.. index::
   single: Accounting Management

*********************
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.

.. index::
   single: module; account

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

.. index::
   single: accounting
   single: accounting; financial
   single: accounting; analytical
   single: accounting; auxiliary
   single: accounting; budgetary
   single: asset
   single: liability

.. 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.

.. index::
   pair: accounting; multi-company

.. 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.

.. raw:: html

    <div class="all-toctree">

.. toctree::

    invoices
    accounting_entries
    accounting_workflow
    accounting_payments

.. raw:: html

    </div>



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