What each is actually for
An accounting package exists to record financial transactions correctly and to produce statutory outputs: VAT returns, management accounts, year-end figures. It is built around documents that have already happened - invoices, bills, payments - and it is very good at that.
An ERP exists to run the work that produces those documents. It holds the enquiry, the quote, the specification, the order, the stock, the works order, the route through production, the pick, the delivery and the service visit. Its output includes an invoice, but the invoice is a consequence rather than the point.
Put crudely: the accounting package tells you what happened financially. The ERP tells you what is happening operationally, and why the financial result was what it was.
Which side each task belongs on
The following split is not universal, but it is what we would recommend to most manufacturers and distributors.
- Quotes, estimates and pricing rules - ERP. Accounting packages have no concept of a cost build-up or a routing.
- Sales orders, allocation and promise dates - ERP. This depends on stock, capacity and lead time, none of which the ledger knows.
- Stock, batches, serials and locations - ERP. Accounting packages hold a stock value; they do not hold a bin.
- Production, works orders and job costing - ERP, always.
- Purchase requisitions, approvals and receipts - ERP, with the resulting invoice posted to accounting.
- Sales and purchase ledgers, payments, VAT returns, statutory accounts - accounting package.
- Bank reconciliation and payroll - accounting package or a specialist tool.
- Management reporting - both, from a single set of data. Operational detail from the ERP, financial summary from the ledger.
The stock trap
The most expensive mistake in this area is running inventory in both systems. It always starts reasonably - the accounting package already has an inventory module, so why not use it - and it always ends with two stock figures that disagree and a monthly reconciliation nobody enjoys.
Pick one master. In practice that means stock lives in the ERP, where receipts, picks, production and adjustments actually happen, and reaches the accounting package as a value via journals. The balance sheet figure and the warehouse figure then agree by construction rather than by effort.
If you take one thing from this guide: never let two systems both believe they own stock.
Do you need both?
If your business buys, makes, holds or delivers physical things in any volume, yes. If you are a service business with straightforward billing, an accounting package plus a decent CRM may well be sufficient, and we would say so.
Some ERP suppliers will encourage you to replace your accounting package too, because a larger footprint is a larger contract and a harder system to leave. That is worth being alert to. Replacing a working, well-understood ledger adds risk, cost and disruption to a project that already has plenty of all three.
Making the two work together
The integration between them should be boring, which means it should post automatically, surface failures loudly, and be reconcilable at any time. Sales invoices, credit notes, purchase invoices and stock journals go one way; payments and account status come back.
Ask any supplier what happens when a posting fails. The answer tells you a great deal. Integrations that discard failures silently are the reason people distrust ERP figures three years into a system.