ERP vs accounting software: which does a manufacturer need?

Tally, QuickBooks, Xero and Zoho Books are built for the ledger: sales and purchase invoices, receipts and payments, bank reconciliation, tax returns and the profit and loss. Most offer a stock module that tracks quantities bought and sold, and some add a simple bill of materials for kits. That is enough for a trader or a shop that assembles a few products from bought-in parts. It gives the accountant everything they need, which is why it is usually the first software a shop buys and the last it gives up.

None of these are accounting questions, and no accounting package is wrong for not answering them. They are operations questions, and they need operational records.

• What a job cost, with material at the issued price and labour at the work-centre rate.
• How much material is tied up in work in progress right now.
• Which work centre is the bottleneck, and how many hours it ran this month.
• Which jobs were quoted below their real cost.
• Who inspected a part, when, and what was found.
• How a stock figure changed from last week, by whom and why.

The first pattern is an ERP with its own double-entry ledger, so stock, production and accounts share one database and the accountant works inside it. The second is an ERP for operations with an integration or export to the accounting package, so each invoice is entered once and posted once. The third is accounting software with an inventory add-on, which covers stock and purchasing but not production or job cost. The first removes double entry but asks the accountant to change tools. The second keeps the accountant happy and adds an integration to maintain. The third is cheapest and stops at the factory door.

The table shows what each class of software answers on its own. Where the ERP column says by integration, ask to see the posting, since a promised integration that does not yet exist is the usual source of double entry.