Accounting, Advanced, General

Lots of Companies – Just one Accounting System

by Chuck Boecking

The purpose of this post is to highlight how iDempiere supports multi-book accounting where you use a single accounting system to manage many different financial entities inside a single login. Specifically, we want to profile how a global manufacturer and distributor would use iDempiere to support operations across many entities and consolidation points.

Definitions

Let’s start with a Multi-book accounting definition:

Multi-book accounting is the capability of managing and publishing multiple sets of accounting records/books using a single system within a single login. Multi-book accounting systems provide detailed transaction records while maintaining isolation between different entities.

Here is an iDempiere Organization definition:

An organization in iDempiere represents a legal or taxation entity. An organization (org for short) is often referred to as a “set of books” or accounting records.

Consolidation and Elimination Made Easier

iDempiere makes multi-book accounting inside a single session possible. Let’s look at an example where a global manages both the manufacturing and distribution of goods across multiple regions and products.

The hierarchy of entities often resembles a tree structure where the leaves are the individual entities and culminate in a global consolidation point. The below image is an example consolidation structure taken from iDempiere’s GardenWorld sample tenant.

Entities with a triangular arrow next to them are summary organizations. Entities ending in the work ‘Elim’ are elimination organizations. All remaining entities are transactional organizations.

Any given financial record (invoice, payment, material transaction, jounals etc…) can post to any transactional organization. Journals are used (if not automated) to manage elimination balances.

The typical convention for consolidation is to create an elimination entity (Organization in iDempiere terminology) for every consolidation point. Here is the typical usage for the above chart:

  • If Store West sells to Store East, elimination entry goes to Store Elimination org
  • If Fertilizer sells to Furniture, elimination entry goes Manufacturing Elimination org
  • If Furniture sells to Store West, elimination entry goes to HQ Elimination org
  • If Store West wells to HQ, elimination entry goes to HQ Elimination org

These elimination entries can be maintained manually or automatically using an iDempiere plugin from Adaxa.com.

iDempiere is capable of producing financials at any level (transactional or consolidation). If you wish to produce all financials at all levels simultaneously, you can do so with a plugin from Logilite.com.

If you wish to pursue installing either the automated elimination from Adaxa or the automated financials from Logilite, let us know here. We can arrange for a demonstration. Jon to complete…

Getting Started

To learn about the concepts in the post or any about iDempiere we encourage you to make use of the below resources…

Jon to complete…

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I am an ERP educator. I believe that open-source ERP have achieved mainstream capabilities, and as a result, more companies can create greater efficiency across their organization. I started using the iDempiere code base in 2003. Back then, it was called Compiere. In 2006, I started my first multi-million dollar installation. Since then, ADempiere has helped me create great success with distribution and manufacturing companies all over the world. My vision of success is to find companies that can best use open-source ERP to help them achieve a single, global instance that drives a discontinuous increase in profitability. I believe that organizations win when they own their technology.