Accounting technology / Glossary / ERP (enterprise resource planning)

What is an ERP (enterprise resource planning)?

Definition

An ERP, or enterprise resource planning system, is software that runs a company's financial accounting together with its operations, such as sales orders, purchasing, inventory, manufacturing, projects and often HR, on one database. Each transaction is entered once and updates both the operational records and the general ledger, so finance and operations work from the same data.

Also calledenterprise resource planningERP systemcloud ERP

Compare the softwareBest general ledger software →All 14 ERP and general ledger vendors →

Core: General ledger and finance modules
Adds: Orders, inventory, purchasing, projects
Category: ERP and general ledger

What an ERP covers

The finance core is the general ledger, receivables, payables, cash, fixed assets and reporting, often across several entities and currencies. Around it sit operational modules that vary by industry: order management and inventory for distributors, production planning for manufacturers, project accounting for services firms, subscription billing for software companies. Because modules share data, a shipped order creates the invoice and the revenue entry without re-keying. For finance teams, the line between an accounting package and an ERP is mostly about scope: small business ledgers such as Xero and QuickBooks cover accounting and connect to separate apps, while an ERP holds more of the business in one system. NetSuite, Microsoft Dynamics 365 Business Central and Odoo serve small and mid-sized companies; Doss focuses on physical goods businesses, and AI-native ERPs such as Campfire and DualEntry target companies moving up from entry-level software.

Common questions

What is the difference between an ERP and accounting software?+

Accounting software records the financial side. An ERP also runs operational processes, such as orders, stock and production, in the same system, so operational transactions post to the ledger directly.

When does a company need an ERP?+

Usually when several entities, inventory, complex revenue or many connected apps make a small business ledger hard to run, or when finance spends much of its time reconciling data between systems.

What is a cloud ERP?+

An ERP run by the vendor as a web service and paid by subscription, rather than installed on the company's own servers. Most new ERP projects for small and mid-sized companies are cloud ERPs.