Odoo Accounting: The first and most essential step
I have always been amazed after all these years inspecting implementations to see how badly the Odoo accounting had been overlooked and neglected. And yet, one should know:
- You CANNOT install most modules concerning sales or purchasing inside Odoo without installing the accounting first. If accounting is not installed, Odoo will install it automatically before you can access any other major module.
- It is a major mistake to go for ERP if you do not know about accounting because accounting remains the backbone of the system and is meant to collect and centralize all information avout values, dates, fluxes, events and valuations.
- Even if you do not want to use analytic functions, the basic accounting settings MUST be setup. Most clients already had an accounting before meeting you and that can either be found on paper or in some third party legacy software.
One simple advice about Odoo accounting: NEVER start using a system and moving data inside an Odoo database before all accounting has been installed and setup in details
The minimal effort for the most basic Odoo accounting consists in following these major steps:
- define your fiscal year (example: 2016 to 2017 for a 1 year standard accounting fiscal year)
- define he periods inside your fiscal years: in most cases, these periods will be the months of the year. And yet, you should find 13 periods instead of 12 since the first period also called ‘opening period’ will contain data inputs relating the situation and account balances before the fiscal year get started.
- define your accounts according to your National Chart of Account principles: Each account can be give a code and a name. Odoo accounting is really not picky about account denominations and codes. Yet, for more visibility, my advice is to input into “code” field the account number as stated in the standard or inherited chart of account. The name and description are up to you. In most cases, when the Chat of Accounts starts becoming big, it comes very often from the generic growth of the ‘Account Receivable’ category; in other words, more and more clients adding up each year. By default, Odoo accounting will plug all your clients into the “Account Receivable” general account. And yet, in the long run, this may become a big problem if your client database starts getting big and you start having similar partner names due to franchised clients for instance. In that case, a general ledger or trial balance will look very messy if you have a hundred different partners with the same name all thrown into one account..
- define your banks
- define your tax rules and rates for both purchasing and sales
I have seen with my own eyes so many installations where that basic work had not been done at all. I have witnessed Indonesian business owners asking me why the financial reports were not coming after the system had been used for sometimes over a year?! Total disaster…
There is no “best way” to setup Odoo accounting. You can either do it from the interface itself or use the methods described in the Odoo accounting setup article.