Should you get an Accounting or ERP system?

There are real and functional differences between accounting and ERP solutions. To directly compare an accounting software against an ERP software wouldn’t make sense; it’d be like comparing apples to oranges and asking which is better.

So here’s an alternative: Rather than asking yourself ‘Should we get an ERP software or another accounting software’, a better approach would be to ask yourself when.

As mentioned above, both accounting systems and ERP systems incorporate multiple functionalities into a single system. Like its namesake, accounting software focuses on accounting-related functions, while ERP systems are scalable systems with functionalities that span across the organization.

For most small businesses and start-ups, a modern integrated accounting system is enough for their needs. But once they start growing, these businesses realize they lack the ability to manage their processes across all departments effectively. Also, from a data perspective, they find they lack a single version of the truth.

So here’s are three questions to help you assess whether it’s a good time to invest in ERP software for your SME:

Are You Using Different Systems to Manage Different Processes?

If you’re using multiple systems to run different departments, you will run into productivity, efficiency, and coordination issues.

Suppose your sales data isn’t updated or keyed incorrectly. This affects your production and inventory management departments, which in turn spirals on to affect other departments. Even if you did have a good accounting system in place, the lack of integration across your SME means you’ll be hard-pressed to prevent this costly rippling effect.

What ERP software excels at is integrating these disparate systems together, so your business functions rely on a single database. With one source of information that contains accurate, real-time data, an ERP solution breaks up information jams, helps employees make faster, smarter decisions, and frees managers to focus on high-value activities like identifying new business opportunities.

Are Your Accounting Processes Slow and Tedious?

You have accounting software in place. It even served you well in the early days of your business.

But of late, you notice things aren’t proceeding as smoothly as it used to do. It takes forever for your finance team to generate reports. And when pressed, they tell you it’s because they need more time to consolidate and reconcile the information that’s spread across systems and multiple spreadsheets. They also expect you to be more understanding because they waste hours manually keying in data from paper invoices and sales orders into the accounting system.

By moving onto an ERP system, you get all your business process data within in a single database. Routine tasks can be automated, freeing your finance team from rekeying or reconciling data manually. As a result, your team are more productive and able to generate the reports you need with minimal delays.

Does it Take a Long Time to Get the Information You Need?

Quick question: how long does it take to find out whether your sales figures are up to date? Are you able to quickly get information on what your average sales margin is, or your average order per day?

If your answers to the above are ‘forever’ and ‘no’, then it’s time to have a re-look at your approach. Among SMEs, the pace and pressure to succeed are greater than ever before. Your executives want a holistic view of their business whenever they need it, while your other employees will expect to get accurate information so they can do their work faster.

For this to happen, your executives and staff will need quick and pain-free access to accurate, real-time data. If your SME is still manually reconciling spreadsheets and siloed systems, you’ll find it’s almost impossible to get that speed of access quickly.

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