What’s the Difference Between ERP and Accounting Software

Category: Accounting Software

The wide array of financial software today has blurred the distinction between accounting software and enterprise resource planning (ERP) solution. A lot of people use these two concepts interchangeably, but, technically, they are different.

Knowing the difference between the two may sound trivial, but it’s important for one reason: comparing apples to apples and not to oranges. If you’re unaware of the distinctions, you may be basing your buying decision by matching two different product categories and not the products themselves. Even before sorting out the different types of accounting software or choosing between industry-specific or general accounting software solution, get to know the bigger picture first–what is the difference between accounting software and ERP?

Here’s a quick fix: accounting software is a subset of ERP.

Accounting software

The term is used to strictly to refer to the financial aspect of your business operations. These include accounts receivable, accounts payable, payroll, and trial balances. Many vendors bundle accounting software with modules for relevant business activities like billing, sales order, purchase order, general ledger, timesheet, expense, and electronic payment.


An ERP software solution can have all the accounting software features plus more. It’s a resource management system that aside from monitoring the business’ financials, also tracks the following: tangible and intangible assets, human resources, and materials. Intangible parameters include working hours, product life cycles, key performance indicators, and customer relations. These are not financials per se, but they impact on the company’s finances; hence, they are essential to your accounting.


Most ERP products today are offered with accounting software as an entry-level package. As your business grows, so does your requirement for automating more complex data recording and reporting processes. You can add activity-specific modules; thereby, transforming your accounting software into an ERP.

For example, a popular accounting software suite offers financial management, planning, and budgeting features as its basic package. But the same package can be integrated with other business operations such as project and supply chain management, reporting and analysis, and human resources management. In some cases, an I.T. management module can be added. Each module is usually licensed separately.

So if you’re just buying software strictly for financial management, make sure you’re comparing two accounting software products to get objective comparative results.

The Future

ERP is fast eating up the market of accounting software products today. Most new product launchings today are ERP, as more businesses demand better integration of their operations. Furthermore, businesses are more intertwined globally today—even a boutique creative agency may have accounts or suppliers in other countries—a situation that an ERP can address better than an accounting software product. But the term “accounting software” won’t likely disappear because users have grown accustomed to using it generically for years now; in short, accounting software and ERP may mean the same thing sooner than later, when both systems are sold as multi-tiered bundles, rather than separate products.

What Are The Most Popular Accounting Software Solutions?

1. Freshbooks


A decent accounting and ERP software analysis can’t go without mentioning our current leader Freshbooks. The system offers very flexible pricing adjusted to the needs of both small and big companies. There is also a great free trial plan available that you can use to test all the key features first. You can easily sign up for Freshbooks free trial here.

Hosted in the cloud, Freshbooks has become the leading choice of millions of small companies and freelance accountants, and that’s right because of the way its developers balanced between intuitiveness and efficient prioritization and results delivery. Created with quality in mind, Freshbooks shines in tracking and managing invoices and recurring subscriptions, collects payments online using several popular methods, and turns financial management from a cumbersome task into an enjoyable experience. What is more, the product is promptly integrated with all popular business systems relevant to accountancy management, and offered in a flexible pricing plan that won’t overload your monthly budget as low as it may be.

Currently, the company is introducing a brand new and redesigned version of the product with even more advanced invoicing and reporting. The list of reasons why our experts believe you should try Freshbooks is fairly long, and we suggest you to check the product’s detailed review, or switch directly for their free trial to get a grasp of the features yourself. For the purpose of this article, we’ve made a basic comparison of the pros and cons of this software that you should have in mind.

To start with, Freshbooks is fast and reliable. While this may not be such an advantage compared to similar software, it is worth of mentioning when a tool is so simple and intuitive to use. Many competent professionals have targeted Freshbooks as a non-accountant friendly app, and the well organized dashboards are there to prove that. The system imposed itself also as a billing leader, all because it allows users to accept online payments regardless of the gateway they’ve decided to use (Visa, MasterCard, PayPal, Google Checkouts, and Amex). For delayed payees, there is a set of automated overdue reminders thanks to which you’ll never have to dispute with your clients, while the handy snaps help you take control of all your charges, track working time, and calculate running bills instantly. With the improvements introduced recently, Freshbook has also become an amazing reporting asset, making it possible to generate profit/loss statements in seconds, and to filter all accounts keeping taxes in the loop.

Obviously, software is by default work in progress, and not even in the case of Freshbooks will it all be rainbows and butterflies. The main critic on this program’s address was its inability to meet the needs of enterprise-grade users, as the company described it specifically as small business-friendly, but that’s an issue that has recently been overcome. The brand new version of this product raised its accounting capacity to large business levels, and that’s mostly due to its brilliant reporting. Another drawback you should consider is that Freshbooks doesn’t record invoices as they arrive, but you have to enter them yourself in order to modify them, and to specify the amount you expect the customer to pay. Depending on the situation, this can be both good and bad, but it certainly doesn’t compromise our general great impression of this system.

2. Intacct


Intacct is another popular accounting system our experts qualified as highly competent. We suggest it to companies seeking a reliable accounting system on a quote based price, in particular, such pursuing configuration for their industry-specific needs.

Intacct’s transaction suite reminds significantly of Freshbook, as pointed out by users shifting from one program to the other. For a long time, Intacct had the advantage of meeting enterprise needs as well, but Freshbooks’ large list of prominent users insinuates that the system is at least, if not so much, easier to navigate for everyone. The fact that the later upgraded to an enterprise-grade app doesn’t compromise Intaact’s position as a top-rated CPA financial system, just as dynamic and mobile friendly as Freshbooks is.

What is so special about Intacct? It does an amazing job helping companies monitor key financial figures and arrive to better decisions, and does so in a comprehensive way. It is richer with charts and dashboards than traditional accountants would expect, and all of them are relevant to substitute manual Excel calculations. While it may take a while to override the challenge of automated KPI, return, and commission calculation, it absolutely ends up making the process more transparent once you’ve mastered the skill. The system allows for credit card and PayPal payments, monitors tallied purchases and acquisitions, and has a unique order management suite which makes it suitable for ecommerce businesses.

Nevertheless, Intacct can be challenging to learn, and can’t offer the same streamlined navigation ease Freshbooks has. At the same time, Intacct may be missing some of the bank integrations you need (check this in advance), and doesn’t convert QuickBooks data as seamlessly as a new user would expect it to do. Certain customers believe access to tech support should be facilitated, but nevertheless agree that the team is helpful and well-trained.

3. QuickBooks


Few years ago, QuickBooks was an undisputed accounting leader, and seems to be recovering this position with innovations such as desktop based Pro and Premier Versions for enterprise grade users. From our experts’ perspective, QuickBooks is gaining momentum in terms of automated organizational capacity, as it still holds possession of certain insights other apps can’t offer. The reason why certain companies choose to go over it and choose a simpler solution is the variety of available packages which confuse starters, in particular, those that are not looking for more than automating traditional bank-related tasks.

This, however, doesn’t change the fact that QuickBooks is still an institution when it comes to modern accounting. This is one of the rare programs that reward patient users with impressive functionality and represents thereof a trademark of accounting quality. All bills and overdue items are stored in a single location, and payment is made single-click-easy regardless of the invoice type. What is really specific about the system compared to our previous suggestions is how it handles security matters, as it has an inbuilt verification system that displays and fixes errors, saves preferences, and identifies payee personal information. The reporting capacity does hold a candle to the one of Freshbooks and Intacct, depending on the exporting capabilities you wish to have available.

As for cons, let’s assume QuickBooks is not the most flexible system there is on the market. There are several versions available, that stands, but it means at the same time that one has to comply with a specific user profile, and purchase a version that won’t expand the way business is growing. Instead, he’ll probably be expected to purchase a different version, and eventually change deployment if has to, and that can’t be neither easy nor cheap. The entry and file modifications between versions can be a challenge for every company, alike the gap between pricing options that becomes extremely expensive at moments.

By Nestor Gilbert

Senior writer for FinancesOnline. If he is not writing about the booming SaaS and B2B industry, with special focus on developments in CRM and business intelligence software spaces, he is editing manuscripts for aspiring and veteran authors. He has compiled years of experience editing book titles and writing for popular marketing and technical publications.

Sam says:

Well explained! Yes, In general both are same, but technically are different. ERP can forecast sales, accounting and other things by using data, but accounting software unable to do that. We can say accounting software is a small part of the ERP. It allows us to integrate various third party accounting tools like cutback to make the payment process smoothly.

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