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ERP terms, in plain English

34 terms that come up in almost every implementation conversation. No jargon defined with more jargon.

AP / Accounts Payable

What you owe suppliers. The module handles bills, payment runs and supplier ageing.

AR / Accounts Receivable

What customers owe you. Covers invoicing, receipts, credit limits and ageing.

Batch

A quantity produced or received together, tracked as a unit for traceability and expiry.

BOM / Bill of Materials

The list of components and quantities needed to make one unit of a product.

Chart of accounts

The structure of ledger accounts your financial statements are built from.

Cost centre

A department or location that costs are attributed to for reporting.

Cycle count

Counting a rotating slice of stock continuously instead of one annual shutdown.

Doctype

In ERPNext, a document type. Custom doctypes model processes the standard app does not ship.

Dunning

Automated chasing of overdue payments or failed card charges.

FEFO

First expired, first out. Picking rule that ships the shortest-dated stock first.

FIFO

First in, first out. A stock valuation method using oldest cost first.

GL / General Ledger

The master record of every financial transaction in the business.

Go-live

The date the new system becomes the system of record and the old one stops.

Landed cost

Item cost including freight, duty and clearing, not just the supplier price.

Lead time

Time between placing an order and receiving it. Drives reorder calculations.

MRP

Material requirements planning. Turns demand into purchase and production suggestions.

Multi-tenancy

One system instance serving multiple organisations with isolated data.

Opening balance

The financial position carried into the new system at the cut-off date.

Parallel run

Operating old and new systems together for one period to prove the new one.

Period close

Locking a financial period so entries can no longer be posted into it.

PO / Purchase Order

A commitment to buy. Should reduce available budget the moment it is raised.

Reorder level

The stock quantity that triggers a replenishment suggestion.

Retention

A percentage of a contract held back until completion, common in contracting.

Routing

The sequence of operations and work centres used to manufacture an item.

Serial number

A unique identifier per individual unit, used for warranty and traceability.

SKU

Stock keeping unit. A single, distinctly stocked item.

Sub-ledger

Detailed records behind a control account, such as customer or supplier balances.

Three-way match

Checking purchase order, goods receipt and invoice agree before payment.

Trial balance

A listing of all ledger balances, used to prove the books balance.

UAT

User acceptance testing. Your users testing with real documents before go-live.

VAT

Value added tax. Treatment should sit on the item and customer, not be typed per invoice.

Work order

An instruction to produce a quantity of an item, consuming materials and time.

Work centre

A machine or group of machines that operations are scheduled against.

Yield

Actual output from a production run compared with the expected standard.

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