Accounting & ERP Glossary

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A

Accounting Automation

Accounting automation refers to the process of turning tasks that once had to be performed manually into processes that are done instantly. Usually, the software takes care of handling automated accounting tasks.

Accounting Software

Accounting software is a type of computer program that you can use to keep track of your company's financial transactions. Some of the tasks the software can often handle include accounts payable, accounts receivable and financial reporting. Using accounting software can help to improve your company's organization and documentation of financial records.

Accounts Payable

Accounts payable refers to the obligations or debts your company has due. Usually, accounts payable means the vouchers your company receives and needs to pay to vendors. Keeping track of your company's accounts payable is critical for your organization's ongoing financial health and stability.

Accounts Receivable

Accounts receivable is the inverse of accounts payable. It's the money customers or clients owe your company. Managing your company's accounts receivable correctly allows you to get better control over your cash flow. The less time it takes for customers to pay, the better off your company will be.

Accrual Accounting

Accrual accounting is a method your accounting team might use. Under accrual accounting, expenses or revenue is recorded when the transaction occurs, not necessarily when your company pays or get paid. Accrual accounting follows the matching principle, which dictates that expenses and revenue should be recognized in the period when they occur.

Agile Accounting

Agile accounting uses agile principles when managing the accounting process. Key to agile accounting is an ability to be flexible and to adapt and change as needed. Also crucial is a focus on simplicity.

B

Business Intelligence (BI)

Business intelligence is a type of software that analyzes your business' performance. It uses various performance metrics, including sales, marketing and financial performance to provide you with a holistic, bigger-picture look at your company. With BI, you can identify opportunities and business trends and decide where to go from there.

C

Cash Flow Statement

Your cash flow statement shows cash and cash equivalents that came in and went out of your company during a particular period. The statement can break down cash in and cash out based on the type of activity, such as financing, investing and operating. It's one of the most critical financial statements for your company.

Chart of Accounts

Your company's chart of accounts is an index of all the transactions in your general ledger. You can use the chart of accounts as a tool to get organized and make sense of your company's finances.

Cloud Computing

Cloud computing is a method of storing data and information in a decentralized location. Instead of only being able to access a piece of software on one physical computer, with cloud computing you can access it from any device that connects to the internet.

Cloud ERP

A cloud ERP is a type of enterprise resource planning software that lets you keep track of your company's accounting, project management, workflow and inventory. The software is cloud-based, meaning you can use it on any computer or device that can get online.

Core Accounting

Core accounting refers to all the essential functions your business needs to keep its finances afloat. Those functions include paying invoices, sending invoices, creating a budget and keeping track of company spending.

Cost Accounting

Cost accounting is a process that measures the fixed costs and input costs of each production step. It compares input to output with the goal of capturing overall production cost.

Customer Relationship Management (CRM)

CRM is a type of software that lets your business keep track of customer relationships. You can use CRM software to evaluate your customer satisfaction levels and to find ways to improve the customer experience.

D

Data Visualization

Data visualization creates charts, graphs and other images to help you better see how your business data. Visualized data tends to be more useful for companies than raw data, as it lets you see changes and trends over time.

E

Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) is a type of software that lets you keep tabs on various aspects of your business. It provides a big-picture look at how your company is doing. It also streamlines your company's operations by automating tasks.

ERP Module

ERP software typically has multiple modules, or sections. Examples of ERP modules are accounting, asset and inventory management, and budgeting and forecasting. The modules you use can vary based on your business' needs and industry.

ESG

ESG stands for Environmental, Social and Governance. It's a set of principles that reflect a company's values. Many investors now look for ESG principles when deciding which companies to work with. Companies that pursue ESG principles can see greater profits thanks to increased interest from socially-conscious investors.

F

Fixed Asset Management

Fixed asset management refers to the process your business uses to keep track of its physical assets, such as vehicles, equipment and furniture. With fixed asset management, you can record when assets are purchased, made inactive, sold or stolen.

Fixed Costs

A fixed cost is a cost that remains constant over time. Examples of fixed costs include salaries, depreciation, rent and interest.

G

GAAP

GAAP stands for "generally accepted accounting principles." They are standards that cover the legalities and details of business accounting. GAAP serves as the foundation for the accounting practices and methods approved by the Financial Accounting Standards Board.

General Ledger (GL)

Your company's general ledger (GL) is a record of all its financial transactions. The GL separates transaction data by type and account. Categories on the GL typically include equity, assets, liability, expenses and revenue.

Gross Profit

Gross profit is how much your company makes once it subtracts manufacturing costs or service costs from its revenue. It's sometimes called sales profit or gross income.

H

HIPAA

HIPAA stands for Health Insurance Portability and Accountability Act of 1996. It's a law that creates standards for the transmission of sensitive health information. The goal of HIPAA is to keep private health data from getting into the wrong hands. Software used by healthcare organizations needs to be HIPAA-compliant.

J

Journal Entry

A journal entry records a business transaction in your company's ledger. It should include all of the details of the transaction, including the date, the amount and what the transaction was for.

K

Key Performance Indicators (KPI)

A key performance indicator (KPI) is a metric or measurement that lets you track your company's success or failure. To make the most of KPIs, you need to establish a benchmark, then evaluate how your company's performance compares to that benchmark.

M

Month End

Month end refers to the process of closing out, verifying and adjusting accounts at the end of each month. It can be a complicated process that often benefits from automation.

N

Net Profit

To calculate net profit, a company subtracts expenses and all other costs of doing business from its gross profit. Net profit is also sometimes called net income or net earnings.

R

Real-Time Accounting

Real-time accounting is another term for cloud computing. It refers to accounting software you can access from any device that connects to the internet.