Home > Financial Accounting, OpenERP > Invoices (Customer and Supplier), Accounting Vouchers and its Reconciliation in OpenERP

Invoices (Customer and Supplier), Accounting Vouchers and its Reconciliation in OpenERP

What is Reconciliation in OpenERP:

When a customer or supplier invoices is created in openerp, the state of these invoices are open. This open state means;

  • Supplier Invoices in open State: No payment is paid to supplier so far.
  • Customer Invoices in open state: No payment is received from customer so far.

Assume we have enter a payment voucher for a supplier invoice or similarly we have enter a receipt voucher for a customer invoice. In this case these invoices are still represented as open state in openerp system and customer will receive a reminder letter.

A method to inform openerp system that on behave of supplier invoice or customer invoice, openerp system paid(payment voucher) or receipt(receipt voucher) amount. This process is called reconciliation between invoices and accounting vouchers. Remember when you reconcile  invoice with voucher, the invoice state will be done from state open.

Let me give an example

Supplier Invoice and Reconciliation example in Openerp:

We enter an supplier invoice

Purchase Voucher (Impact of Supplier invoice) 1
id accounts Partner debit credit state
1 Purchases Dawood & Co 1000

Open

2 Acc Payable Dawood & Co 1000

Now After a week we enter a Bank Payment Voucher

Bank Payment Voucher 2

id accounts Partner debit credit state
3 Acc Payable Dawood & Co 1000

valid

4 Bank Acc Dawood & Co 1000

Still openerp system still treat the supplier invoice as unpaid invoice (because state is open). When we reconcile the supplier invoice and with bank payment voucher the state of invoice will be set to done. Remember reconciliation in openerp means reconcile the invoice lines and bank payment lines. In above supplier invoice reconcile example; line id 2 will be reconcile with line id 3 and status will be set of supplier invoice as done.

Purchase Voucher (Impact of Supplier invoice) 1

id accounts Partner debit credit state
1 Purchases Dawood & Co 1000

done

2 Acc Payable Dawood & Co 1000

Customer Invoice and Reconciliation example in Openerp:

We enter an Customer invoice

Sale Voucher (Impact of Customer invoice) 3

id accounts Partner debit credit state
5 Acc Receivable Naeem & Co 1000

Open

6 Sales Naeem & Co 1000

Now After a week we enter a Bank Receipt Voucher

Bank Receipt Voucher 4

id accounts Partner debit credit state
7 Bank Acc Dawood & Co 1000

valid

8 Acc Receivable Dawood & Co 1000

Still openerp system still treat the customer invoice as un-receipt invoice (because state is open). When we reconcile the customer invoice and with bank receipt voucher the state of invoice will be set to done. Remember reconciliation in openerp means reconcile the invoice lines and bank receipt lines. In above customer invoice reconcile example; line id 5 will be reconcile with line id 8 and status will be set of customer invoice as done.

Sale Voucher (Impact of Customer invoice) 3

id accounts Partner debit credit state
5 Acc Receivable Naeem & Co 1000

done

6 Sales Naeem & Co 1000

Note:

in above example we actually reconcile to accounts.

  • In supplier invoice example: Acc Payable credit side is reconcile with the debit entry of same Acc payable .
  • In customer invoice example: Acc Receivable debit side is reconcile with the credit side of same Acc Receivable.

This account level reconciliation is only possible, when you set these both account as reconcile. We can set the property of account from Financial Management → Configuration → Financial Accounting → Financial Accounts → Select Acc Payable Account in form view → select reconcile check box → save. Similarly any account will be reconcile when its reconcile option is checked.

Methods of payment and its reconciliation in openerp:

Openerp provide three form to enter account payment voucher or receipt voucher on behave of supplier invoice and customer invoice. What ever methods you used for entering accounting voucher, you also have available the reconciliation method. Below are three methods.

  1. Entries Encoding by move (Manual reconciliation and automatic reconciliation methods are available)
  2. Entries by Statement (entry time reconciliation method is available)
  3. Direct payment or receipt from invoice (automatic reconciliation will be done)

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  1. Siddique Momin
    November 10, 2010 at 6:59 am | #1

    gud information Mohsin..need to be elaborate the things like Bank Reconciliation..against the Bank Statement

    Rgds,

    Sid

    • November 11, 2010 at 4:53 am | #2

      @Sid yes brother difference exist in bank statement and bank reconciliation statement. but openerp support reconciliation of withdrawal and deposit with system invoices.
      as we and number of accountants,define bank reconciliation as, is the process to find the reasons of difference of balance between company’s bank book and bank book maintaining by banks. as explaining in this tutorial http://mohsinpage.wordpress.com/2010/08/27/step-by-step-bank-reconciliation/
      but in openerp, we can can enter whole bank statement at last day of month and at same time we also reconcile these withdrawals and deposits with company invoices. entering bank statement using single form (accounting entries automatically will be created by the openerp system) and reconciling with invoices is so far the bank reconciliation of openerp, actually openerp is not actual supports bank reconciliation statement.

  2. November 11, 2010 at 5:07 am | #3

    in my future post, i will elaborate what actually bank reconciliation is in openerp

  3. KD
    November 11, 2010 at 8:46 am | #4

    Thank you sir for clearing my doubts. I would be grateful if you explain me the use of bank reconciliation in openerp.especially the use of statements reconciliation under bank reconciliation. Would like to know the way by which we could match our bank journal entries with the bank statements.

    Best regards
    KD

  4. November 11, 2010 at 9:13 am | #5

    @KD ok soon i will dear.Usually when ever i got the time i used to post for my friends.

    • KD
      November 12, 2010 at 1:43 pm | #6

      whenever time permits do let me know the process and use of bank reconciliation. will wait for your explanation.

      KD

  5. Anas Suhaimi
    November 21, 2010 at 2:07 pm | #7

    thanks bro,

    for someone who had zero accounting knowledge two days ago, this kind of approach in tutorials on OpenERP is really helpful.

    thanks again.

    May Allah bless you.

    • November 21, 2010 at 4:42 pm | #8

      @thanks anas
      pray that i will be able to publish more such material that will be helpful for all level of friends.
      thanks again

  6. mokepigu
    March 22, 2011 at 7:49 am | #9

    Thanks Mohsin, your tutorials are very useful, especially about accounting, wait for your next tutorials!

  7. May 24, 2011 at 9:13 pm | #11

    great post! i learned alot from this and i hope you will continue writing.
    by the way i realy like using priority – great software

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