Sage Software Glossary: Key Terms Every Beginner Should Know

Sage is a powerful form of ERP software that boosts automation, streamlines operations, and increases profitability. Understanding key accounting and business terms will help you navigate Sage with ease and get the most benefit out of your ERP application.

Key Accounting Terms in Sage ERP

In addition to basic accounting functionality, Sage includes advanced accounting features suited to the needs of larger enterprise businesses. It has different solutions for businesses of all sizes and industries ranging from the service sector to manufacturing. As one of the oldest providers of ERP software in the business, Sage has seen it all and has a solution perfectly tailored to suit your needs.

Sage Accounting Terminology

1. Chart of Accounts (COA) – A Chart of Accounts is a structured list of accounts companies use to track financial transactions, including assets, liabilities, revenue, expenses, and more. In Sage, the COA includes a code, description, and type of each account, which allows employees to sort and filter to find the information they need.

2. General Ledger (GL) – A general ledger is a central record of all financial transactions, and includes data from accounts payable, accounts receivable, payroll, and more. In Sage, employees can produce a summary or detailed view of all transactions using the General Ledger report.

3. Accounts Payable (AP) – Accounts payable is the outstanding money a company owes to suppliers or vendors. Sage’s advanced AP automation simplifies accounts payable, reduces manual labor, and improves control over cash flow.

4. Accounts Receivable (AR) – Accounts receivable involves the money a company is owed for produces or services. Sage automates invoicing, reduces Days Sales Outstanding (DSO), and simplifies the invoice-to-cash process with advanced tracking software.

5. Bank Reconciliation – Bank reconciliation involves matching a company’s internal financial records with bank statements to check for accuracy. In Sage, users can easily search for transactions using the bank code, the ending balance from the bank statement, or the statement date.

6. Contra Account – A Contra Account is an account that reduces the value of a different account listed in a company’s general ledger. They are used to provide a more accurate picture of a company’s overall financial health. Sage makes it easy to set up contra accounts, including choosing the accounts or invoices to offset.

7. Prepayment – Prepayments are payments made in advance for goods or services that have not yet been received. In Sage ERP, prepayments can be made in the Accounts Payable and Accounts Receivable modules, which makes it easy to track money before it is paid or received.

8. Suspense Account – A Suspense Account is a temporary holding account for transactions that need additional classification. Employees can create a suspense account in Sage using the General Ledger module by creating a new account designated as a suspense account.

9. Accruals – Accruals consist of expenses or revenues that are recognized before cash is received or paid. They are recorded to align with the accrual accounting principle, which holds that transactions should be recorded when they are earned or incurred, not upon delivery. It’s easy to set up accruals in Sage using the relevant nominal code, the estimated total value, and the number of months before the transaction will be complete.

10. Reverse Charge VAT – Reverse Charge VAT is a mechanism by which the buyer provides the value added tax (VAT) on a transaction instead of the seller. While the Reverse Change VAT mechanism is not applicable within the US, it’s still an important function for American businesses engaged in international trade. To perform a reverse charge VAT in Sage, employees should select the “Use VAT reverse charge on this invoice” checkbox when creating a sales invoice.

11. Day Books – Day Books are a record of daily transactions before they are transferred to the leger. In Sage, the Day Book report show an overview of each daily transaction, including the transaction type and amount.

12. Write-Offs & Write-Backs – A write-off refers to removing an asset or debt from accounts, while a write-back restores a previously written-off item. Users can perform write-offs and write-backs in the Accounts Receivable section in Sage ERP.

13. Nominal Code – A nominal code is a unique identifier assigned to accounts within the Chart of Accounts. They are used to track and manage financial transactions. Users can set a nominal code in Sage by navigating to the Nominal codes section.

14. Disbursements – Disbursements are out-of-pocket expenses that are separate from normal operating expenses. In Sage, the term “disbursements” refers to the process of recording payments made to vendors or suppliers. It is done in the Accounts Payable module and documented in a “Cash Disbursements Journal.”

Key Payroll and HR Terms in Sage ERP

Sage ERP provides advanced payroll and HR functionality integrated with the rest of your financial and operational data. Here are some common payroll and HR terms and the functionality provided by Sage.

Payroll Terminology in Sage

1. Payroll Processing – Payroll processing involves calculating and distributing employee wages, deductions, and taxes. Sage includes a dedicated Payroll Processing module to handle these functions and streamline the entire payroll process.

2. Employee Self-Service (ESS) – This refers to a feature in Sage Payroll that allows employees to access the payslips and other personal data by themselves, bypassing the HR department and reducing the burden on HR employees.

Key ERP and Business Management Terms in Sage ERP

As an ERP, Sage includes advanced business management functionality that streamlines processes, improves data visibility, and provides real-time access to vital operational and financial data. Here are some business management terms and their associated functionality in Sage.

Business Management Terminology in Sage

1. Inventory Management – Managing inventory is a critical function for any business that handles large volumes of stock. Sage ERP includes robust inventory management functionality, including streamlining inventory management across multiple platforms and product lines, tracking and managing stock levels, and optimizing supply chain efficiency. Our Automated Inventory Cycle Count tool makes Sage’s inventory management capabilities even better.

2. Purchase Order (PO) – Purchase Orders are documents issued by buyers and given to suppliers listing the quantity and price of requested goods or services. Sage’s Purchase Orders module makes generating and managing purchase orders a breeze.

3. Supplier Ledger – A supplier ledger is a detailed record of transactions with a specific supplier, including purchases, payments, and outstanding balances. It makes it easier to track and manage supplier relationships.

4. Customer Relationship Management (CRM) – CRMs help companies track, manage, and standardize customer interactions across the company. They improve customer service and enable businesses to create new and better channels for customer communication. Sage CRM provides advanced CRM functionality that integrates with Sage ERP, providing a single source for all financial, operational, and customer data.

Key Tax and Compliance Terms in Sage

Maintaining regulatory and legal compliance is a major concern for many companies. These regulations and requirements often change, and not remaining in compliance can lead to serious financial and legal penalties. That’s why Sage has built-in compliance features to give customers peace of mind and improve regulatory compliance.

Regulatory Compliance in Sage

1. Corporation Tax – Corporate taxes or business taxes are the taxes on company profits that must be reported and paid annually. In the U.S., this often includes local, state, and federal taxes. Companies operating in multiple locations must also deal with multiple different local and state taxes, which adds complexity. Sage has built-in features that streamline the process of compiling and corporate taxes.

2. Audit Trail – Audit trails consist of a detailed record of financial transactions. They help provide transparency and are often required by lenders, as well as being legally required for public companies in the U.S. With its built-in audit trails, Sage ensures that companies are always audit-ready.  

3. Financial Reporting – Corporate financial reporting includes generating financial statements, including balance sheets, profit & loss statements, cash flow reports, and more. Sage includes pre-built and easily customizable financial reports that allow business leaders to analyze data along any dimension they need.

Understanding Key Terminology in Sage ERP

Understanding key financial terminology in Sage helps users navigate the system with ease. Knowing the correct terminology and where certain functions are located in Sage increases employee confidence and helps companies get the most benefit out of their Sage system.