Accounting Management

This chapter traces the accounting workflow in OpenERP, from entering an invoice to registering payments. The various operations are described, from the entry of accounting receipts to the treatment of the reconciliation process, including payment orders.

Accounting is at the heart of managing a company: all the company’s operations have an impact here. It has an informational role (how much cash is there? what debts need to be repaid?) and, because of the information it provides, a reliable and detailed accounting system can and should have a major decision-making role.

In most companies, accounting is limited to producing statutory reports and satisfying the directors’ curiosity about certain strategic decisions, and to printing the balance sheet and the income statement several times a year. Even then, there is often several weeks of delay between reality and the report.

Note

Valueing your Accounting Function

In many small companies, the accounting function is poorly treated.

Not only do you see the data for documents being entered into the system twice, but also the results are often just used to produce legal documents and regular printouts of the balance sheet and income statements some weeks after the closing dates.

By contrast, integrating your accounts with your management system means that you can:

• reduce data entry effort – you only need to do it once,
• run your processes with the benefit of financial vision: for example, in managing projects, negotiating contracts, and forecasting cash flow,
• easily get hold of useful information when you need it, such as a customer’s credit position.

So accounting is too often underused. The information it brings makes it a very effective tool for running the company if accounting is integrated into the management system. Financial information really is necessary in all of your company’s processes for you to be effective, for example:

• to prepare quotations, the precise financial position of the customer is a key element, as well as history of any delays in payment,
• if a given customer has exceeded his credit limit, accounting can automatically stop further deliveries to the customer,
• if a project budget is 80% consumed, but the project is only 20% complete, you could renegotiate with the customer, or review the objectives of the project,
• if you need to improve your company’s cash flow, you could plan your service projects on the basis of invoicing rates and payment terms of the various projects, and not just delivery dates – you could work on short-term customer projects as opposed to R&D projects, for example.

OpenERP’s general and analytic accounting handle these needs well because of the close integration between all of the application modules. Furthermore, the transactions, the actions and the financial analyses happen in real time, so that you cannot only monitor the situation, but also manage it effectively.

Financial Management in OpenERP covers general accounting, analytic accounting, auxiliary and budgetary accounting. It is double-entry, multi-currency and multi-company.

Note

Accounting

• General accounting (or financial accounting) is for identifying the assets and liabilities of the business. It is managed using double-entry accounting which ensures that each transaction is credited to one account and debited from another.
• Analytic accounting (also called management or cost accounting) is an independent accounting system, which reflects the general accounts but is structured along axes that represent the company’s management needs.
• Auxiliary accounting reflects the accounts of customers and/or suppliers.
• Budgetary accounts predefine the expected allocation of resources, usually at the start of a financial year.

Tip

Multi-company

There is a choice of methods for integrating OpenERP in a multi-company environment:

• if the companies hold few documents in common (such as products, or partners - any OpenERP resource), you could install separate databases,
• if the companies share many documents, you can register them in the same database and add OpenERP’s multi-company user group to finely manage access rights,

One of the great advantages of integrating accounts with all of the other modules is in avoiding the double entry of data into accounting documents. So in OpenERP, an Order automatically generates an Invoice, and the Invoice automatically generates the accounting entries. These in turn generate tax submissions, customer reminders, and so on. Such strong integration enables you to:

• reduce data entry work,
• greatly reduce the number of data entry errors,
• get information in real time and enable very fast reaction times (for reminders, for example),
• exert timely control over all areas of company management.

All the accounts are held in the default currency (which is specified in the company definition), but each account and/or transaction can also have a secondary currency (which is defined in the account). The value of multi-currency transactions is then tracked in both currencies.

• Advanced Invoice Management
  • Creating a Customer Invoice
  • Tax Management
  • Cancelling an Invoice
  • Controlling a Supplier Invoice
  • Credit Notes / Refunds
  • Advanced Setup: Payment Terms and Fiscal Positions
• Advanced Cash Management
  • Managing Bank Statements
  • Cash Register Management
  • Miscellaneous Operations
• Recording Journal Items
  • Recording Sales Entries through Journal Items
  • Miscellaneous Operations: Creating an Opening Entry
  • Journal Entries
  • Manual Reconciliation Process
  • Productivity Tips
• Automate your Payments
  • Supplier Payments
  • Automatic Reconciliation