The software industry is notorious for jargon, buzzwords and acronyms. Knowing these terms can help you understand better what is available and help you through your software search to find the right product.
AP: Accounts Payable
Accounts Payable: The function within an accounting system that manages vendors and bills to be paid.
AR: Accounts Receivable
Accounts Receivable: The function within an accounting system that manages customers and customer invoices.
BOM: Bill of Materials
Bill of Materials: A list of materials to be used for an assembly process (a process for building completed items from other items in your inventory). When you create a production plan to build your assemblies, the system looks at what you are building and then looks at the supplies that are needed for that plan. A bill of materials lists what is needed, and what is available or not available in your inventory.
CRM: Customer Relationship Management
Customer Relationship Management: A computer system for managing detailed customer information and a record of contact with customers (and prospective customers), so relationships can be enhanced.
ERP: Enterprise Resource Planning
Enterprise resource planning: A business management application that integrates all aspects of a business operation, from planning and development to inventory management, purchasing, sales, production, and more.
GL: General Ledger
General Ledger: The function within an accounting system that records the financial and non-financial information for an organization.
Just-In-Time: A manufacturing strategy for increasing profits by reducing inventory carried.
PO: Purchase Orders
Purchase Order: An official document from a customer to a seller, indicating an order for products or services, with quantities and agreed upon pricing.
PP: Production Planning
Production Planning: The process of ensuring necessary materials are available for creating finished products, according to a production schedule.
ROI: Return on Investment
Return on Investment: A measure used to evaluate the performance of an investment. The formula used to calculate ROI is: (Gain from Investment – Cost of Investment) divided by Cost of Investment.
SCM: Supply Chain Management
Supply Chain Management: The flow of goods, referring to manufacturer’s inventory, including raw materials, finished products, and related information about suppliers, customers and the company.
SMB/SME: Small to Medium-Sized Businesses or Enterprises
Small to medium-sized businesses or enterprises. The distinguishing factor is usually the number of employees, with small meaning up to 50 employees, and medium ranging from 50 to 250 employees.
SO: Sales Orders
Sales Orders: An official internal document representing an order for products or services.
TCO: Total Cost of Ownership
Total Cost of Ownership: In reference to your accounting system, TCO refers to the total cost of owning the system over the product’s entire lifecycle, including direct and indirect expenses such as the accounting software, associated hardware, support, and other expenses.
UOM: Unit of Measure
Unit of Measure: Referring to inventory items and the measure by which they are received and sold. Some accounting systems allow you to set up your own units of measure, allowing you to purchase items in one unit of measure, and sell in another. Having the capability makes order entry and inventory management easier, and keeps inventory numbers accurate.
If you are searching for a new accounting system, be sure to brush up on your jargon, and you have a better chance of finding the right features for your business (Source: Accounting Systems from Red Wing Software).