Although many people may consider Bookkeeping and Accounting Software to be identical, there are certainly some key differences. A core foundation for any business, of course, is how to properly manage the financial transactions of an organization. To the extent of how financial management functionalities are included or not in certain software, (cloud software solutions) will make apparent the distinctions between the two. Let’s look at both the advantage and disadvantages when comparing Bookkeeping vs. Accounting Software.
Bookkeeping Software: Bookkeeping is responsible for financial activities that a company is involved with. This includes receivables, payable, sales, invoices, expenses, and even payroll. The bookkeeper’s primary task, therefore, is an accurate accounting of a business’s financial transactions which are then documented. A thorough and complete financial recording of every single transaction is the key responsibility for bookkeeping, and this is primarily where these ends. Although there can certainly be comparisons between financial transactions to gauge trends, results, and make business decisions, a lack of additional insights, plus other functionality is what is missing from basic bookkeeping software. However, these sorts of software systems are relatively inexpensive. Furthermore, bookkeeping software can include the capabilities to connect and integrated into other 3rd party systems.
Accounting Software: Accounting Software Solutions, are designed to manage more complex financial transactions plus give a much wider view of a company’s financial health. More complex transactions and reporting include, for example, cash flow forecast, general ledger, account statements, income statements, tax calculations, and more. A key difference in Accounting Software is the ability then to take this data to analyze, forecast, and provide guidance for a company’s financial direction as well as providing a complete “overview” of everything accounting-related. Similar though to some Bookkeeping systems is the ability to add-on and “connect” to additional 3rd party systems to enhance the “Accounting Solution”. Accounting Software Systems that have more financial management capabilities are naturally more expensive than Bookkeeping Software. Another disadvantage is the need for even more business functionality demands. Small to Midsized companies very often require even more capabilities to manage their organization. When this occurs, basic Accounting Software will not suffice, and companies seek out Enterprise Resource Planning (ERP) systems.
ERP Software Systems: ERP systems typically have a very strong financial management accounting capability as one of their core products features. However, in addition, modern ERP solutions offer much more expanded business functionality including such areas as the management of Inventory, Supply Chain, Projects, Human Resources, Services, Sales, CRM, and even Manufacturing. To learn about the differences between Bookkeeping vs Accounting Software and Accounting vs. ERP Software, it is best to consult with an experienced and knowledgeable business management software partner such as iCepts Technolgoy Group, Inc.
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