In this guide 6 sections
An ERP is a set of modules that share one set of records. Sales holds quotations and orders, stock holds items and movements, accounts holds the ledger, HR holds people and pay, and projects holds jobs and time. Documents pass between them, so nothing is typed twice.
What a module is and why they share records
A module is a group of screens, documents and reports built for one job. Sales has quotations and price lists, while stock has items and bin locations, and accounts has the ledger, the bank and the fixed asset register. The links matter most.
A sales order points at the item master. A delivery note points at the order. An invoice points at the delivery and posts to the receivables ledger in the same click.
One number is entered once. Everyone reads it. Without that, staff retype the same customer name and rebate into three spreadsheets, and the copies drift apart before the month closes.
- Item master: shared by sales, stock and purchase
- Party master: customers and suppliers in one list
- Chart of accounts: the target of every posting
Sales and purchase: the two document chains
The sales chain runs from quotation to sales order, delivery note, tax invoice and payment receipt, and each step copies the lines from the one before it. A pro forma collects an advance. A credit note reverses a sale when goods come back.
The purchase chain runs from purchase indent to purchase order, goods receipt note, supplier bill and payment voucher. The receipt note is the hinge, because it adds stock, adds freight to landed cost, and lets accounts check the bill against what truly arrived at the gate.
Three way matching compares the order, the receipt and the bill. A mismatch is held. Nobody pays the supplier until the buyer clears it, and a backorder stays open for the short quantity.
Stock and accounts: where the numbers land
The stock module records every movement as a ledger line: receipt, issue, transfer or adjustment. The balance is the sum of those lines. A stocktake posts its write-off or gain as an adjustment, and batch or serial numbers trace an item back to one supplier lot.
Accounts receives the value of each movement. A goods receipt debits inventory, and a sale credits revenue while taking cost of goods sold. Depreciation and accrual entries run monthly, and bank reconciliation matches each statement line to a payment entry.
Check the trial balance against the stock valuation report. If they tie, the links are set up right.
- Stock ledger: movements by item, bin location and date
- Valuation method: moving average or first in first out
- Bank reconciliation: statement line to payment entry
- Tax codes: set on item and party
HR and projects: people and jobs
The HR module holds employee records, leave balances, leave encashment, attendance, expense claims and payroll runs. Payroll posts salary expense, gratuity and statutory liabilities to accounts, so finance sees the cost without keying a manual journal.
The projects module holds jobs, tasks, timesheets and budgets. Timesheet hours become billable lines on an invoice or cost lines against the job. A variation order adds scope without breaking the original budget, and material issued from the store room is charged to the same job.
Small firms often skip projects at first. A contractor or consultancy that sells hours should not.
Which module to switch on first
Most firms start with the module that hurts most. A trader begins with stock, sales and purchase. A service firm begins with projects, timesheets and invoicing. Accounts comes alongside, because every document posts there, and the cycle count schedule can wait for month two.
Add HR last unless leave and payroll errors are the real complaint. Each new module needs clean master data and trained users, and doing five at once spreads the team too thin to finish any of them well.
Write down the three reports the owner reads each week. Switch on only the modules those reports need. Then add one more every quarter.
Module-to-document map
A one page chart with a row for each module: sales, purchase, stock, accounts, HR and projects. Columns list the documents it creates, the records it reads from other modules, the reports it feeds and the staff role that owns it. A final column marks the go live order and the target month.
Open a blank worksheet to printQuestions owners ask
Do we need every ERP module?
No. Start with the two or three that match your biggest daily problem. Unused modules add menus, settings and training time without adding value, and they can wait until the first ones run cleanly.
What is the difference between ERP and accounting software?
Accounting software records money. An ERP also records quotations, stock, purchases, people and jobs. It posts their value to the ledger for you, including freight, rebate and depreciation entries.
Can modules from different vendors work together?
They can, through integration. Each link needs field mapping, error handling and a retest after every upgrade, and a failed intercompany or drop ship document is hard to trace across two vendors. A single ERP keeps those links built in and supported.
Which module should I switch on first?
Pick the one behind your most repeated mistake, often stock or invoicing. Add the next one after the first has survived a full month end.