Xero and QuickBooks are brilliant. They made bookkeeping something a business owner can do on a phone, and for a huge number of businesses they are all that is ever needed. But there is a point where you find yourself using them for things they were not built for, and that is when the question of an ERP comes up.
The difference in one line
Accounting software records what has happened to your money. An ERP runs the operations that make it happen.
Xero knows an invoice was raised. It does not know which shelf the goods came from, whether the picker packed the right quantity, what the reorder point is or how many hours went into making the product. An ERP knows all of that, and raises the invoice as a by-product.
What accounting software does well
- Bank feeds and reconciliation
- Invoicing and bills
- VAT returns and Making Tax Digital
- Reports your accountant needs
- Payroll (via add-ons)
- A large ecosystem of connected apps
If your business is services, consultancy, a small shop or anything with simple stock and simple orders, this is enough.
What it does not do
- Stock at scale. Multiple locations, batches, serial numbers, reorder rules and stock valuation.
- Order workflows. Quote to order to picking to delivery to invoice, with partial deliveries and back orders.
- Purchasing. Purchase orders tied to stock, supplier lead times, three-way matching of PO, receipt and bill.
- Manufacturing. Bills of materials, work orders, costing.
- Projects with resources. Planning, timesheets, costs against budgets.
- One customer record. The sales history, service history and finance history in one place.
The signs you have reached the limit
- You run stock in a spreadsheet next to Xero and the two never agree.
- You have added three or four apps around your accounts software and now spend time keeping them in sync.
- Orders go through email, a spreadsheet and a WhatsApp group before they reach the invoice stage.
- You cannot tell the margin on an individual order without a calculator.
- You have a second warehouse, shop, company or country.
If several of these apply, read 10 signs your business has outgrown spreadsheets, because the spreadsheet is usually where the strain shows first.
You do not have to replace everything
There is a middle path that many businesses take. Keep Xero or QuickBooks for accounts, because your accountant lives there, and add an ERP for operations, connected by an integration. Sales, stock and purchasing happen in the ERP; invoices and bills flow into the accounts package automatically. We describe how this works in what is system integration.
Over time, most businesses find it simpler to move accounting into the ERP too, because having one system beats keeping two in sync. But it is a choice, not a requirement.
A note on cost
Accounting software is cheap. An ERP costs more to buy and more to set up. The question is not which is cheaper, it is what the gap between them is costing you. Hours of retyping, stock write-offs, late invoices and lost orders add up faster than a licence fee. Our Odoo ERP cost guide will give you a realistic view of the numbers.
Next step
If you recognise the signs, the right next step is a short conversation about what your business does day to day. That is what our free discovery call is for. Read about our ERP service or request a quote.
Key takeaways
- Accounting software records money. An ERP runs the operation that generates the money.
- Xero and QuickBooks are excellent for accounts and are the right tool for most micro businesses.
- The tipping point is usually stock, multi-step orders, manufacturing or more than one location.
- You do not have to throw accounting software away: many businesses keep it and integrate it with an ERP.
Frequently asked questions
Need help with ERP?
eSolution Hub is a UK company with its own engineering team in Lahore. Every project starts with a free 30 minute discovery call and a written quote. Read about our ERP service or request a quote.
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