The comparison of QuickBooks with enterprise resource management (ERP) software boils down to a single word: growth. It is important for companies to understand that accounting software comes with limitations that companies have to overcome. Consider, for example, the complicated but essential questions with GAAP acceptance and globalization.
QuickBooks requires workarounds to ensure conformity with Generally Accepted Accounting Principles, and businesses that are growing with international markets in mind require accounting software to accommodate other taxes, currencies, and different languages.
However, the main difference between ERP and simple accounting software like QuickBooks is that ERP goes beyond the specific features that often fluctuate.
The real benefit of ERP is in its broad nature. Yes, it has been accounting software as its foundation; however, with ERP, this accounting software functions as the core of larger resource management for the entire company.
The inherent limitations of QuickBooks can make it easier to use and manage as compared to ERP software. Thus, QuickBooks may be a suitable choice for small-scale businesses just beginning their journey and don’t require more than the basic accounting software, as evidenced by QuickBooks users and the community of consultants who support it.
What Is an ERP System?
ERP application manages the necessary operations of all aspects of a business. It places financials and accounting first, but it is developed to function across manufacturing, accounting professional services, inventory management, customer relationship management, commerce, project management, human resources, and many other areas.
ERP can offer an immediate overview of the various and broad responsibilities that run growing companies by ensuring that the operational data for each department are stored in a single database that is the same as where accounting data is kept.
Additionally, ERP systems are typically modular. So, a company that initially uses just ERP accounting software could later incorporate modules for other departments as the company expands and new needs emerge.
Does QuickBooks an ERP System?
QuickBooks has three types of versions available in the market. These are Desktop, Desktop Enterprise, and QuickBooks Online. The online version is the only cloud-based version that can be used natively with QuickBooks. Desktop and Online versions are the only accounting software available.
They are able to provide a restricted number of business-related capabilities that ERP software usually contains. To show the difference, take a look at the following set of steps that manufacturing companies must follow to complete the selling of a product.
The sales group is accountable for finishing sales.
Information about the order is then passed on to the Accounting department for the order to be processed, which includes creating records of the customer if it is the first time that a customer has made a purchase, including the details of the purchase.
It is then delivered to the warehouse, where the pick list is created so that a worker is able to select the items that were ordered off the shelves.
The ordered item is moved to the shipping department, where it’s wrapped and shipped to the buyer.
Warehouse inventory is regularly updated.
Shipping informs the accounting department that the order has been fulfilled and may be invoiced.
Accounting invoices are sent to the customer.
These steps QuickBooks Desktop and QuickBooks Online may be able to handle, at the very least, no. 2 and No. 7. Since they are solely Accounting software, they don’t have additional integrated functions that aid in running the other components of a company.
Other steps must be handled by hand or using entirely distinct software systems. In many cases, data needs to be transferred from one system to the next, making it a time-consuming process that is susceptible to the risk of human mistakes.
An ERP system, however, can be automated in every process, from the initial order from purchase to invoice. Since CRM and warehousing, inventory management, and accounting components in ERP systems are interconnected and share a database, every action instantly will inform the subsequent. There is no need to be entered again, and nothing is unexpected.
Also, remember that “P” in ERP is a reference to “planning. It’s simple to see from this illustration how the department of sales and warehouse in an ERP-based organization can use pipeline information to plan supply.
If the departments are aware of the order flow coming through, they can ensure they have the proper employees available at the right time to complete the task quickly and efficiently.
Quick View about QuickBooks Desktop Enterprise?
This version comes with the common accounting features of QuickBooks, along with additional functions specifically designed to be competitive with ERP, including pricing management, inventory management, and time-tracking.
It leaves out many of the advantages of an ERP system, which allow companies to plan the integration of and automate business processes across manufacturing, supply chain, and sales and human resources marketing, in addition to other accounting functions.
One of the main drawbacks of the Enterprise version, however, is based on cloud support and the largest quantity of users. QuickBooks Desktop Enterprise is not completely cloud-based, but it is available as a hosted service with hosting services provided by a third party. The maximum number of customers in an instance is 40.
It makes it an ideal choice for mid-sized to small-sized businesses that are not planning massive growth. The cloud-based nature of ERP software guarantees that it will help greater numbers of users.
If you dig deeper, QuickBooks Desktop Enterprise only easily accommodates business processes such as subscription billing, accounting for revenue, and multidimensional reporting.
Businesses will require additional software solutions to handle these and other tasks that can cause problems such as inconsistency in reporting, rework of manual, inefficient processes, and a soaring amount of Excel sheets.
The enterprise version comes with a standard chart of accounts with a hardwired connection that has the benefit of reducing complexity. However, it restricts the capacity of an organization to track and arrange transactions according to its unique financial structure, which includes revenues, assets, liabilities, and expenses.
Accounting Software Vs. ERP System
The major distinction between accounting applications and ERP is that ERP software covers practically every aspect of running a company, regardless of whether the business is small or extremely massive. While this is easy to explain and understand in reality, it can translate into a huge number of particular variations.
For instance, accounting practices are basically the same for all industries, with the exception of a few noteworthy exceptions, like construction. Therefore, accounting software is identical regardless of the industry.
ERP systems can be customized specifically for an industry or, similar to NetSuite’s product, provide an industry-specific set of capabilities offered through NetSuite or other third parties.
Other examples of how this distinction is manifested in real life are inventory management and warehousing. These are completely outside the capabilities of accounting applications.
However, they are essential operational elements of any retail or manufacturing enterprise, and ERP systems generally have extensive features for automating and managing these functions efficiently.
They also make it possible for information output to flow from these operations directly into the software’s accounting component. ERP systems also integrate supply chain, CRM, and HR functions, in addition to others.
In addition, a collection of capabilities is included in ERP; however, they are not accounting software. These capabilities are the ERP’s emphasis on expanding businesses, which will eventually require more complicated needs than the typical mom-and-pop shop.
Dashboards that are customized based on roles are, for example, highly useful when organizations expand, and their work becomes more specialized. Even accounting functions are covered. ERP systems usually have better controls and, consequently, more secure conformity with GAAP rules for the U.S. and International Financial Reporting Standards (IFRS) in other countries.
The accompanying chart reveals several other details about the differences.
Key Differences between ERP & Accounting Software
ERP | Accounting Software | |
Workflow-Oriented Accounting is a vital job, but it's not a stand-alone. With ERP, companies can design workflows that are customized to their needs. | Y | N |
Single View of Entire Business ERP Systems provides one picture of the enterprise. No additional tools are required to oversee multiple departments. | Y | N |
Real-Time Data Access Real-time data access to important performance indicators can allow a company to make decisions that are responsive to market demands. | All Modules | Account Only |
Inventory and Supply Chain Management Be proactive in managing the availability of products and gaps, which will reduce the need for purchases of products within the storage facility. | Y | N |
Inventory Tracking ERP software tracks inventory automatically and provides a clear understanding of what's available and what's required to be ordered. It helps reduce the cost of carrying stock. | Y | N |
Industry-Specific Different industries have different requirements. ERP is specifically designed for specific industry requirements. QuickBooks is not. | Y | N |
Improve Business Efficiencies/Cut Operating Costs ERP eliminates the necessity for multiple systems and speeds up access to data, which means more work can be completed with less time across the entire enterprise. | Business wide | Account Only |
GAAP-Compliance Accounting software, such as QuickBooks, permits logging to be switched up and down. It means the log of transactions is unable to be verified by auditors outside the company. | Y | N |
Customized Dashboards Dashboards that have access based on roles allow businesses to tailor what employees should be able to see. | Y | N |
Customer Relationship Management Accounting software does not assist in managing customer relations. It usually does not contain details regarding prospective customers. | Y | N |
Cross-Department Collaboration Because ERP systems offer a complete overview of the business's activities and encourage cooperation. | Y | N |
Beyond Accounting ERP systems are more than accounting systems and provide capabilities to automatize the entire range of tasks in the business. | Y | N |
API Availability Interfaces for application programming allow the IT department of a company to establish connections to other systems. | Y | N |
Why ERP Is Better for Your Business
Some businesses may not have large goals. However, companies that intend to expand — and require the most efficient tools to control their growth– are better off using an ERP software system instead of a standalone accounting software application.
Here are some essential advantages ERP systems can provide that accounting software generally does not, as well as the benefits that these features provide:
ERP software streamlines and automates the vast array of processes beyond the whole business. It can lead to a variety of advantages, ranging from quicker order-to-cash processing to better management of vendor relationships.
With ERP management, managers have full access to all their essential business processes. This transparency allows business leaders to spot potential opportunities to improve processes across the entire organization.
Reporting and tracking of resources is an ERP function that helps companies manage their resources more effectively and efficiently. It typically means higher profits.
Integrating business functions that ERP can provide, including production to the development of products, inventory, and even marketing and sales, can result in quicker time-to-market implementation and better management of production, marketing, and sales.
Synchronization across departments results in greater efficiency and productivity. That, in turn, lowers costs and improves the competitiveness of your company.
Since ERP modules are based on a common data source and provide more precise live reportage.
Cloud-based ERP systems can reduce or eliminate hardware purchase and maintenance costs and also provide greater accessibility from remote locations.
Why You Should Choose ERP
ERP is an array of software created to be used in conjunction to provide a management solution for organizations that are growing. Processes that are essential to the business can be automated, and important departments will be able to monitor financial and operational performance.
The application offers an accounting system that is world-class and modules that incorporate essential business processes, such as ordering processing and production management, inventory management, warehouse operations, and supply chain.
From apparel and advertising to wholesale distribution and transportation, ERP offers a system that is designed to meet the needs of any business. ERP draws on more than two decades of experience to address the challenges encountered by various sectors and ensures that customers are quick to get into operation with the tools that can help their business the most.
In addition, studies show that ERP customers have realized amazing outcomes. The visibility of their business has helped them reduce the amount of time and money required to create financial reports between 40% and 55 %. They’ve shortened the time to close financial accounts by 45-70 percent and cut IT support costs between 40 and 65%.
Such results are derived partly due to ERP modular design that lets businesses select the components that best suit the needs of their customers and then add more modules as the complexity increases. Through ERP, businesses can:
Make better decisions by analyzing transactions and financial and operational information from all over the company.
Reduce the complexity of a variety of operations by examining them in a single program. Automated processes can be made to reduce time and help serve customers better. It also gives you an advantage in the market through the identification of new opportunities.
Go global with the built-in capability to manage multiple subsidiaries. ERP serves businesses worldwide in 27 languages and 190 currencies.
Conclusion
If a company grows beyond what it can do by using just a few rows and columns of Excel, the next step is typically accounting software, which is typically QuickBooks. It’s a good choice for small-scale businesses that have low-growth guidelines, such as an established family-owned business that has yet to make plans to open a new location.
Companies anticipating expansion of their product, rapid development expansions, geographic expansion, or any of the above are more likely to succeed with an ERP solution that gives an integrated overview of the company, which allows automation of processes throughout the company as well as better financial functions and compliance.
QuickBooks Vs. ERP FAQs
Why is QuickBooks not an ERP?
QuickBooks isn’t an ERP system since it offers solely accounting functions. It is only one component that builds up an ERP. ERP systems can help companies manage many different business processes, such as marketing and sales, production inventory management, procurement, and many more.
What is QuickBooks CA Enterprise?
QuickBooks Enterprise is on-premises software that manages a variety of processes for business. Because it is installed, users are accountable for upgrading and maintaining the application. It is even feasible to buy on a hosting basis.
What is the distinction between the Pro and Enterprise version of QuickBooks?
QuickBooks Pro version is the most basic version of QuickBooks Desktop software. It was designed for small businesses that have only a handful of users. It only provides accounting functions.
QuickBooks Enterprise provides other functions in addition to accounting and was created to be competitive with ERP. The most costly version is that of desktop software and is available in a yearly subscription.
What kind of system is QuickBooks?
QuickBooks is a desktop-based system. It means that the program can be hosted on your personal computer. In this way, QuickBooks users are responsible for the maintenance and service of their computer, including installing and managing software updates and data security, as well as backups. A hosted version is available.
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