ERP glossary — forty terms, one sentence each

Forty pieces of jargon pass through a single implementation kick-off, and half the room nods at all of them. Asking what a word means feels like admitting you should not be in the meeting, so nobody asks, and the misunderstanding surfaces four months later as a defect.

This page settles that in one read. It is grouped by meaning rather than alphabetically, because these terms only make sense in their clusters — knowing what a goods receipt note is tells you very little until you know what sits either side of it.

Master data

Term	In one sentence
Master data	The standing records that transactions point at: item, customer, account
Chart of accounts	The ordered list of accounts in your ledger, and therefore the shape of your financial statements
Business partner	One record that can act as both customer and supplier
Unit of measure (UoM)	The unit an item is counted in, plus the conversion factor between two of them
Price list	The price of an item for a specific customer group or currency
Cost centre	The part of the organisation an expense is attributed to
Dimension / analytic tag	A second axis on a posting — branch, project, product line — that lets one ledger answer several questions

Documents and cycles

Term	In one sentence
RFQ	A request for pricing sent to suppliers before you commit
Purchase order (PO)	A commitment to buy, which in most systems produces no accounting entry
Goods receipt note (GRN)	The moment goods actually arrive and their value is recorded
Vendor bill	The supplier’s financial claim, which may arrive before or after the goods
Three-way match	Comparing the order, the receipt and the invoice before releasing payment
Sales order (SO)	A commitment to sell, which reserves stock and produces no revenue
Delivery note	Goods physically leaving, which is where cost of goods sold is calculated
Credit note	The only legitimate way to correct an issued invoice, which is never edited
P2P	Procure to pay: the whole purchasing cycle
O2C	Order to cash: the whole sales cycle

Accounting inside the system

Term	In one sentence
General ledger (GL)	The book every posting in the system flows into
Journal entry	A movement with two equal sides, debit and credit
Posting	Committing an entry to the ledger, after which it cannot be edited
Clearing account	An account holding a temporary difference between two events; its balance is a diagnostic message
Accounts receivable (AR)	What customers owe you
Accounts payable (AP)	What you owe suppliers
Accrual	Recording the effect when it happens rather than when cash moves
Period close	Sealing a period after defined checks, so nothing further can be posted into it
Bank reconciliation	Matching your book to the bank statement, line by line
Trial balance	The list of every account balance, and the first thing anyone examines

Inventory and costing

Term	In one sentence
Perpetual inventory	Every stock movement produces an accounting entry at the moment it happens
Periodic inventory	Cost is computed at period end rather than with the movement
FIFO	The oldest cost is charged out first
Moving average	A weighted cost recalculated on every receipt
Standard cost	A fixed estimated rate, with the difference thrown to a variance account
Landed cost	Freight and duty distributed across the value of the goods
On hand vs available	On hand is what is in the building; available is what has not been reserved
Physical count	A real count compared against the book balance
FEFO	First expired, first out: picking is directed by expiry date, not by receipt date

Project and implementation

Term	In one sentence
Fit-gap analysis	What the product covers as standard, and what it does not
Data migration	Moving your existing records into the new system
UAT	The business testing the system against its own scenarios, not the vendor’s
Go-live	The day the new system becomes the record of truth
Hypercare	A defined period of intensified support immediately after go-live
Customisation	Code written to change how the system behaves
Configuration	Setup without code, which is where most requests labelled customisation actually belong
Sandbox	A copy of the system where changes are tried before production
Cutover	The transition itself, including opening balances

The four pairs that get confused

These are worth more than the tables above, because each confusion has a price attached.

Configuration and customisation. The first is setup within what the product allows. The second is code that has to be maintained through every upgrade for the life of the system. The difference is the difference between a cost paid once and a cost paid annually. When a vendor quotes for a requirement, ask which of the two it is, and get the answer in writing.

Invoicing and revenue recognition. Raising an invoice is a document event. Recognising revenue is an accounting judgement. In a simple sale they coincide. In any extended contract, subscription or milestone-based project they diverge, and a system that treats them as the same thing will report revenue you have not earned.

On hand and available. The difference between them is stock reserved against open sales orders. Anyone selling against on-hand quantity is selling goods already promised to somebody else, and the failure shows up in the warehouse rather than in the report.

Purchase order and liability. A purchase order is a commitment and, in most systems, produces no journal entry. The liability forms at goods receipt. This is why a company that manages spend from open purchase orders and a company that manages it from payables are looking at two different numbers, both correct.

How to use this page

Do not memorise it. Open it during your first implementation meeting and tick every term you actually hear. The count will be under twenty.

The vocabulary that gets used daily is small. The rest is said once in the sales presentation and never again, which tells you something about the presentation.

Where to go from here

Each group above has an article behind it explaining the logic rather than the words: the procurement cycle, order to cash, inventory and costing, and the ledger and the close. The full reading order is on the learn ERP page.

For the same concepts under each product’s own naming, the systems comparison is the place to start. The names change from system to system. The meanings do not.