What is an ERP system in accounting? How to pick the best solution

Enterprise resource planning system (ERP) tools are solutions that streamline midsized and enterprise-level businesses through supply chain management, project management, customer relations management, and more. 

In accounting, ERP offers financial organization and clarity across multiple accounting channels. It consolidates data, reconciles transactions, generates statements, and automates bookkeeping processes, allowing organizations to scale orders efficiently and easily. 

This article will dive deeper into what an ERP system is in accounting and how it can help make your finance team more productive and efficient.

• Understanding accounting features in ERP systems
• How ERP systems benefit accounting and finance teams
• Key differences between ERP systems and accounting software
• Integrating ERP systems with accounting software
• ERP vs. Accounting software: How to make the right choice
• Boost productivity and enhance profitability
• What is an ERP system in accounting FAQ

Understanding ERP accounting software features

A well-equipped ERP system offers the following core accounting features for financial management: 

• Integrated modules: ERP software features distinct modules that connect different departments together. They’re connected by a central database that transfers information across each module. For example, a finance module can pull data from a sales module to help an executive create quarterly revenue reports.
• Cross-departmental functionality: An ERP shares information through a central database. They seamlessly send information across departments to fulfill a company’s objectives. 
• Real-time data processing: ERP systems work instantaneously in a connected ecosystem. This helps CFOs quickly review relayed information and make informed high-level decisions.
• Scalability options: As a business grows, an ERP accounting system grows right along with it. It handles high-volume transactions, supports multi-currency sales, and frequently backs up financial information. 

Essentially, these features help executives manage complex tasks, ensure accuracy, and increase productivity. The benefits of ERP software can ultimately save your company time and money.

How ERP systems benefit accounting and finance teams

There are many benefits to setting up an ERP accounting system. Most types of ERP—including cloud-based ERP, dedicated on-premise ERP, or hybrid solutions—offer: 

• Optimized sales strategies: Financial data integrated with sales data makes it easy to track trends. Executives can identify areas for growth and forecast revenue. A company can accurately budget for inventory, marketing, and payroll with real-time income data. 
• Unified data management: An ERP system emerges from a single collective database. As a result, there’s less effort required to gather and review information. A unified data source also increases accuracy and reduces redundancies.
• Enhanced customer engagement: ERP accounting software makes it easy to retrieve consumer data. If a customer calls, an agent can pull together client information in seconds to quickly support the caller. 
• Improved security and compliance: ERP systems centralize your business’s data. This cohesion makes it easy to comply with regulations. Audits are less of a hassle, with all records retrievable with the click of a button. 

These benefits can support your entire team. Agents have fewer tasks, while managers can follow a business's daily operations. This ultimately helps leaders make long-term financial decisions based on clear data.

Key differences between ERP systems and accounting software

Accounting software can sufficiently handle basic financial procedures. However, a multi-entity management ERP tool may be best for a mid-size or growing business. 

Here’s how the two technologies differ: 

Payment acceptance

CFOs often generate detailed reports that provide a glimpse into financial operations. Here’s how accounting software and ERP systems differ in this regard: 

Accounting software: 

Accounting software is designed to streamline and automate various financial processes within a business. It offers a range of essential features for managing day-to-day accounting tasks, including accounts payable and receivable, general ledger, and payroll. These tools simplify financial data entry and management, ensuring accuracy and efficiency.

ERP system:

ERP modules can communicate with any aspect of the business and, therefore, provide real-time accounting data to your team. They handle multiple payment gateways and send transactions to other departments, ensuring that the data is accessible team-wide. 

Manufacturing planning

Here’s what executives can expect in regards to manufacturing features: 

Accounting software:

Basic accounting programs solely focus on financial tracking. They aren’t designed to offer robust manufacturing planning. A company usually needs an external program to track these types of workflows. You can’t schedule production tasks or analyze production data in real-time with basic accounting software, which leads to delays and additional manual work.

ERP system:

ERP systems have dedicated modules that sync manufacturing data with financial records. You can easily execute work order management scheduling and planning. ERP systems also track the availability of resources and materials. This automation keeps operations running smoothly, avoiding budgetary or inventory-related bottlenecks.

Payment processing costs

Effective payment processing features improve a company’s bottom line. Here’s how they function between the two types of software: 

Accounting software:

An accounting program offers basic payment processing features, including fee amounts, payment status, and total transaction fees. However, for businesses seeking to optimize payment processes, this may not provide the level of detailed data needed to reduce fees or adjust payment options effectively.

ERP system:

ERP in accounting can further analyze payment processing data for executives. It shares payment gateway costs, quantifies currency exchange rates, and isolates sub-departments. For laser precision, you can even focus on a single region. Multi-gateway support makes it easier to choose between different providers.

Furthermore, you can add a manufacturing execution system (MES) to an ERP. This offers even more visibility by tracking raw material, labor, and shipping costs. 

An MES-integrated ERP system can use predefined commands to enter journal entries. It also compares and reconciles payments from balance sheets and income statements. 

Integrating ERP systems with accounting software

Good enterprise accounting software integrates accounting software with an ERP system. It’s a great way for an established business to expand a pre-existing tool into a more comprehensive one. Best of all, it maintains familiarity with your current software. 

This two-tiered approach can:

• Streamline payment processing. ERP software connects accounting tools with other areas of your business. This includes such as inventory, sales, and HR
• Improve cash flow with data from other modules. This provides a real-time glimpse into funds
• Reduce redundancies by effortlessly feeding data between the two programs

This builds a scalable foundation that sets your business up for growth. Executives won't have to migrate to another platform, offering the best of both worlds.

ERP vs. accounting software: How to make the right choice 

Consider your unique executive needs when choosing between these two management programs. Here’s when you should go with each option:

When to go with accounting software

This option is best for smaller businesses seeking lower upfront costs. A limited staff will appreciate the relative simplicity of the training process.

Keep in mind that you may need additional programs to manage other areas of your business.  This may require manual data entry or API connections to sync information. It’s also more challenging to scale operations with a single accounting software. However, you can always integrate an ERP system down the line. 

When to go with accounting ERP software

An all-inclusive ERP solution is best for larger organizations with several departments. In this case, financial officers need workforce management automation to streamline complex operations. Teams with large inventory can avoid headaches and inaccuracies down the line. 

ERP software can cost more, yet its ability to handle various tasks and reduce manual entries may save costs over time. Training can be more in-depth with ERP systems because different departments may use the software differently. However, once your team completes training, it’s easy to scale the system without much more effort. 

Boost productivity and enhance profitability

What does​​ an ERP system in accounting bring to the table? In short, you can expect a seamless and centralized experience. This includes automated bookkeeping and advanced reporting. ERP can simplify operations and provide a platform for growth, which is why ERP can benefit CFOs in mid-size and enterprise businesses.

ERP software like Intuit Enterprise Suite tailors to your specific accounting needs while connecting all departments to financial metrics with a single tool.