ERP vs Accounting Software: 9 Key Differences
9 key differences between ERP and accounting software
There are many differences between ERP and accounting software relating to cost, implementation, staff training, automation and reporting capabilities. Here are 9 key differences:
1. Cost of solution
Cost of solution is the first major difference between accounting and ERP systems.
Accounting software is a low-cost option because its functionality is finite — its main purpose is to help users record, organise, analyse and report on financial data.
Its affordability is what makes it a great starting point for small businesses with limited budgets.
ERP systems help manage and automate core processes beyond the financial realm.
There's more scope to customise or configure an ERP system to suit your business requirements and integrate it with other software.
The cost of ERP systems is therefore higher due to their extensive features and greater complexity.
2. Staff training and implementation
Staff training and implementation are also ways the two systems differ. Accounting software is generally more straightforward to implement and use.
On the other hand, implementing an ERP is a big deal as it needs to meet the needs of multiple departments.
Sometimes the ERP needs to be customised to support specific business requirements.
Other times it may be more efficient to change business processes to align with the design of the ERP.
Regardless, the implementation process is much more involved and tends to follow a structured methodology with distinct phases — planning, design, build and test, readiness and go live.
This approach supports the design and build of software that's going to work well for the business and its users.
Because of the complexity of an ERP and the importance of getting full value from it, the learning curve for it is a lot steeper.
There will also be significantly more users across the business using the system, so businesses also need a structured approach to staff training.
3. Time to deploy
Time to deploy accounting software versus ERP — most accounting software can be set up quickly and takes considerably less time to implement than a full-scale ERP system.
The bulk of time is usually taken up with migrating your financial data, particularly if you're moving from paper-based processes to cloud-based accounting software.
With ERP software, you'll spend more time planning the functionality and modules that are most important to your business.
Implementation is also complex because more programming expertise is involved. This is why it takes longer to deploy an ERP system.
Working with ERP experts who have a proven track record is essential and will ensure you go live on time (and don't run over budget).
4. Modular and scalable software
At its core, accounting software is designed to help you do your accounting tasks — from invoicing and managing cash flow to tracking expenses and automatic bank reconciliation. It helps you keep track of your finances.
While you may be able to integrate accounting software with third-party apps, it can't be used to streamline any other business processes.
On the other hand, an ERP system is designed to scale in users, volumes and software capabilities — you can add modules as your business grows and your needs evolve.
The reason for switching to an ERP system may be that your business is growing, diversifying or becoming more complex, and is, therefore, harder to manage off separate software systems.
5. Scope of data and information
ERP systems house a broad range of business management functions, creating a single source of truth for data from different departments and processes.
The integration of an ERP system allows data to flow seamlessly across your platform, so your people all have access to the same information in real time and can make confident, informed decisions.
Accounting software doesn't have the same scope or integration. What it does provide is an easy and secure way to manage your financial data — cashflow, purchase orders and billing — which are all crucial for accurate financial reporting.
6. Managing automation
With accounting software, the automation mostly takes the manual elements out of accounting tasks — for example, turning a quote into an invoice, filing taxes or running financial statements.
While both reduce repetitive tasks and increase efficiency, ERP automation extends beyond routine accounting tasks and provides real-time visibility of your business operations.
This transparency helps you identify process bottlenecks so you can improve business workflows.
And, with the help of in-built artificial intelligence (AI) and machine learning (ML), an ERP becomes a tool for resource planning, business forecasting and other high-value, growth tasks.
7. Types of reporting and insights
The types of reporting and insights available in an ERP system are more extensive than in accounting software.
Because integrated ERPs pull data from a wide range of business processes into a single database and the information is accessible in real-time, you can generate advanced reports and leverage deeper insights that inform decision-making beyond accounting and finances.
For example, you can monitor stock levels and use this information to determine the most optimal times to replenish inventory.
You can customise your reporting to suit your business needs, and slice and dice the data to home in on granular details.
While accounting software may not provide the same level of reporting and analytics, you can still pull valuable intelligence from your financial data through core accounting reports like the income statement, balance sheet, profit and loss statement and cashflow statement.
8. Managing functions and processes
Managing functions and processes is something that both accounting software and ERPs do well — just on different scales.
Accounting software focuses on automating basic financial functions and processes — the idea is to remove the spreadsheets and automate everyday tasks, so you can focus on tasks that will get you closer to your business goals.
An ERP is a comprehensive platform that offers many functions to power your entire business.
With MYOB Advanced Business, you can customise our ERP system to suit your business, including industry-ready solutions that have additional functionality designed specifically for:
9. Demand and resource planning
Part of good supply chain management is demand planning. This allows you to better anticipate stock level requirements and helps you avoid any inventory waste from overstocking or stock-outs.
But to do this level of forecasting and planning, you need real-time visibility and reporting across your warehousing and inventory management.
With an ERP system, your accounting software natively integrates with your inventory management software.
ERP vs accounting software FAQs
Are ERP systems needed for ecommerce?
ERP systems can be hugely valuable for ecommerce businesses, especially if you're selling products through multiple channels.
A cloud-based ERP can integrate your back-office admin with your online store operations — bringing together everything from supply chain and warehousing to inventory, logistics planning and finances.
Connecting these workflows reduces the admin of order processing and fulfilment, creating greater operational efficiency and a better customer experience.
When should a business use an ERP system?
It's a common question — when should a business use an ERP system? The answer depends on several factors.
The right time to implement an ERP system is different for every business, but these are some common roadblocks that indicate your business is ready to take that step:
You've outgrown your existing software — it's struggling to process high volumes of data, and your software lacks the additional functionality you need or specific automation capabilities.
You're spending more time on core business activities — it takes you longer to complete daily or monthly tasks like closing the books or running reports because of manual processes and multiple data sets.
You're missing new business opportunities and spending too much time running your business which means you can't pursue new ventures or capitalise on shifts in the market.
Your IT is too complex – while one or two integrations can elevate existing software, adding more and more can further complicate an already inefficient system, making it harder to maintain and access your business data.
Your customer experience is suffering — if a customer calls asking about their order and you can't immediately check its status, this directly affects customer satisfaction.
Are ERP systems better than accounting systems?
For some businesses, ERP systems are better than accounting systems — but it depends on which software best meets your business requirements for functionality, integration, scalability, reporting, efficiency and price.
For example, if you're starting an online business, you may not need payroll or inventory management tools straight away.
But, as your sales volumes increase, you launch more product lines and hire more employees, you'll likely need those additional features. That is when you might consider more advanced accounting software or an ERP system.
Is MYOB an ERP system?
MYOB Advanced Business is an all-in-one ERP system — the number 1 provider of ERP software in Australia.
It's designed to help businesses manage complexity and scale confidently by connecting projects, accounting, payroll, financial management, inventory and more — all on one platform.
Accounting software vs ERP — which one will you choose?
Understanding the differences between accounting software and ERP is critical when choosing the right system for your business.
Our accounting software is designed specifically for financial management and is generally a more affordable option for smaller businesses.
Our ERP systems are comprehensive with a broader, more advanced range of functionality.
This gives you a more complete view of your business operations, making it easier to spot areas for improvement or respond more flexibly to market changes.
If you're not sure which system is best for your business, let's chat. Our MYOB experts can point you in the right direction.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.