Accounting and finance

chapitre 12 covers the operational invoicing cycle. This one covers bookkeeping: chart of accounts, journal entries, bank reconciliation, analytic accounting, closing and financial statements.

Setting up the chart of accounts

Localisation

The chart of accounts is installed automatically by the fiscal localisation chosen when the database goes live (see section 5.5). For France, it is the Plan Comptable Général.

Adapting the accounts

1. Open Accounting › Configuration › Accounting › Chart of Accounts.
2. Create or edit the accounts your business needs.
3. For each account, check the type, the currency where there is one, the default taxes attached and whether reconciliation is allowed.

Entering journal entries

Kinds of entry

• Sales entries, generated by customer invoices.
• Purchase entries, generated by vendor bills.
• Bank and cash entries, coming from payments and statements.
• Miscellaneous entries, keyed in by hand: provisions, accruals, payroll, depreciation.

Entering a manual journal entry

1. Open Accounting › Accounting › Transactions › Journal Entries.
2. Click New.
3. Check the Journal: Miscellaneous Operations is offered by default.
4. Check the Accounting Date and fill in a meaningful Reference.
5. In the Journal Items tab, click Add a line and fill in for each of them the Account, the Label, then the amount in Debit or in Credit.
6. Fill in the Partner on the lines that use control accounts: without it, the line will not appear in the partner ledger and cannot be matched.
7. Check that total debits equal total credits.
8. Click Post.

Correcting a posted entry

The correction goes through a reversal: rather than editing the faulty document, you record an opposite entry that cancels it, then key in the right one. Both remain visible, and the path that led to the correction can be read in the accounts.

1. Open the document concerned.
2. Click Reverse Entry.
3. Fill in the date of the reversal. The Reason displayed on Credit Note field only appears on an invoice, not on a miscellaneous entry.
4. Validate: an opposite entry is generated, reconciled with the original.
5. Then key in the correct entry.

Reconciling the bank

Bank reconciliation consists in matching each line of the bank statement with the accounting document it corresponds to: an invoice paid, a vendor payment, bank charges. It is the most repetitive accounting work, and the one that lends itself best to automation.

For as long as a transaction is not reconciled, the invoice it pays stays in payment and not paid: reconciliation is what closes the cycle.

Feeding the statement

Three routes bring bank transactions into Odoo.

Route	What it assumes
Bank synchronisation	Odoo connects to the bank and retrieves the transactions every day, without any intervention. Belongs to the Enterprise edition and requires a subscription to the connection service.
File import	The statement is downloaded from the bank then loaded into Odoo, in the common formats: CSV, OFX, QIF, CAMT. Free, but to be done again every period.
Manual entry	The lines are keyed in by hand. Reserved for very low volumes or for accounts with little activity.

1. Open the Accounting dashboard and find the bank journal card.
2. Open the card's three-dot menu and, in the New column, click Import File; or key the lines in directly.

Reconciling

1. Open the Accounting dashboard and find the bank journal card.
2. Click the button announcing the number of transactions to reconcile.

The Bank Matching screen lists the transactions not yet dealt with, with the account's Current Balance at the top. Each line carries the buttons that match its situation.

Button	What it does
Reconcile	Reconciles the transaction with the document proposed. The figure beside it gives the number of documents Odoo has retained: a confident match proposes only one.
Receivable / Payable	Posts the transaction to the corresponding control account, without naming a particular document. To be used for a down payment received or a payment that does not yet settle anything.
Set Partner	Fills in the third party when Odoo has not recognised it, which brings up the documents that might match.
Set Account	Posts the transaction directly to an account, with no third-party counterpart. This is the route for bank charges, overdraft interest and commissions.

The three-dot menu on each line gives access to the less common actions: the reconciliation models, Manage Models and Delete Transaction. To set a transaction aside without dealing with it, open it and click To Review; the Reviewed button lifts that marking.

Automating with reconciliation models

A reconciliation model describes a recurring transaction and the entry to record: the monthly bank charges, a rent collected by direct debit, a subscription. Once the rule is set, Odoo recognises it and proposes (or records) the entry by itself.

1. From the three-dot menu of the bank journal card, section Reconciliation, click Models. From the reconciliation screen, the equivalent entry is called Manage Models.
2. Create a model and name it.
3. Set the recognition conditions: - the Journals the rule applies to; - the Label: Contains, Not Contains or a regular expression, with the Label Parameter to look for in the transaction description; - the amount, with Is lower than or equal to, Is greater than or equal to or Is between; - the Partners concerned, where relevant.
4. Set the counterpart: the account to be moved, the label of the entry, the taxes where there are any, and how the amount is split: Fixed, Percentage of balance, Percentage of statement line or From label.
5. Choose how it is triggered.

Trigger	Behaviour
Manual	The model is proposed on the reconciliation screen when the transaction matches. The accountant validates.
Automated	The entry is recorded without intervention as soon as the transaction matches the conditions.

Matching down payments

The payment of a down payment passes through a control account dedicated to advances received. To clear the position of a customer who has paid a down payment and then the balance:

1. Open Accounting › Accounting › Closing › Reconcile.
2. Go to the advances and down payments received account, in the customer's group.
3. Select the line of the down payment invoice and the deduction line carried by the final invoice: both are on that same account and cancel each other out.
4. Click Reconcile.

Analytic accounting

Creating the analysis dimensions

1. Open Accounting › Configuration › Analytic Accounting › Analytic Plans.
2. Create one plan per dimension of analysis: site, department, vehicle, activity.
3. In each plan, create the corresponding analytic accounts.

Allocating

The analytic distribution is filled in on invoice lines, on manual journal entries and on timesheets. Distribution models make it possible to apply a split automatically according to criteria: general ledger account, partner, product.

Analysing

Open Accounting › Reporting › Management › Analytic Report to consult expenses and income by dimension, and to measure profitability by site or by activity.

Managing the periods

Fiscal year

1. Open Accounting › Configuration › Settings.
2. In the Fiscal Year section, fill in the Last Day: the month and day the year ends on.
3. Save.

Locking the periods

Locking prevents an entry from being recorded at a date earlier than the one set. Five locks coexist, each with its own scope.

Lock	Scope
Lock Sales	Entries coming from the sales journals.
Lock Purchases	Entries coming from the purchase journals.
Lock Tax Return	Any entry carrying taxes. This is the lock to set after filing a return, so that no entry can alter a period already declared.
Lock Everything	All entries, whatever the journal.
Hard Lock	All entries as well, but with no exception possible and no going back.

1. Open Accounting › Accounting › Closing › Lock Dates….
2. Fill in the dates you want.
3. Save.

Tax returns

VAT return

1. Open Accounting › Accounting › Closing › Tax Returns.
2. Select the period.
3. Check the bases and the amounts: output VAT on sales, input VAT on purchases, balance payable or credit.
4. Check the points the report flags for attention.
5. Generate the tax closing entry.
6. File the return, electronically where the function is available.

Setting the tax lock

Once the return has been filed, set the tax lock date to the end of the period declared. Any later entry affecting that period is then refused, which guarantees that the accounts and the return filed agree.

Financial statements

The financial statements belong to the Enterprise edition, where they are available as soon as Invoicing is installed. They do not exist in Community. They are reached from the Reporting menu of Accounting, sorted by family.

Family	Report	Contents
Balance Sheet	The financial position at a given date: what the company owns and what it owes.	Profit and Loss
Income and expenses over a period, and the result that follows from them.	Cash Flow Statement	Where the cash came from and where it went over the period.
Trial Balance	The debit and credit balances of every account. This is the control report: it must balance.	General Ledger
The detail of the movements, account by account.	Partner Ledger	The detail of the movements by third party.
Aged Receivable	Receivables classified by how long they have been overdue.	Aged Payable
Payables classified the same way.

Reading a report

Every report shares the same toolbar, which governs what it shows.

Setting	What it governs
Period	The year or the interval chosen. This is the first filter to set.
Comparison	Adds a column for the Previous Period or for a period of your choosing, and a percentage variance column.
All Journals	Restricts the report to certain journals, useful to isolate an activity kept in a separate journal.
Posted Entries	This button carries the current state as its label: Posted Entries, or With Draft Entries if drafts are included. The Draft Entries entry in its menu switches between the two. Official reports are read on the posted entries.
Report	Chooses the presentation variant. The French localisation installs one that follows the Plan Comptable Général.
Budget	Sets actuals against forecasts, where budgets are defined.

The PDF and XLSX buttons, on the left, export the report as it stands: comparison and filters included.

Annual report

Odoo lets you build the company's annual report from preconfigured templates, gathering the financial statements and the management commentary into a single document.

1. Open Accounting › Review › Audit › Annual Report.
2. Click New.
3. In the creation window, fill in the title and select the template and the period.
4. Validate: the report opens in the editor.

What Odoo prepares. The report is not a single document but a tree of sections, already structured by the template and summarised by an Index block at the top:

Section	What it carries
Attestation	The signed statement of the director or the accountant.
Balance Sheet and Profit and Loss	The financial statements for the year.
Annexes	The body of the report, subdivided: preamble, accounting principles and methods, fixed assets, inventory, financial resources, contextual information, financial position, performance, taxation.
Supporting Documents	The documents to attach to the file.

1. Open each section and complete it: management commentary, significant events, explanations of the variations.
2. Insert the financial statements into the body of the text, or attach existing documents.
3. Add an Article creates an extra section; Load a Template inserts a ready-made structure.
4. Share distributes the report, for reading or for editing.

Multi-currency

Check the company's currency. The Currencies block of the settings carries the Main Currency, the one the accounts are kept in.

Activate the currencies you use. The Currencies link in the same block opens the list: activate there the ones you invoice or buy in. An inactive currency is offered nowhere.

Keep the rates up to date.

1. Tick Automatic Currency Rates.
2. Choose the Service that supplies the rates: the European Central Bank for a company in the euro area.
3. Set the Interval: Manually, or an automatic frequency.
4. The Next Run date shows when the next update will take place; the icon beside it triggers it immediately.

Documents are entered in their original currency and converted into the company's currency for the accounts. The exchange differences arising on payment are recorded automatically in the accounts provided for that purpose.

Multi-company

Where several entities coexist in the database:

• each company has its own chart of accounts, its own journals and its own sequences;
• users' access rights determine which companies they can see;
• transactions between entities can automatically generate the mirror documents: the sales invoice of one entity creating the vendor bill of the other.

Closing the year

The Review menu of Accounting brings together the closing tools. It is arranged in the order in which they are used.

1. Make sure everything has been entered.

1. Open Accounting › Review › Control › Journal Items and replace the Posted filter with Unposted: the remaining drafts appear.
2. Deal with them or delete them. A forgotten draft throws off the reports without signalling itself anywhere other than in the warning banner.
3. Open Accounting › Review › Control › Journal Audit: the report lists the entries journal by journal, which makes it possible to spot a quiet period or a missing entry.

2. Identify what straddles the year end. The Purchases and Sales headings in the same menu flag the timing differences between the physical flows and the accounting flows:

Report	What it reveals
Bill To Receive	Goods received whose vendor bill has not arrived. The expense has to be recognised in the year.
Billed Not Received	The opposite: a bill recorded for goods not yet received.
Invoices To Be Issued	Deliveries made that have not yet been invoiced. The income belongs to the year.
Invoiced Not Delivered	Invoicing ahead of delivery.

3. Record the adjusting entries. Under the Regularization Entries heading of the Review menu of Accounting are three reports, which are not handled in the same way.

Report	What to do with it
Unrealized Currencies	It recognises the unrealised exchange differences on balances held in foreign currency. The Adjustment Entry button records the adjustment; it is always available.
Deferred Revenues and Deferred Expenses	They list the income and the expenses to be carried to another year. The Generate entry button only appears if generation is set to Manually & Grouped in the settings.

4. Deal with the fixed assets. In Accounting › Review › Inventory › Depreciation Schedule, the report summarises the year's depreciation charges; Loans Analysis, in the same place, gives the loan instalments.

5. Reconcile and match. Reconcile every bank account in full (see section 14.3), then match the items on the control accounts and substantiate the remaining balances with the Partner Ledger.

6. Substantiate account by account. Accounting › Review › Audit › Working Files opens the review files. Each file carries the year under review and tracks progress account by account, through a status with four values:

Status	What it indicates
To Review	The account has not been substantiated yet.
Reviewed	The balance has been substantiated by the person who keeps the accounts.
Supervised	The substantiation has been checked by a second pair of eyes.
Anomaly	A discrepancy has been found and is still to be dealt with.

This is the tool that makes the review of the accounts tangible: where the previous steps produce reports, this one records who substantiated what, and separates the substantiation from its supervision.

7. Close the accounts.

1. Produce the final financial statements from the Reporting menu of Accounting.
2. Open Accounting › Accounting › Closing › Lock Dates… and set the Lock Everything at the year end.
3. Once the accounts have been filed, come back to the same place and set the Hard Lock.

The detail of the five locks and their effects is given in section 14.5.2.

How it fits with the other applications

• Sales: confirmed orders generate the customer invoices.
• Purchase: orders and receipts feed the vendor bills.
• Inventory: stock movements produce the valuation entries.
• Project: time spent feeds the analytic costs and the invoicing.
• Payroll: payslips generate the personnel expense entries.