QuickBooks vs ERP: Choose the Best Solution (2024)

Comparison of QuickBooks with enterprise resource planning (ERP) software comes down to oneword: growth. Companies should know that accounting software alone comes with limits thatgrowing companies must surmount. Take, for instance, the complex but necessary issues ofGAAP compliance and globalization. QuickBooks requires workarounds to achieve compliancewith Generally Accepted Accounting Principles; and growing companies that have internationalmarkets in their sights will need accounting software to support additional currencies, taxjurisdictions and languages.

But the key difference between ERP and simple accounting software, like QuickBooks, goes wellbeyond such specific features — which often fluctuate. The true value of ERP lies inits comprehensive nature: Yes, it's got accounting software at its heart, but with ERP,that accounting software serves as the hub of broader resource planning for the entirebusiness.

The inherent limits of QuickBooks, however, also make it simpler to manage and use than ERPsoftware. So, QuickBooks may be a good choice for many small businesses that are juststarting out and don't need much more than basic accounting software — a factattested to by QuickBooks' user base and community of supporting consultants.

What Is an ERP System?

Enterprise resource planning software managescritical processes across an entire business. ERP places accounting and financials first butis designed to operate across accounting, manufacturing, inventory management, professionalservices management, customer relationship management, project management, commerce, humanresources and more. ERP is able to provide real-time insight into the diverse and broadfunctions that make growing businesses run, because the operational information for allthose departments is housed in a single database — the same one in which accountinginformation is stored.

In addition, ERP systems are typically modular. That means a business that initially deploysonly ERP accounting software can add modules for other departments as the organization growsand new requirements emerge.

Is QuickBooks an ERP System?

There are three main versions of QuickBooks: QuickBooks Desktop, QuickBooks DesktopEnterprise and QuickBooks Online, which is the only native cloud-based version. QuickBooksDesktop and QuickBooks Online are accounting software, only, and don't include thebroader range of business functions that ERP software typically offers. To illustrate thedifference, consider the following series of simplified steps a manufacturing company needsto take to fulfill a sale of an item.

1. The sales team makes a sale.
2. Order information is passed to the accounting department for the order to be processed,which include creating a customer record if this is a first time sales with details ofthe order.
3. It is then sent to the warehouse where a pick list is generated so a worker can pick theitems ordered off the shelves.
4. The picked order moves to shipping, where it is packaged and sent to the customer.
5. Warehouse inventory is updated.
6. Shipping informs accounting that the order is fulfilled and can be invoiced.
7. Accounting invoices the customer.

Of these steps, QuickBooks Desktop and QuickBooks Online might handle, at most, No. 2 and No.7. Because they are exclusively accounting software, they do not contain additionalintegrated functions to help run the non-accounting components of a business. The othersteps need to be managed manually or through completely separate software systems. Often,data must be re-entered from one system to another, creating a slow process prone to therisks of human error.

An ERP system, on the other hand, could automate every step, following the order from sale toinvoice. Because the CRM, warehousing, inventory management and accounting modules of an ERPsystem are integrated and share a common database, each step instantly informs the next. Nodata needs to be re-entered and nothing comes as a surprise.

Furthermore, remember that the P in ERP stands for "planning." It's easy tosee from this example how the warehouse and sales departments in an ERP-enabled organizationcould use pipeline data for supply planning. If those departments know about the flow oforders coming through, they can make sure they have the right staff on hand at the righttimes to get the job done quickly and efficiently.

What about QuickBooks Desktop Enterprise?

This version includes the basic accounting functions of QuickBooks plus several addedfunctions designed to compete with ERP, particularly inventory management, pricing andtime-tracking. That leaves out many of the benefits of an ERP system, which empowerorganizations to plan for, integrate and automate business processes across supply chain,manufacturing, human resources, sales and marketing, among other non-accounting functions.

Perhaps the biggest limitations of the enterprise version, though, are related to cloudsupport and the maximum number of users. QuickBooks Desktop Enterprise is not nativelycloud-based, though it can be purchased on a hosted basis with hosting provided by a thirdparty. In addition, the maximum number of users per instance is 40, making it a meaningfuloption primarily for small to midsize businesses that are not planning for large-scalegrowth. The native cloud structure of ERP software means that it can support many moreusers.

Digging deeper, QuickBooks Desktop Enterprise does not readily accommodate business processeslike subscription billing, revenue recognition, asset management and multidimensionalreporting. Instead, businesses would need to bring in additional software solutions toaddress those and other functions, resulting in difficulties like inconsistent reports,manual rework, redundant processes and a growing profusion of Excel sheets. Lastly, theenterprise version offers a standard hard-wired chart of accounts, which has the virtue ofminimizing complexity but limits an organization's ability to capture and organizetransactions into its own specific financial structure of assets, liabilities, revenue andexpenses.

Accounting Software vs. ERP System

The big difference between accounting software and ERP is how ERP systems embrace virtuallyall aspects of running a business, whether that business is relatively small or very large.While that's simple to say and to understand, in practice it translates into a verylarge number of detailed differences.

For example, accounting practices are essentially the same for most industries, despite a fewnotable exceptions such as construction. So accounting software is essentially the sameregardless of industry, while ERP systems are either customized from the ground up for agiven industry or, like NetSuite's software, have an ecosystem of industry-specificcapabilities provided either by NetSuite or third parties.

Other examples of how that difference manifests in practice include warehousing and inventorymanagement. These functions are entirely outside the scope of accounting software. Butthey're key operational aspects of any manufacturing or retail business, so ERP systemsusually include comprehensive capabilities for automating and managing them efficiently andmake it possible for the information output to flow from those operations directly into theERP's accounting module. ERP systems similarly integrate CRM, supply chain and HRfunctions, among others.

Going further, another set of capabilities that are in ERP but not accounting software comefrom ERP's focus on growing businesses that will ultimately have more complexrequirements than a typical mom-and-pop shop. Customized, role-based dashboards, forinstance, become extremely useful as organizations grow and work becomes more specialized.Even in accounting functions, ERP systems typically provide better controls and, therefore,tighter compliance with GAAP regulations in the U.S. and International Financial ReportingStandards (IFRS) elsewhere.

The accompanying chart includes many more specific differences.

Key Differences of ERP & Accounting Software

Why ERP Is Better for Your Business

Not every business has big ambitions. But companies that plan to grow — and want themost effective tools with which to manage their growth — will be better off with anERP system than a stand-alone accounting software package.

Here are some of the key features ERP systems provide that accounting software typicallycannot, and the benefits those features create:

• ERP systems streamline and automate a wide array of business processes across theenterprise. This leads to many kinds of benefits, from a faster order-to-cash process tomore efficient vendor management.
• With ERP, managers get complete visibility into all their core business processes. Thatvisibility empowers business managers to identify opportunities for process improvementthroughout the organization.
• Resource tracking and reporting is an ERP feature that helps organizations deploy theirresources more accurately and efficiently — which usually means more profit.
• The integration of business disciplines that ERP provides — from productdevelopment to manufacturing to inventory and even sales and marketing —translates into faster time-to-market execution and better planning for production,marketing and sales.
• Synchronization across departments leads to increased productivity and operationalefficiency. That, in turn, reduces costs and enhances competitiveness.
• Because ERP modules share a single common source of data, they provide more accuratereal-time reporting.
• Cloud-based ERP systems reduce or eliminate hardware purchases and maintenance costs andprovide better access from remote locations.

Why You Should Choose NetSuite ERP

NetSuite ERP is a suite of applications designed to work together as a business managementsolution for growing organizations. Core processes can be automated and key departments canhave visibility into operational and financial performance. The suite of applicationsprovides a world-class accounting system, along with modules that integrate key businessprocesses such as order processing, inventory management, production, supply chain andwarehouse operations.

From advertising and apparel to transportation and wholesale distribution, NetSuite ERP has a solution tailored to meetthe specific needs of any organization. NetSuite taps into nearly two decades of experienceto solve the problems faced by many different industries and make sure clients are quicklyup and running with the tools that will help their businesses most.

Of note, surveys show NetSuite ERP customers have realized impressive results. Businessvisibility has helped them reduce the time and resources it takes to produce financialreports by between 40% and 55%. They've reduced the time required for financial closesby 45% to 70% and reduced IT support costs by 40% to 65%.

Results like these come, in part, from NetSuite's modular format, which lets a businesschoose components that best meet its needs and add modules as complexities grow. WithNetSuite ERP, businesses can:

• Make better decisions by tapping into financial, operational and transactional data fromacross the organization.
• Simplify a whole range of business processes by looking at them through a singleapplication. Manual processes can be automated to save time and serve customers betterwhile simultaneously creating a competitive advantage by identifying new opportunities.
• Go global, with built-in capabilities to manage multiple subsidiaries. NetSuite ERPserves business worldwide in 27 languages and 190 currencies.

Conclusion

When a business grows beyond what it can accomplish with a few rows and columns in Excel, itsnext step is often toward accounting software — usually QuickBooks. That's theright choice for businesses with low-growth policies, such as a family-owned local storewith no desire to open a second location. Businesses anticipating rapid growth, productextensions, geographic expansion — or all of the above — are far more likely toprosper with an ERP system that offers a unified view of the organization that enablesautomation of operations across the enterprise, as well as superior accounting functions andcompliance.

QuickBooks vs. ERP FAQs

Why is QuickBooks not an ERP?

QuickBooks is not an ERP because it provides only accounting functions — just one ofthe components of an ERP system. ERP systems help businesses manage a wide variety ofbusiness processes, including sales and marketing, production, inventory management,procurement and more.

What is QuickBooks CA Enterprise?

QuickBooks Enterprise is on-premises software that manages a broad range of businessprocesses. As installed software, users are responsible for maintaining and upgrading thesoftware. It can also be purchased on a hosted basis.

What is the difference between QuickBooks Pro and QuickBooks Enterprise?

QuickBooks Pro is the simplest version of QuickBooks Desktop software, designed for smallerbusinesses with only a few users. It provides only accounting functions. QuickBooksEnterprise provides other functions beyond accounting and is designed to compete with ERP.It is the most expensive version of the desktop software and is sold as an annualsubscription.

What type of system is QuickBooks?

QuickBooks is a desktop system, meaning that the software is hosted on your own computer. Assuch, QuickBooks users are responsible for service and maintenance of the computer,installing and managing software upgrades, and data security and backups. A hosted versionis also available.