Concepts and Terms

Before you start implementation, lets get familiar with the terminology that is used and some basic concepts in ERPNext.

Basic Concepts

Company

This represents the Company records for which ERPNext is setup. With this same setup, you can create multiple Company records, each representing a different legal entity. The accounting for each Company will be different, but they will share the Customer, Supplier and Item records.

Setup > Company

Customer

A customer can be an individual or an organisation who intends to buy your products or services. The system allows you to maintain a list of customers along with relevant data.

Selling > Customer

Supplier

A supplier refers to a business entity or individual from whom an organisation procures goods or services. The system allows you to create and maintain detailed records for each supplier.

Buying > Supplier

Item

A Product, sub-product or Service that is either bought, sold or manufactured and is uniquely identified.

Stock > Item

Account

An Account is a heading under which financial and business transactions are carried on. Examples of accounts are "Debtors", "Creditors", "VAT Payable", “Travel Expenses”, "Sales", "Share Capital", etc. ERPNext keeps track of your customers' and suppliers' balances in the background, so you don't need to create dedicated Accounts for them.

Accounting > Chart of Accounts

Address

An address represents location details of a Customer or Supplier which can be used in the case of selling or procurement transactions, tax compliances as well as communication.

Selling > Address

Contact

Contacts represent individuals or entities with whom your organization interacts, such as customers, suppliers, employees, and other stakeholders.

Selling > Contact

Communication

A list of all Communication with a Contact or Lead. All emails sent from the system are added to the Communication table.

Support > Communication

Price List

A price list is a structured list that defines the prices of different items or services. The price lists play an important role in sales and procurement processes.

Selling > Price List

Buying > Price List

Accounting

Fiscal Year

Represents a Financial Year or Accounting Year. You can operate multiple Fiscal Years at the same time. Each Fiscal Year has a start date and an end date and transactions can only be recorded in this period. When you “close” a fiscal year, it's balances are transferred as “opening” balances for the next fiscal year.

Setup > Company > Fiscal Year

Cost Center

A Cost Center is like an Account, but the only difference is that its structure represents your business more closely than Accounts. For example, in your Chart of Accounts, you can separate your expenses by its type (i.e., travel, marketing, etc.). In your Chart of Cost Centers, you can separate them by product line or business group (e.g., online sales, retail sales, etc.).

Accounting > Chart of Cost Centers

Journal Entry

A document that contains General Ledger (GL) entries and the sum of Debits and Credits of those entries is the same. In ERPNext you can update Payments, Returns, etc., using Journal Entries.

Accounting > Journal Entry

Sales Invoice

A bill sent to Customers for delivery of Items (goods or services).

Accounting > Sales Invoice

Purchase Invoice

A bill sent by a Supplier for delivery of Items (goods or services).

Accounting > Purchase Invoice

Currency

ERPNext allows you to book transactions in multiple currencies. There is only one currency for your book of accounts though. While posting your Invoices with payments in different currencies, the amount is converted to the default currency by the specified conversion rate.

Setup > Currency

Selling

Customer Group

A classification of Customers, usually based on market segment.

Selling > Setup > Customer Group

Lead

A lead represents a potential sales opportunity that has shown interest in your products or services but yet to process through the sales pipeline.

CRM > Lead

Opportunity

An opportunity represents a potential sale or business opportunity that could result in revenue for your organization.

CRM > Opportunity

Quotation

A quotation is a formal document issued by a seller to a prospective buyer, outlining the terms and conditions of a proposed sale.

Selling > Quotation

Sales Order

A note confirming the terms of delivery and price of an Item (product or service) by the Customer. Deliveries, Work Orders and Invoices are made on basis of Sales Orders.

Selling > Sales Order

Territory

A geographical area classification for sales management. You can set targets for Territories and each sale is linked to a Territory.

Selling > Setup > Territory

Sales Partner

A third party distributer / dealer / affiliate / commission agent who sells the company’s products usually for a commission.

Selling > Setup > Sales Partner

Sales Person

Someone who pitches to the Customer and closes deals. You can set targets for Sales Persons and tag them in transactions.

Selling > Setup > Sales Person

Buying

Purchase Order

A contract given to a Supplier to deliver the specified Items at the specified cost, quantity, dates and other terms.

Buying > Purchase Order

Material Request

A request made by a system User, or automatically generated by ERPNext based on reorder level or projected quantity in Production Plan for purchasing a set of Items.

Buying > Material Request

Stock (Inventory)

Warehouse

A warehouse is a physical or virtual location where inventory items are stored or managed.

Stock > Warehouse

Stock Entry

A stock entry is a transaction that records the movement of inventory items into or out of a warehouse.

Stock > Stock Entry

Delivery Note

A list of Items with quantities for shipment. A Delivery Note will reduce the stock of Items for the Warehouse from where you ship. A Delivery Note is usually made against a Sales Order.

Stock > Delivery Note

Purchase Receipt

A note stating that a particular set of Items were received from the Supplier, most likely against a Purchase Order.

Stock > Purchase Receipt

Serial Number

Serial numbers are unique identifiers assigned to individual items within inventory.

Stock > Serial Number

Batch

A number given to a group of units of a particular Item that may be purchased or manufactured in a group.

Stock > Batch

Stock Ledger Entry

A unified table for all material movement from one warehouse to another. This is the table that is updated when a Stock Entry, Delivery Note, Purchase Receipt, and Sales Invoice (POS) is made.

Stock Reconciliation

Stock reconciliation is a process used to reconcile the physical inventory count with the inventory records maintained in the system.

Stock > Stock Reconciliation

Quality Inspection

A note prepared to record certain parameters of an Item at the time of Receipt from Supplier, or Delivery to Customer.

Stock > Quality Inspection

Item Group

An item group is a categorisation used to organise and group similar items together for easier management and reporting.

Stock > Setup > Item Group

Human Resource Management

Employee

Record of a person who has been in present or past, in the employment of the company.

Human Resources > Employee

Leave Application

A record of an approved or rejected request for leave.

Human Resource > Leave Application

Leave Type

A type of leave (e.g., Sick Leave, Maternity Leave, etc.).

Human Resource > Leave and Attendance > Leave Type

Payroll Entry

A tool that helps in creation of multiple Salary Slips for Employees.

Human Resource > Payroll Entry

Salary Slip

A record of the monthly salary given to an Employee.

Human Resource > Salary Slip

Salary Structure

A template identifying all the components of an Employees' salary (earnings), tax and other social security deductions.

Human Resource > Salary and Payroll > Salary Structure

Appraisal

A record of the performance of an Employee over a specified period based on certain parameters.

Human Resources > Appraisal

Appraisal Template

A template recording the different parameters of an Employees' performance and their weightage for a particular role.

Human Resources > Employee Setup > Appraisal Template

Attendance

A record indicating presence or absence of an Employee on a particular day.

Human Resources > Attendance

Manufacturing

Bill of Materials (BOM)

A list of Operations and Items with their quantities, that are required to produce another Item. A Bill of Materials (BOM) is used to plan purchases and do product costing.

Manufacturing > BOM

Workstation

A place where a BOM operation takes place. It is useful to calculate the direct cost of the product.

Manufacturing > Workstation

Work Order

A document signaling production (manufacture) of a particular Item with specified quantities.

Manufacturing > Work Order

Production Planning Tool

A tool for automatic creation of Work Orders and Purchase Requests based on Open Sales Orders in a given period.

Manufacturing > Production Planning Tool

Website

Blog Post

A short article that appears in the “Blog” section of the website generated from the ERPNext website module. Blog is a short form of “Web Log”.

Website > Blog Post

Web Page

A web page with a unique URL (web address) on the website generated from ERPNext.

Website > Web Page

Setup / Customization

Custom Field

A user defined field on a form / table.

Setup > Customize ERPNext > Custom Field

Global Defaults

This is the section where you set default values for various parameters of the system.

Setup > Data > Global Defaults

Print Heading

A title that can be set on a transaction just for printing. For example, you want to print a Quotation with a title “Proposal” or “Pro forma Invoice”.

Setup > Branding and Printing > Print Headings

Terms and Conditions

Text of your terms of contract. In Sales/Purchase transactions there might be certain Terms and Conditions based on which the Supplier provides goods or services to the Customer. You can apply the Terms and Conditions to transactions and they will appear when printing the document. To know about Terms and Conditions, click here

Selling > Setup > Terms and Conditions

Unit of Measure (UOM)

How quantity is measured for an Item. E.g., Kg, No., Pair, Packet, etc.

Stock > Setup > UOM