What are the differences between ERP systems and AR software?

Blog | May 2, 2022

Reading time: 7 min
Deciding between using ERP systems and AR accounting software? Discover the differences between ERP systems & AR and which is best for your software needs!

ERP (Enterprise Resource Planning) systems and AR software both play a vital role in the success of a company but boast distinct differences and advantages. Accounts receivable accounting software manages small business finances and commonly used to automate AR, create financial statements and track expenses. 

Businesses use ERP software to manage operations, inventory and logistics. While ERP systems are not as flexible as AR accounting systems, they store critical business data on a large scale that keeps even the most extensive corporations running smoothly. 

Read on to discover more about the differences between ERP systems and AR software to ensure that you’re getting the best fit for your accounting needs!

people having a business meeting about erp systems and ar

What is AR accounting software?

It's no secret that managing financial data is a cumbersome task. Fortunately, that's where AR accounting software comes in.

Accounting software, at its core, helps you keep track of your business's finances. It’s an integral part of any business as it can help you track your profit and loss, manage your transactions and organize the data in a centralized location. This includes functions such as double-entry bookkeeping, digital payment automation and financial analysis. Some types of accounting software even make it possible to file your company's taxes online. These days, many accountants recommend using automated AR software because it is easier than traditional paper-based accounting and eliminates the use of spreadsheets.

How does automated AR keep track of it all?

AR accounting software can automatically generate sales reports, inventory lists, and other data to make business management easier. Some of the most popular features include automated invoicing, inventory management and many more.

And the best part?

AR software can run on any device such as a tablet or laptop through mobile apps, so you do not have to be in the office to update your records. This allows you to work from anywhere at any time without the need for expensive offices.

In short, automated AR accounting software is an advanced form of accounting software that can automatically put your accounts in good order by helping accountants organize corporate finances. The specialized features help accountants, AR bookkeepers and other finance professionals work seamlessly. Plus, it assists accountants by providing them with the data they need to do their work.

ERP systems and AR software: key features of an erp accounting system

What is ERP accounting?

You can customize any ERP system to meet your company's needs, however, most systems share a common overall function. ERP accounting software comprehensively integrates all the functions of the financial department with the goal of creating a single database of information that can be used by all areas of the company. In short, ERP software helps businesses manage their business processes by integrating data from the company's different departments, such as finance, human resources and manufacturing to provide a more holistic view of the company. 

Key features of an ERP accounting system include:

  • Real-time information for managers, executives, and owners
  • Critical data to help these leaders make decisions in the present and future
  • A system of information management used to streamline business processes
  • Integrated electronic data from various departments, such as procurement, inventory control and customer management
  • Data that empowers managers to make more informed decisions, with access to all relevant information in one place

How is ERP used in AR accounting?

Enterprise Resource Planning erp software is the new generation of accounting software that relies on Artificial Intelligence to help with business decisions. Companies with large-scale accounting and operations mainly use ERP software because it helps automate tasks and streamline operations. Most larger accounting firms take advantage of this all-in-one system as it manages all the different parts of the business in one centralized location.

AR accounting is a specialized subset of ERP that focuses on tracking business transactions by pulling information from external systems to help managers create accurate financial reports for auditing purposes. ERP is used in accounts receivable (AR) accounting to create reports automatically, view them in real-time, and send them to clients on a daily or monthly basis.

In summary, ERP systems and AR work in tandem to create an accounting system manages and automates the accounting process, including the creation of AR accounts. Accounts receivable accounting is one of the most important tasks for any company, and, fortunately, ERP can help keep track of the financials. As such, ERP systems and AR automation software, together, are valuable tools for account creation and management.

Download the ultimate guide to digital accounts receivable

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Get top tips and fresh insights that will help you control your cash flow and your daily calendar of AR tasks.

Is AR accounting software considered ERP?

Traditional accounting is often one of the most time-consuming and tedious processes in any company. Automated accounts receivable software, on the contrary, is designed to be a highly efficient and easy bookkeeping system that manages the financial records of a business. 

Ever since the emergence of AR software, some have debated whether it is considered ERP. There are many who argue that the two are separate concepts, but others argue that they actually go hand-in-hand.

AR accounting software is not ERP, however.

ERP is a type of integrated business management software that tracks the entire business from start to finish by automating various aspects of business operations. While both ERP systems and accounts receivable solutions can be vital tools for a company to determine its financial status, they are not interchangeable. 

Accounting software, as a whole, often includes invoicing, point-of-sale (POS), customer relationship management (CRM), payroll, inventory and much more. For example, accounting software manages the finances of a company by tracking all expenditures, income, and assets. Accounting software also helps prepare reports required by law for taxation purposes. Integrated receivables software, in addition to general accounting software, is a subset of ERP. It's used to track and maintain financial records and consists of accounting transactions that are managed electronically.

man sitting in an office working on a laptop

More differences between accounting software and ERP software

ERP systems and AR software work hand in hand and boast many similarities. For example, both prioritize high-quality financial statements and reports that keep your company in compliance with various regulations. However, there are also some key differences between accounting software and ERP that you should be aware of before deciding what type of solution is best for your business:

AR accounting solution

  • Designed to help business owners with the day-to-day (real world) budgeting, accounting, and reporting operations of a company, such as incoming payments.
  • More appropriate for small-scale use.
  • Designed to help accountants and bookkeepers keep up with their finances. 
  • Typically has features such as invoicing and tracking.

ERP software

  • Engineered to help managers and executives manage the entire business by handling the big picture, like production planning and customer service.
  • Used as a means of automating key business processes such as purchasing, billing and product manufacturing.
  • Most suitable for large enterprise-wide use
  • Designed to help businesses manage their day-to-day operations. 
  • Has features such as production planning, inventory management, time tracking and more.

Final thoughts on ERP systems and AR software

The growth of accounts receivable (AR)  solutions and ERP software is only just beginning. With more and more companies adopting these technologies, the benefits become clearer as they continue to revolutionize the business world. These account-based systems offer a way to automate tedious accounting tasks and give companies control over their resources.

The major differences between the two?

Integrated receivables software is designed to automate the smaller-scale business processes of an organization. Companies can use it to track and analyze financials, inventory, investments and other company details. ERP software aims to increase the large-scale efficiency of a company by providing one integrated system for managing all aspects of the company's operations.

Understanding the core differences between AR software and ERP software can help ensure that you’re getting the best services possible for your specific business needs!