Enterprise resource planning (ERP)

Definition

Enterprise Resource Planning (ERP) is an integrated software platform used to manage a company's core business processes, such as finance, HR, manufacturing, supply chain, services, procurement, and others. ERP systems centralize data and streamline information flow across the organization for better decision-making and efficiency.

5 Must Know Facts For Your Next Test

1. ERP systems integrate multiple business functions into a single unified system.
2. Financial modules within ERP systems handle accounting tasks such as general ledger, accounts payable/receivable, and financial reporting.
3. ERP implementations often require significant planning and customization to fit the specific needs of an organization.
4. Good ERP systems improve data accuracy and reduce redundant data entry by centralizing information.
5. Many career paths in accounting now prefer candidates with knowledge of ERP systems due to their widespread use in modern businesses.

Review Questions

Related terms

Accounting Information System (AIS): A structure that a business uses to collect, store, manage, process, retrieve, and report its financial data.

General Ledger:

The central repository for accounting data transferred from all sub-ledgers or modules like accounts payable and receivable.

Supply Chain Management (SCM): The management of the flow of goods and services from raw materials to final products delivered to customers.