERP is the abbreviated form of the term Enterprise Resource Planning system. It refers to a type of software that is used for Planning and managing the daily activities involved in an organization’s business. In simple words, the system can be used to automate and simplify the individual organizational activities involved in maintaining a flourishing business. Individual ERP applications can provide software as a service while a complete range of such applications form a complete system that is used for effective communication across the organizational platform and also to unify the business processes. This in turn also promotes the smooth flow of data among the internal applications of the company.
Thus, the use of the ERP System is to increase the efficiency of the user company by the proper management and improvement in the utilization of the company resources.
Accounting software is designed to perform an array of functions related to the financial management of the user organization. But the ERP System is a collection of several tools that perform all the financial functions of the Accounting software along with providing several organizational benefits to the user company.
The use of ERP Accounting software in the contemporary business environment is both essential and extremely beneficial for companies irrespective of their size. this software includes the following components that help in supporting and monitoring financial activities :-
● General Ledger
● Receivables
● Payables
● Assets
● Payrolls
● Analytics and Audit
To use these components to their advantage, the user companies should perform the following activities:-
● Keep the employees aware of the changes.
● Evaluate the strengths and the weaknesses of the employees
● Designing a customized training plan
● Monitoring the individual progress of the employees.
● Encouraging feedback from the employees relating to the use of the ERP Accounting Softwares.
– Yes, the ERP Systems are usually adept with the Accounting abilities of the Accounting software, along with having a plethora of other capabilities.
– Yes, both ERP and Accounting Softwares are similar but not the same. This implies that though these systems have certain similarities, they are technically very different from one another.
