6 questions foundWhat is an ERP system?
Beginner Enterprise Resource Planning software that integrates finance, procurement, sales, inventory, HR and more into one shared database so data flows across modules.GL + AP + AR + Inventory + Procurement sharing one databaseReal-world example A large company runs finance and operations together in SAP or Oracle.It is the central book of record where all sub-ledgers (AP, AR, assets, inventory) post, and from which the financial statements are produced.AP, AR, Fixed Assets sub-ledgers -> post to GL -> Financial StatementsReal-world example Every module ultimately reconciles to the ERP general ledger.A sub-ledger holds transaction detail (e.g. every customer invoice); its total must reconcile to the corresponding GL control account.AR sub-ledger total 1.2m = GL Receivables control 1.2mReal-world example A month-end control is proving each sub-ledger ties to the GL.P2P runs purchase requisition -> PO -> goods receipt -> invoice -> payment; O2C runs quote/order -> delivery -> invoice -> receipt. ERPs enforce three-way matching in P2P.P2P: PO 1,000 + GRN 1,000 + Invoice 1,000 -> 3-way match -> payReal-world example Three-way matching in SAP stops payment of invoices without a matching receipt.Sub-ledgers are reconciled, accruals/adjustments posted, foreign currency revalued, the period is locked to prevent new postings, and reports are generated.Reconcile -> post adjustments -> FX revalue -> lock period -> reportReal-world example A structured close checklist in Oracle ensures a fast, controlled month-end.Why is master data important in an ERP?
Intermediate Vendor, customer, GL and item master records drive every transaction; poor master data (duplicates, wrong tax codes) causes errors across all modules.Duplicate vendor master -> duplicate payments riskReal-world example A master-data governance process prevents duplicate or fraudulent vendors.