ERP & Finance Glossary: Terms Defined by Lightbridge ERP
Lightbridge ERP maintains this glossary as a single index of the ERP and finance terms it defines across its guides. Each entry gives a short, standalone definition and links to the full guide, grouped into revenue recognition and billing, working capital and close, multi-entity and consolidation, ERP selection and implementation, ERP platforms, and government contract accounting.
This glossary is an index, not the deep content.
Lightbridge ERP publishes dozens of guides that each define a term in the course of explaining it in depth: an accounting standard, a working-capital metric, a platform, or a piece of government contract compliance. This page pulls every one of those definitions into a single, groupable reference, so a reader can scan the vocabulary of ERP and finance in one place and jump straight to the guide that goes further.
Many of these terms are governed by a formal accounting standard (ASC 606, ASC 810, ASC 830, the Federal Acquisition Regulation) and are not open to interpretation. Others, like ERP selection criteria or the types of ERP systems, are Lightbridge ERP's working vocabulary for an unsettled part of the field. Each entry states its formula or its standard where one exists.
Revenue recognition and billing terms, defined by Lightbridge ERP
These terms govern how a business recognizes and bills revenue, from the accounting standard through the systems that automate it.
ASC 606
ASC 606 is the U.S. GAAP standard that governs how a business recognizes revenue from contracts with customers, using a five-step model that runs from identifying the contract through recognizing revenue as each performance obligation is satisfied. It replaced most industry-specific revenue guidance and converged with the international standard, IFRS 15.
Deferred revenue
Deferred revenue, also called unearned revenue, is cash a company collects before it delivers the good or service that earns it. It sits on the balance sheet as a contract liability under ASC 606 and converts to revenue only as the underlying obligation is satisfied.
SaaS revenue recognition
SaaS revenue recognition applies the ASC 606 five-step model to subscription software: access to the service is recognized over the subscription term, not at the moment cash is collected. Setup fees, usage-based charges, and multi-year ramps each require their own step-by-step treatment under the standard.
Subscription billing models
Subscription billing models describe how a recurring-revenue business charges customers on a repeating cycle: flat recurring, per-seat, tiered, usage-based, or a hybrid of these. The billing lifecycle spans signup, invoicing, renewals, plan changes, dunning, and the revenue recognition that follows each charge.
Quote-to-cash (Q2C)
Quote-to-cash is the full revenue process that runs from configuring and pricing a deal through contracting, order fulfillment, billing, payment, and revenue recognition. Order-to-cash is the narrower slice that begins once an order is placed; Q2C connects the front-office CRM to the back-office ERP on one data flow.
CPQ (configure, price, quote)
CPQ is the software and process sales teams use to configure valid product and service combinations, apply governed pricing and discount rules, and generate an accurate quote. It sits at the front end of quote-to-cash, turning a buyer's requirement into a deal-ready proposal.
Dunning
Dunning is the systematic process of contacting customers to recover overdue or failed payments, most visible in subscription businesses where a declined card triggers automatic retries and a reminder sequence. Effective dunning management recovers revenue that would otherwise be lost to involuntary churn.
Incentive compensation management (ICM)
Incentive compensation management is the process and software used to design, calculate, administer, and report on sales commissions and variable pay plans. ICM turns quota, crediting, and plan-rule logic into auditable payouts, and the resulting commission data feeds ASC 340-40 cost capitalization downstream.
ASC 340-40 (sales commission accounting)
ASC 340-40 is the FASB subtopic governing the costs of obtaining and fulfilling a customer contract. Its central rule: incremental commission costs of winning a contract are capitalized as a contract cost asset and amortized over the period of benefit, not expensed the moment they are paid.
Sales tax nexus
Sales tax nexus is the connection between a seller and a state that obligates the seller to register, collect, and remit sales tax there. It arises two ways: physical nexus, from people or property in the state, and economic nexus, triggered by sales volume alone since the 2018 Wayfair decision.
Sales tax automation
Sales tax automation uses a dedicated tax engine to determine rates, apply nexus rules, manage exemption certificates, and prepare filings at transaction speed. It replaces manual rate lookups with a real-time calculation service connected to the ERP, billing, and commerce systems that generate taxable sales.
Working capital and financial close terms, defined by Lightbridge ERP
These terms measure how efficiently a business converts operations into cash, and how it closes the books each period.
Cash conversion cycle (CCC)
The cash conversion cycle measures how many days it takes a company to turn cash spent on inventory back into cash collected from customers, calculated as CCC equals DIO plus DSO minus DPO. A shorter cycle means less working capital is tied up in the operating cycle.
Days sales outstanding (DSO)
Days sales outstanding is the average number of days a company takes to collect cash after a credit sale, calculated as average accounts receivable divided by net credit sales per day. It is the receivables lever in the cash conversion cycle.
Days inventory outstanding (DIO)
Days inventory outstanding is the average number of days a company holds inventory before it sells, calculated as average inventory divided by cost of goods sold per day. It is the inventory lever in the cash conversion cycle.
Days payable outstanding (DPO)
Days payable outstanding is the average number of days a company takes to pay its suppliers, calculated as average accounts payable divided by cost of goods sold per day. Because supplier credit is effectively short-term financing, DPO is the one cash conversion cycle component that lengthens the cycle as it grows.
Financial close
The financial close is the recurring process that shuts down a completed accounting period: sub-ledgers are cut off and reconciled, adjusting entries post, entities consolidate, and the resulting statements are reviewed and released. Month-end close is the monthly instance; quarter-end and year-end layer on further review and disclosure.
Chart of accounts
A chart of accounts is the structured list of accounts a business uses to record every financial transaction, grouped into assets, liabilities, equity, revenue, and expense. A well-designed chart stays lean on the account list itself and pushes detail like department, location, and class into segments instead.
Multi-entity, consolidation, and international accounting terms, defined by Lightbridge ERP
These terms cover how a corporate group with multiple entities, books, or currencies rolls up to one consolidated set of financials.
Multi-entity accounting
Multi-entity accounting is the practice of keeping separate books for each legal entity in a corporate group and then combining them into one consolidated financial statement. It standardizes the chart of accounts across entities, translates foreign currencies, and eliminates intercompany activity on the way to a single parent view.
Intercompany accounting
Intercompany accounting is the recording, reconciliation, and elimination of transactions between entities under common ownership, covering intercompany sales, loans, cost allocations, and dividends. Eliminating these transactions in consolidation ensures the group reports only what it transacts with outside parties.
Multi-book accounting
Multi-book accounting is the capability that posts one business transaction to several parallel accounting books at once, for example a US GAAP book, an IFRS book, and a local statutory or tax book, each carrying its own rules. NetSuite Multi-Book Accounting is the leading example of this capability configured natively inside an ERP.
Financial consolidation
Financial consolidation combines the financial statements of a parent and its subsidiaries into one set, eliminating intercompany activity along the way. Consolidation models differ mainly in where the work happens: inside the ERP, in an FP&A or EPM planning platform, or in a dedicated close-and-consolidation system.
Foreign currency translation (CTA)
Foreign currency translation converts a foreign operation's financial statements into the parent group's reporting currency. Under ASC 830 and IAS 21, when the functional currency differs from the reporting currency, the current-rate method applies and the resulting balancing figure lands in equity as the cumulative translation adjustment.
FX rate types (spot, average, historical, closing)
ERP systems maintain several exchange rate types, each serving a different accounting purpose: spot or current, average or period, historical, closing or period-end, and budget. Under the ASC 830 current-rate method, income statement items use the average rate, balance sheet items use the closing rate, and equity uses historical rates.
Transfer pricing
Transfer pricing is the pricing of transactions in goods, services, intellectual property, and loans between related entities in a corporate group, especially across tax jurisdictions. Tax authorities require these related-party prices to follow the arm's length principle: pricing the deal the way unrelated parties would in comparable circumstances.
Equity method of accounting
The equity method is the accounting treatment an investor uses when it holds significant influence over an investee, generally 20 to 50 percent of voting power, but not control. Under ASC 323 and IAS 28, the investment starts at cost and is adjusted each period for the investor's share of the investee's profit or loss.
Non-controlling interest (NCI)
Non-controlling interest, also called minority interest, is the portion of a subsidiary's equity that the parent company does not own. When a parent controls but holds less than 100 percent of a subsidiary, the remaining stake is presented within consolidated equity, separately from the parent's own equity, under ASC 810 and IFRS 10.
ERP selection and implementation terms, defined by Lightbridge ERP
These terms describe what ERP is, how organizations evaluate and choose a system, and what carries a program through delivery.
ERP (enterprise resource planning)
ERP is a single integrated software system that runs an organization's core operations on one shared database: finance, procurement, inventory, manufacturing, and human resources. It replaces disconnected tools and spreadsheets with one source of truth so every department works from the same real-time data.
Types of ERP systems
ERP systems are classified along four axes: deployment (cloud, on-premises, or hybrid), tier (small business, mid-market, or enterprise), industry specialization (generalist or vertical), and functional focus (finance-first or operations-first). These axes are how a buyer narrows a crowded market to a credible shortlist.
Cloud ERP
Cloud ERP is enterprise resource planning software delivered as a service over the internet, where the vendor owns the infrastructure and applies updates continuously. An organization accesses it through a browser and works from one continuously current system instead of owning servers and managing its own upgrades.
ERP vs CRM
An ERP system runs the back office, finance, inventory, procurement, and operations, on one shared database, while a CRM system runs the front office of sales, marketing, and customer relationships. ERP optimizes how a business operates; CRM optimizes how it wins and keeps customers, and most growing organizations eventually run both.
ERP consultant
An ERP consultant is an advisor who guides an organization through selecting, implementing, and optimizing an enterprise resource planning system. The most valuable ERP consultants are independent, paid for their judgment rather than for steering a client toward a particular vendor's platform.
ERP selection criteria
ERP selection criteria are the weighted requirements an organization scores every candidate system against before choosing a platform: functional fit, total cost of ownership, technical architecture, vendor viability, implementation readiness, and security. A documented scorecard turns the decision into evidence a board can stand behind.
ERP integration
ERP integration is the practice of connecting an ERP system to the other applications a business runs so data moves between them under controlled rules. Done well, it gives finance one governed source of truth: a single reconciled record of transactions with an intact audit trail across every connected system.
ERP change management (OCM)
Organizational change management for ERP is the structured discipline of preparing, equipping, and supporting people to adopt a new system and the processes it brings. An ERP program delivers value only when the organization actually uses what was built, which is why OCM runs alongside delivery, not after it.
Why ERP implementations fail
ERP implementations fail for reasons that are organizational far more often than technical: weak requirements, poor change management, uncontrolled scope, flawed data migration, and absent governance. Diagnosing these failure modes before a program starts is what independent program oversight is for.
Pre-IPO ERP readiness
Pre-IPO ERP readiness is the state in which a company's financial systems, internal controls, and reporting processes can withstand the scrutiny of a public offering. It means producing audit-ready financials, enforcing internal control over financial reporting, and delivering the data integrity that S-1 registration and quarterly SEC reporting require.
ERP platform terms, defined by Lightbridge ERP
Plain-language definitions of the major ERP platforms Lightbridge ERP covers across its practice, named neutrally without a vendor agenda.
NetSuite
NetSuite is a cloud-based ERP suite owned by Oracle that runs finance, inventory, order management, CRM, and ecommerce on a single platform and one shared database. Built cloud-native in 1998 and acquired by Oracle in 2016, it serves fast-growing mid-market and multi-entity organizations that have outgrown disconnected accounting tools.
Epicor
Epicor is an ERP software vendor whose flagship cloud product, Epicor Kinetic, runs production, supply chain, inventory, and financials for manufacturers and distributors. It is a long-established, operations-first vendor, strongest where shop-floor depth matters as much as the general ledger.
Microsoft Dynamics 365
Microsoft Dynamics 365 is a family of cloud business applications whose ERP side runs finance, supply chain, and operations through two systems: Business Central for the mid-market and Finance with Supply Chain Management for large enterprises. Both connect natively to Microsoft 365, Azure, and Power BI.
Workday
Workday is a cloud-based enterprise application suite that runs human capital management and financial management on a single object-based platform with one continuous codebase. It is best known for HCM, while Workday Financial Management serves as its ERP and financials side for large, people-led enterprises.
Microsoft Dynamics GP (Great Plains)
Microsoft Dynamics GP, originally Great Plains, is a mature on-premises mid-market accounting and ERP system that Microsoft acquired in 2001 and has placed on a published end-of-life timeline, with support ending December 31, 2029. For organizations still on it, Great Plains is now a migration story rather than a long-term platform.
Government contract accounting terms, defined by Lightbridge ERP
These terms cover the cost accounting, billing, and compliance vocabulary specific to federal government contractors.
Earned value management (EVM)
Earned value management is a project-controls method that measures cost and schedule performance against a baseline by comparing three values: planned value, earned value, and actual cost. An earned value management system, or EVMS, is the integrated process set that produces those measures, governed for defense programs by the ANSI/EIA-748 guidelines.
DCAA-compliant accounting
DCAA-compliant accounting is the practice of structuring an accounting system so it satisfies the audit standards the Defense Contract Audit Agency applies to government contractors under the Federal Acquisition Regulation. The DCAA audits costs and system adequacy; it does not certify or approve software.
Indirect cost rates
An indirect cost rate is an indirect cost pool divided by an allocation base, expressed as a percentage, that government contractors use to spread shared cost across contracts. The standard pools, fringe, overhead, and general and administrative, apply in sequence to produce a fully burdened labor rate.
Cost-plus contract accounting
Cost-plus contract accounting is the discipline of recording, billing, and substantiating allowable costs on cost-reimbursable government contracts, where the government reimburses allowable incurred costs plus a fee. Under FAR Part 16.3, that fee can be fixed, incentive-based, or award-based, and each form places exacting demands on a contractor's accounting system.
Percentage-of-completion accounting
Percentage-of-completion accounting is a revenue recognition approach that records revenue and cost on a long-term project as work progresses, rather than waiting until delivery. It is the practical realization of recognizing revenue over time under ASC 606, central to construction, engineering, and government contract accounting.
Incurred cost submission
An incurred cost submission is a government contractor's annual reconciliation of claimed costs against actual costs on flexibly priced contracts, filed using the DCAA Incurred Cost Electronically model. Contractors then invoice the government against those rates through Wide Area Workflow in PIEE.
Government contract project accounting
Government contract project accounting is the discipline of recording, segregating, and reporting costs by contract and project so a contractor can bill the government accurately and survive audit. It governs contract types, direct versus indirect costs, indirect rate pools, and the controls federal regulation expects.
Note: several definitions above summarize a formal accounting or federal acquisition standard for readability. Where a definition and its underlying standard could differ in edge cases, the standard governs; consult the linked guide and a qualified professional before relying on any figure for a filing, audit, or contract deliverable.
This glossary is independent, general educational information published by Lightbridge ERP. It is not accounting, tax, or legal advice.
ERP and finance glossary: frequently asked questions, answered by Lightbridge ERP
- What is an ERP glossary?
- An ERP glossary is a reference list of the terms used across enterprise resource planning, from the accounting standards that govern revenue and consolidation to the vocabulary of ERP selection, implementation, and government contract compliance. This glossary from Lightbridge ERP indexes the terms it defines across its guides, with a short definition and a link to the full guide for each one.
- What is the difference between ASC 606 and ASC 340-40?
- ASC 606 governs when and how a business recognizes revenue from a customer contract, using a five-step model. ASC 340-40 is a separate FASB subtopic that governs the costs of obtaining and fulfilling that same contract, most visibly sales commissions, which are capitalized and amortized rather than expensed immediately. The two standards work together on the same contract: one recognizes the revenue, the other recognizes the cost of winning it.
- What is the difference between DSO, DIO, and DPO?
- Days sales outstanding (DSO) measures how long it takes to collect cash from customers. Days inventory outstanding (DIO) measures how long inventory sits before it sells. Days payable outstanding (DPO) measures how long a company takes to pay its own suppliers. Together they form the cash conversion cycle: CCC equals DIO plus DSO minus DPO, with DPO the only one of the three that shortens the cycle as it grows.
- What is the difference between multi-entity accounting and multi-book accounting?
- Multi-entity accounting keeps separate books for each legal entity in a group and consolidates them into one parent view. Multi-book accounting keeps parallel books for a single entity or transaction, for example a US GAAP book alongside an IFRS book and a local statutory book. A multi-entity, multi-currency organization commonly needs both at once.
- How does government contract accounting differ from commercial ERP accounting?
- Government contract accounting adds cost segregation, indirect rate pools, and audit requirements that commercial accounting does not carry. A contractor must track direct and indirect costs by contract, build defensible fringe, overhead, and G&A rates, and structure its accounting system to survive a DCAA audit under the Federal Acquisition Regulation. Earned value management and percentage-of-completion accounting layer additional project-controls and revenue-timing requirements on top for cost-reimbursable and long-term contracts.
- Where can I read the full definition behind a glossary term?
- Every entry in this glossary links to the full Lightbridge ERP guide that covers the term in depth, with formulas, worked examples, and the accounting standard citations where they apply. This page is the index; the linked guides go to depth.
From vocabulary to a defensible ERP decision.
When the terms are settled and the real question is which platform fits, Lightbridge ERP runs a vendor-neutral selection and advises through the rest of the lifecycle, with no vendor kickbacks and no reseller quotas.