What are ERP Systems?



ERP systems stand for enterprise resource planning. The CFO and the finance department use this system to create official financial reports or accounts. You will find common brand names, including NetSuite, Oracle, SAP, Workday and a few more. An ERP enables an organisation to connect all of its operational data to a central financial source. The central financial source is the general ledger, which ultimately receives all transactions and enables you to produce final financial reports, principally the Balance Sheet and the Profit and Loss.

The ERP System Explained

ERP has advanced massively over the last few years some of the leading brands, such as Oracle and SAP, offer huge amounts of automation, meaning there are increasingly fewer manual jobs. Simple jobs in Financial Control, AP, AR and more are increasingly being automated out of existence. However, errors in the sub-ledgers or general ledgers are required to be corrected. This is impossible to automate at present, due to the processes being less predictable and requiring more ad-hoc work. Dealt with unusual areas and made managerial changes to the accounts.

This means that in order to work in finance with the ERP, one must learn double-entry accounting. Without knowledge of double-entry accounting, it is very difficult to work successfully with a general ledger or ERP.


The core parts of any ERP system are the feeding systems, called sub-ledgers. These could include such areas as payroll, inventory, accounts receivable, payable, fixed assets, project finance, and the list goes on and on. You may often find that you will have a sub-ledger specific to your business, industry, or country.

General Ledger

Ultimately, the ERP will always have a general ledger. The general ledger is a manager or summary, and it’s all financially formatted. The general ledger aims to correct all the data in line with the accounting standard, either IFRS or GAAP and ultimately report it as a balance sheet and a P&L.

ERPs are moving forward massively, and it is important to understand that, increasingly, the more basic jobs that require little skill are being automated away. Therefore, building up your skill level to work at a more managerial level is necessary.

What does it mean for your job prospects?

The good news is that using SAP, Oracle, and other ERP systems is increasingly easy. Therefore, if you change jobs and find yourself working for a different system, changing over should not be too daunting. However, you will notice that the supporting EPM systems often connected to the ERP can be quite variable. You can learn more about double-entry accounting by taking one of our Bookkeeping Courses.

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