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Financial & Accounting Software versus an Enterprise Resource Planning (ERP) System

Financial & Accounting Software versus an Enterprise Resource Planning (ERP) System

Small and midsized companies in today’s complex business environment have excellent tools for running their businesses – both modern accounting software and ERP systems provide a unified view of your data that exceeds capabilities from just a decade ago.

This blog discusses the capabilities of accounting software and ERP systems, highlighting the unique benefits of each and noting how they’re different.

Modern Finance & Accounting Software

If you haven’t reviewed accounting software recently, you’d assume it covers the basics (but only the basics) for accounting transactions like payroll, accounts receivable, accounts payable, and trial balances. You’d also expect add-on modules for billing, sales orders, purchase orders, general ledger, timesheets, expenses, and electronic payment. And you’d be right – but today’s accounting software does much more. It offers visibility across complex business operations with a unified view of all financial data.

Having a single, unified view of operations through software changes the game in so many ways. It enables businesses to:

  • Gain immediate access to all accounting information to make faster decisions in financial management, including nominal ledgers, payable and receivable ledgers, consolidation, and debtor management
  • Integrate and consolidate all financial operations, data, and procedures in one system
  • Streamline reporting and planning cycles for improved corporate performance
  • Access transactions and reports with drill-down functionality for real-time insight
  • Cut out repetitive manual processes to improve accuracy and automate transactions
  • Maintain regulatory compliance with built-in audit trails and alerts
  • Support multi-currency transactions and reporting
  • Close books faster with a unified ledger

In addition, today’s leading accounting software reflects the understanding that financial accounting processes underpin operations and drive business decisions, particularly in complex businesses that operate internationally. New capabilities also include multi-currency, multi-company, and multi-dimensional analysis as well as integration with other company systems and software.

These advanced capabilities make the software ideal for project-based, partner-based, and complex industries like energy, financial, and professional services. Now, users can easily track and account for joint venture agreements, allocate costs for joint billing, maintain multiple reporting structures, simultaneously report in multiple currencies, and more. Given the areas of information unified in today’s financial and accounting software, companies are also relying on it to forecast potential scenarios and predict and manage business growth.

Modern Enterprise Resource Planning (ERP) Systems

Just as financial and accounting software has progressed rapidly, so too has ERP software. The financials are still there, as are the resource management capabilities for tracking tangible and intangible assets, human resources, materials, and financial resources. Now, however, ERP systems can also track and run business operations across the entire enterprise, serving as the process and workflow hub for everything from supply chain management, customer relationship management, service management, stock and distribution control, and production control to in-market product tracking.

If you can think of a function that’s core to your business, modern ERP systems either have the functionality or can integrate it with an add-on module. The purview of ERP has shifted; while you can use it strictly for financial needs, it would be a waste of software that can perform financial analysis that factor in the findings of information from product lifecycles, customer relations, real-time eCommerce, and more.

The benefits of modern ERP systems stretch beyond the realm of financial accounting and include:

  • The ability to run your business from a single platform/system
  • Placement of customer information front-and-centre
  • Clear, instant insights into critical functional areas
  • A unified view of the business for everyone
  • Improved efficiency
  • Industry-specific functionality wherever manufacturing and/or distribution are essential to operations

With the wide array of business software in the market today, the distinction between the various types has been blurred, especially between Financial/Accounting and ERP software. Many use these two terms interchangeably, but, technically, they are different. View our infographic to get a better understanding of the differences, and which may be right for your business.

Conclusion

The progress made in both financial and accounting software and ERP software has been impressive in the last decade – so much so that the cost of doing business without one of them can be extreme. The fact is, virtually all leading companies in every industry rely on modern accounting software and/or modern ERP software to gauge, report on, and improve business operations. To discover which type of software modernisation can propel your business forward, contact Sapphire.

Still unsure? Join us at our latest Software Selection and Implementation masterclass where we will dig deeper into financial and accounting software and ERP systems to help you determine which is best suited for your business. Register today.

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