ERP terms, explained for Indian businesses

A quantity of stock produced or received together and tracked as a unit, usually with a manufacturing date and expiry. Batches are what let you answer which customers received a particular lot, which matters in food, pharma and chemicals.

A specific storage location inside a warehouse — a rack, shelf or floor position. Bins are the difference between knowing you have an item and knowing where to walk to find it.

The list of components and quantities needed to make one unit of a product, sometimes with the operations required. It is what production consumes against and what costing is calculated from, so an inaccurate BOM makes every job cost wrong.

A document accompanying goods that move without a sale — stock transfers between your own locations, material sent for job work, goods sent on approval. It records the movement without creating a tax invoice or revenue.

A document reducing what a customer owes, issued for a return, a shortfall or a price correction after an invoice. Under GST it has its own reporting treatment, which is why it is a document rather than an edit to the original invoice.

Counting part of your stock on a rolling schedule instead of closing the business to count everything at once. It catches discrepancies while somebody can still remember what caused them.

The purchase-side counterpart of a credit note: a document raised against a supplier reducing what you owe them, typically for rejected material or a billing error.

An invoice reported to the government portal at the moment of issue, which returns an IRN and a signed QR code. It is not an emailed PDF — the defining feature is the registration, not the format.

An electronic document required for moving goods above a threshold value, carrying details of the consignment, the parties and the vehicle. Part A covers the consignment, Part B the transport. Check the current threshold and state rules, which change.

A stock valuation method that assumes the oldest stock is consumed first. It matters because the valuation method changes your cost of goods sold and therefore your reported profit.

The Indian term for a warehouse or storage location. In an ERP it is a stock-holding location: the same item can exist in several godowns with separate quantities, and moving between them is a documented transfer.

The document recording that goods physically arrived, raised against a purchase order by whoever received them. It is what increases stock and what a vendor bill is later matched against, so discrepancies surface at the gate rather than at month-end.

The return reporting your outward supplies — what you sold — filed on the GST portal. Reconciling it against your own books before filing is what stops a mismatch becoming a notice.

A static statement of the input tax credit available to you, generated from what your suppliers reported. Comparing it with your purchase records is how you find suppliers who have not filed.

The international classification code for a product, used on Indian invoices to determine the GST rate. SAC is the equivalent for services. Getting it wrong on a master propagates to every invoice for that item.

The unique number returned by the Invoice Registration Portal when an e-invoice is registered, along with a signed QR code. An e-invoice without an IRN has not been registered, whatever it looks like.

Sending your material to an outside processor and receiving it back worked on. The material remains yours throughout, moves on a delivery challan rather than an invoice, and has to be reconciled against what comes back.

The running credit account a regular customer holds with a shop — traditionally a notebook. In an ERP it is a customer ledger, so the outstanding is visible at the counter, on a statement and in the receivables report at the same time.

The instruction sent to a restaurant kitchen when an order is taken, showing items and any special notes. Sending it to a kitchen display or printer is what stops orders being heard late, twice, or not at all.

The true cost of getting an item into your warehouse — the purchase price plus freight, duty, insurance and handling, apportioned across the consignment. Without it, imported or freighted goods look cheaper than they are and margins are overstated.

The time between placing an order and receiving the goods. It is the number a reorder level is calculated from, and using an optimistic one is the most common cause of stockouts that look inexplicable.

A control where the person who prepares a transaction cannot also approve it. Applied to payroll disbursement and payments, it means the system enforces separation of duties rather than relying on an instruction.

The instruction to produce a quantity of a product, against which material is issued, operations are booked and finished goods are received. It is the container costs accumulate in, which is how you find out what a job actually cost.

A recorded instance of something not meeting its specification — material, process or product. Recording it, rather than fixing it quietly, is what lets you see whether the same supplier or the same machine keeps causing it.

A document that looks like an invoice and is not one: it states what will be supplied and at what price, typically to obtain an advance or open a letter of credit. It creates no GST liability because no supply has happened.

Your formal commitment to buy specified goods at a specified price. It is the document a goods receipt and a vendor bill are both matched against — the three-way match that catches over-delivery and over-billing.

The stock quantity at which an item should be reordered, set from consumption rate and lead time. Set correctly it prevents stockouts; set from a guess it produces either stockouts or cash tied up in shelves.

A quantity of a produced batch kept aside and stored so it can be re-tested later if a complaint or an investigation arises. Standard practice in pharma, food and chemicals, and usually a regulatory expectation rather than a choice.

A request sent to several suppliers asking them to quote for the same requirement, so responses can be compared on the same basis. It is the step that turns purchasing from a phone call into a decision you can evidence.

The distinct sellable variant of a product — a specific size, colour or pack. Two SKUs may be the same product to a customer and must be separate records to a warehouse, because they are counted and picked separately.

Tax withheld by the payer when making certain payments and deposited against the recipient’s liability. In an ERP it is a rule applied at the point of payment, with a return filed and a certificate issued afterwards.

Checking a vendor bill against the purchase order and the goods receipt before paying it. The three documents should agree on quantity and price; when they do not, that is exactly the thing worth finding before the money leaves.

A list of every ledger balance at a point in time, with debits equalling credits. It is the first thing an accountant looks at, and the figure a migration is reconciled against on cut-over day.

Material that has left the store but is not yet a finished product. It is real value sitting on the floor, and a system that cannot show it will understate your stock and overstate your consumption.