ERP vs. Accounting Software: What Are the Differences?

As small businesses become more successful, they can quickly outgrow their basic version of accounting software, spreadsheets, and paper recordkeeping. Often the people running the business are not sure what type of software is best to support their growing business. They begin to weigh the pluses and minuses of accounting systems to enterprise resource planning (ERP) systems.

What is ERP?

ERP is an integrated suite of software applications that businesses can use to run almost every aspect of their business. An ERP brings together into one database inputs from accounting, human resources, sales, supply chain, and other departments. It provides business owners with a unified view of the organization’s data. Allowing for the automation of business processes and generating insights across multiple departments. Ultimately company managers can use ERP systems to identify process improvements and drive greater efficiency.

What is accounting software?

Accounting software solely focuses on financial activities. It is designed to help companies manage their accounts payable, accounts receivable, and bookkeeping. An accounting software system helps a company put together financial statements such as profit and loss reports and balance sheets. The scope is specific to the financial activities of a company.

What are the key differences between ERP and Accounting software for lighting showrooms?

A robust accounting software system is great for keeping track of sales, collecting payments, paying suppliers, and calculating profitability. But no accounting package, on its own, can manage the purchasing and order management complexities, nor can it provide a view of the warehouse costs and activities.

Instead of having your data housed in separate places – accounting data in one software system and the HR, supplier, and customer data in a patchwork of software and spreadsheets – the data can be centrally located. Giving you a view of your entire business in one ERP system.

Key Differences of ERP & Accounting Software Capabilities

ERP

  • Can manage virtually all aspects of a business. Including automated updates from Lights America and XO Logic catalogs
  • Able to generate insight for all business operation areas.
  • Produces reports for all business aspects, incorporating financial and operational data.
  • Scales with your business as you grow.
  • Can be Costlier, but cloud-based offerings are affordable.
  • There can be a substantial learning curve to exploit full capabilities – working with an implementation team will shorten implementation time and learning curve.

Accounting Software 

  • Focuses on bookkeeping – general ledger, chart of accounts, accounts payable & receivable.
  • Analysis limited to financial data.
  • Produces reports based solely on financial information.
  • User seats or licenses and customer record numbers limit scalability.
  • Relatively inexpensive for small businesses.
  • Easy to learn; self-training is usually sufficient.

Why is ERP the Right Choice for Light Showroom Growth?

One of the biggest challenges we hear from lighting showrooms is managing inventory and the integration of either Lights America or XO Logic catalogs into their software. When the limitations of the accounting system require managing inventory in another software or spreadsheet, a lot of manual data entry is needed to keep both systems in sync, which is slow and has a high chance of errors.

With orders coming to you through multiple avenues such as showroom sales, sales representatives, builders, and web orders; managing the customer data can also be a challenge when using multiple software systems.

For example, a customer places an order, the order is created in your client relationship management software, the staff gathers the order items from your warehouse & records the deduction from inventory in a spreadsheet or other software, then accounting needs to create and send an invoice from the accounting software. With an ERP system, all these actions are captured in one system, giving you one location to view your entire operation.

Interested in exploring how an ERP can improve your showroom operations?

Call us!

Zastro has designed illumiNET with specific customizations within the NetSuite ERP platform to meet the unique needs of lighting showrooms and distributors. Including full integration between Lights America and XO Logic catalogs. Learn more about illumiNET here.