Discover the essential ERP Finance and Accounting terms every business should know
ERP systems come with their own terminology, and if you’re new to them, it can sometimes feel like you’re learning a whole new language.
If you work in finance or regularly interact with financial data, understanding these concepts will make conversations easier, improve decision‑making, and help you use your system more effectively.
In this article, we break down the core ERP Finance and Accounting terms you need to know.
General Ledger (GL)
The general ledger, also known as GL, is the central record of every financial transaction your organisation makes and forms the foundation of your financial reporting.
It typically includes five account types: assets, liabilities, equity, revenue and expenses. The GL records transactions from source documents, such as your invoices or receipts, and organises them by account type. These transactions are first entered into a journal and later posted to the GL.
Since the general ledger consolidates all financial data, it helps to show you exactly where money is going in and out from, so you have greater visibility into your business finances.
Accounts Payable (AP)
Accounts payable, or AP, represents the money your business owes to suppliers and vendors. Essentially, it’s money you owe to third parties.
These debts are typically short-term liabilities, meaning they must be paid within a set period (often 30, 60, or 90 days). This includes invoices for goods, services, utilities, and other operational expenses.
In an ERP system, efficient AP management helps you track your liabilities, manage cash flow, avoid late fees and maintain strong supplier relationships.
Accounts Receivable (AR)
Accounts receivable, or AR, is the money owed to your business by customers. It includes invoices you’ve issued but haven’t yet been paid for.
Similar to a line of credit extended to a customer, accounts receivable serves as a payment agreement between your business and your customers, and is typically set to be paid anywhere from one day to one year of the invoice date.
In an ERP system, accounts receivable helps you monitor overdue payments, automate reminders, and forecast incoming cash. Strong AR management improves liquidity and ensures your business has the funds it needs to operate smoothly.
Chart of Accounts (COA)
The Chart of Accounts, sometimes written as COA, is a structured list of all an organisation’s financial accounts.
The COA acts like a detailed directory for your business’s finances, including revenue, equity, expenses, assets and liabilities. Having a COA makes it easier to track growth, manage obligations, and keep an eye on spending. A well-organized chart of accounts is the backbone of good financial management.
Reconciliation
Reconciliation refers to the process of matching and verifying financial records. It’s comparing two sets of records to ensure the figures match, often by comparing internal financial records against monthly statements from external sources.
For example, a business might compare its cash account records (from its internal ledgers) with its monthly bank statement provided by its financial institution, and these documents should align.
ERP systems, such as Sage Intacct, often automate parts of this reconciliation process, which reduces manual effort and improves reliability.
Fiscal Period/Fiscal Year
Fiscal Period or Fiscal Year (FY) are the financial reporting periods used by an organisation.
A fiscal period is a defined segment of time, such as a month or quarter, used for financial reporting. A fiscal year, sometimes referred to as a ‘Financial Year’, is the full 12‑month cycle your organisation uses and does not need to match your calendar year.
ERP systems allow you to manage these periods, close them when reporting is complete, and ensure transactions are recorded in the correct timeframe. Understanding the fiscal period/fiscal year is essential for accurate reporting and compliance.
If you’re working with an ERP system like Sage 200 or Sage Intacct, strengthening your knowledge of these core finance and accounting terms will help you get more value from your system and make smarter decisions for your business.
To learn more ERP terms, you can read our article here.
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