Basic Difference Between ERP And Accounting Software

The difference between ERP and accounting software lies in their functionality, range, design, outputs and of course size. Accounting software recently has been used as synonym to ERP which is perhaps most misleading to general people, accounting software has been and will remain one of the most important part of the Enterprise resource planning software as businesses run on the basis of accurate accounting but ERP is much more than only accounting. Organizations does not have only one aspect accounting, there are many other aspects of an organization and as organization grow in size and business volume increases few more aspects come into picture or become very important like SCM, Marketing, Human resource, Multiple Inventory, SFA, logistics etc.

Enterprise resource planning software covers all the possible aspects of small to large organizations including accounting and integrates all the aspects of an organization under one seamless software to allow the information to flow from one department to another in real time and produce consolidated outputs which can reflect status of entire organization. Enterprise resource planning software is resource management software which is capable of dealing with all the activities of an organization, like in case of manufacturing it can start from keeping track of raw material suppliers up to after sales records of finished product. Whereas accounting software keeps track of money flow by processing account receivables and payables and generate reports which display the exact standing of an organization in terms of profit and loss.

The confusion about the difference between ERP and accounting software has grown largely due to the fact that most of the ERP software companies either had established accounting software around which they build an ERP or they took over small accounting software companies to develop Enterprise resource planning software. To identify the huge difference between ERP and accounting software one needs to know that accounting software starts from sale, purchase, cash and bank vouchers and finishes at balance sheet explaining the financial status of the organization with in given period.

Whereas enterprise resource planning goes much beyond than simple accounting and can even predict future losses or profits, changing market trends, better opportunities, ways to increase profit margins, lowering cost of production, improving quality of finished product, identifying new markets etc., and it can provide this whole information to the management in one consolidated format. Hence the difference between ERP and accounting is that ERP is a tool which does not simply explains how business is running but it can also suggest how to run it better for earning higher profits.

With advent of ERP, organizations can conveniently work at multiple distant geographical locations and can still get consolidated status of entire organization at the headquarter everyday. This is another difference between ERP and accounting software. Though quality accounting software can also handle multiple accounting systems and complex transactions but ERP can provide deeper view of each location’s day to day working and ensures strict following of general policies and rules at every step without manual monitoring. Changes can be implemented in the working at the head quarters and those get implemented by one stroke at every location, thus Enterprise resource planning software gives far better control to the management and also updated and consolidated information at every step to make correct decisions.

Accounting Software Classification and Types – Helping Small and Large Organization

Accounting software is an application or set of applications that records and processes accounting transactions according to the rules and regulations specified and takes every single transactional entry up to the final books like trial balance, profit and loss accounts and balance sheet automatically. Accounting is a part of life, it is required everywhere be it home, shop, services, companies or government departments. The books containing information about money transactions are compulsory.

Accounting software makes the task of keeping account books easy. This is done in few ways like software helping a lay man in keeping his books who has no knowledge of accounting rules. Software helping small to large organizations in maintaining books with ease by doing processing and recording on its own and relieving accounts department from repetitive work and another way is to help in analyzing the accounts data for better and profitable decisions and getting alerts for wrong decisions or pitfalls.

Accounting software generally contain modules like accounts receivables, accounts payable, general ledger, billing, inventory, purchase order, sales order, bank book and cash book. These are core modules of accounting software however non core modules may include more options like debt collection or outstanding, payment performance, expenses, payroll etc.

Accounting software can be classified as per their functionality in few categories. Personal accounting software are meant for simple accounting purposes like managing budget, expenses and income for personal accounts. These software also include reports for reconciliation like bank book and expense sheet. Inventory-accounting software is another category of software used with sales and purchase options, few of those have stock option too and use single entry system for accounting. These software are very low in terms of functionality and support only one type of regulation and currency. These software are not designed with GAAP or IFRS compliance and just provide accounting as additional feature with the software.

Accounting software used by mid level companies has multiple currency and multiple regulation options which allows the user to keep books according to international standards. Reporting of these software is robust and scalable by using external tools. These software use scalable and flexible databases at the back end like Oracle, Pervasive, MS-SQL, MySql etc. Management information systems are provided along with these software supported by capable reporting tools like crystal reports or cognos.

ERP finance software are more advanced versions of accounting software used by mid level organizations. The advantage of using such software is that these can be customized according to the user needs and requirements without disturbing the compliance with IFRS or GAAP and maintaining the accuracy and speed for transfer of vital information and analysis. Large organization may have to adopt few policies for working smoothly or covering the pitfalls, these software adjust according to such changes to allow its users work freely with same flexibility. Some accounting software are specifically designed for a particular industry, resolving industry specific problems and providing advanced features like data security and privacy. Such software are used by banks, financial institutions and government departments. These software are flexible enough to adjust according to changing rules and regulations too with greater ease.

Why Is Accounting Software So Important?

Accounting is the back bone of any commercial business. As known to all any business requires an accountant. Some businesses go ahead and hire employees as their accountants and then there are some businesses which outsource their accounting to accounting firms. In both scenarios it is proved that any business requires accounting.

There are many companies who also invest in services provided to them by software for their accounting purposes. The accounting software allows the users to store all the information or it can be used just for calculation purposes. The only small issue in this is that the user should be very fluent with this software because if they are not then the software may become a task to consume for the business.

The other glitch is that if the business is depended on the software for accounting it’s very important to always have a back up copy of the work done or there may be a huge risk to deal with if there is any loss of data. The software allows you to make your daily tasks very easy; however it also carries a lot of risks as well.

The accounting software available in the market can be used as a helping hand or as an accounting advice tool. If there are certain transactions that are not very clear for the accountant then the accounting software can be of great help. The software can easily manage reports as well as book keeping for the business. So it will always be a benefit to invest in these kinds of software.

For many accounting students part time jobs as an accountant is a very good idea before they enter the stream. Nowadays many students prefer to learn the software and become completely savvy with it so that they do not have to text their brains with any kind of calculation. The software does it for them and they can get the job done faster with less effort and with less worry about not able to study for their course.

The accounting software is indirectly a boon to the commerce industry as they make the work very easy and shareable. Since the accounting software are present on the computer they can also be shared very easily with the members of the business or the business owners. A lot of times there are accountants who outsource their work to accountants who are accounting software savvy as the work gets done very quickly at a very nominal price.

As for hard copies the software not only stores the work done in the hard disk drive but it also allows its user to take print outs. Hence the users do not need to worry about the loss of data if they keep printing the work done by this software.