Accounting system vs. ERP software: the differences and advantages


Updating your accounting tools is probably on your agenda as you embark on your digital transformation journey. The key question you should be asking yourself is whether you should opt for a new accounting system or consider enterprise resource planning (ERP) software. Although accounting systems and ERP software have some similarities, they also have unique features that can benefit your business in different ways.

First, let's define what an accounting system is.

An accounting system is a software solution designed specifically for businesses to manage their finances. It includes tasks such as bookkeeping, invoicing, payroll and financial reporting. It assists with these tasks and usually focuses on financial information such as payables and receivables. A well-known example is Unit4 Financials, a standalone solution that aims to optimize and automate day-to-day financial processes.

Then we do the same for ERP.

ERP software, on the other hand, offers a comprehensive solution that integrates various business processes into a single system. It manages not only finances, but also operational processes such as supply chain management, human resources, customer relationship management and project management. ERP systems offer a holistic view of a company's processes and data and enable well-founded decisions to be made.

So what does this mean for you and your company?

The main difference between accounting systems and ERP software lies in their scope and focus. Accounting systems are designed specifically for financial management, whereas ERP systems offer a broader range of business process management capabilities. This means that an ERP system typically has more robust financial management capabilities and more extensive operational management capabilities.

Customization options are another important difference. Accounting systems tend to be more flexible and allow companies to customize the system to their specific needs. While ERP systems tend to be more rigid, they offer a more efficient and organized approach to managing business processes.

Accounting systems are generally less expensive and more accessible, especially for smaller businesses or those with limited budgets. They are also traditionally easier to set up and use compared to ERP systems. However, the introduction of Software-as-a-Service (SaaS) solutions has significantly simplified the implementation of ERP platforms and made them more accessible to businesses of all sizes.

In contrast, ERP systems provide a comprehensive business management solution and serve as a centralized data source that integrates information from different departments and processes. This provides a holistic view of business operations and makes it easier to identify areas for improvement and make informed decisions. ERP platforms also offer advanced features for supply chain management, project management and customer relationship management, which can help optimize operations and improve profitability.

In addition, ERP systems can improve data security by centralizing all data within a company, making it easier to protect against unauthorized access. This is particularly important for companies that process sensitive information such as financial data.

Finally, ERP systems can help companies to reduce their IT costs and optimize processes. By integrating different processes and departments, ERP systems can eliminate the need for separate software solutions, resulting in lower IT costs. Advanced features such as intelligent process automation also free up your finance and HR teams, allowing them to focus on more demanding tasks. This helps your organization to react flexibly and resiliently to market changes or global economic shifts.

Or as the 2023 Professional Services Maturity Benchmark report from Service Performance Insight puts it:


"The basic financial requirements of service-oriented organizations are very different from traditional manufacturing and supply chain-focused ERP applications, as they must include resource management (people) and project management (tasks) capabilities. More and more providers of project-based ERP applications have added extensive talent management capabilities to support recruitment, onboarding, compensation and rewards for the employees who are their most important assets. The fact is that with increasing globalization, service companies' requirements for tools to work more efficiently and effectively are changing."

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