[Openerp-community] Seeking clarification on reconciliation functionality in 7.0

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[Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Phil Frost
The Problem:

I've just received a monthly statement from the bank, and I want to be
sure I did not forget to add any entries, and that the bank did not make
any wrong entries.

I'm a bit confused by the overloading of the term "reconcile" in the
interface and the documentation. In some places, it seems to refer to
matching payments to invoices -- that's not the kind of reconciliation
I'm seeking.

I thought maybe Accounting -> Periodic Processing -> Reconciliation ->
Manual Reconciliation was the place to look, but that always says "No
journal items found". I have an asset account representing the checking
account, and "allow reconciliation" is checked. There is a journal for
that account, and when I register a payment for an invoice I select that
journal for the payment method. An unposted journal entry is created
crediting A/R and debiting the checking account, and I can manually post
it (is this necessary?), but still the manual reconciliation says "no
journal items found".

Is there something I'm missing, or am I looking in the wrong place?

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Leonardo Pistone - Agile BG - Domsense
Phil,
usually in OpenERP when you read "reconciliation" it is about matching payments to invoices (more precisely, matching journal items in payable/receivable accounts together).
Leonardo


On Thu, Jan 17, 2013 at 9:39 PM, Phil Frost <[hidden email]> wrote:
The Problem:

I've just received a monthly statement from the bank, and I want to be sure I did not forget to add any entries, and that the bank did not make any wrong entries.

I'm a bit confused by the overloading of the term "reconcile" in the interface and the documentation. In some places, it seems to refer to matching payments to invoices -- that's not the kind of reconciliation I'm seeking.

I thought maybe Accounting -> Periodic Processing -> Reconciliation -> Manual Reconciliation was the place to look, but that always says "No journal items found". I have an asset account representing the checking account, and "allow reconciliation" is checked. There is a journal for that account, and when I register a payment for an invoice I select that journal for the payment method. An unposted journal entry is created crediting A/R and debiting the checking account, and I can manually post it (is this necessary?), but still the manual reconciliation says "no journal items found".

Is there something I'm missing, or am I looking in the wrong place?

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Phil Frost
On 01/18/2013 03:47 AM, Leonardo Pistone wrote:
> usually in OpenERP when you read "reconciliation" it is about matching
> payments to invoices (more precisely, matching journal items in
> payable/receivable accounts together).

Certainly the terminology is different in the US. I understand the need
to match payments to receivables and payables, and that all works fine.
However, there is still a need to verify that bank statements, credit
card statements, etc, match my records.

Typically, the way this works in US accounting systems, is that when the
statement is received, the closing balance on the statement is entered
into the accounting software, and the opening balance is set to the
closing balance from last month, which should also match what is on the
statement.

Each credit or debit to the account corresponding to the statement has a
boolean flag which defaults to false. A dialog will present a list of
all credits or debits where this flag is still false, and the user then
selects some of these credits and debits in the list until the opening
balance, plus all the credits, minus all the debits, equals the closing
balance. Credits and debits are also totalled separately, and all these
numbers (total debits, total credits, ending balance) match the
statement. Then the dialog is confirmed, and all the entries that were
selected have their flag set to true.

This way, if either I or the bank have records that differ, I'll notice.
Differences could be from mistyped numbers, account fees, making entries
to the wrong account, or fraud. How does one address this problem in
OpenERP?

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Phil Frost
I thought it might help to have a specific example of the sort of error
I'm trying to catch. Say I invoice a customer for $100. Then, I receive
a check for $100 in the mail. I register a payment against the invoice,
and now the invoice is reconciled.

Later, I take that check to the bank. But, accidentally I write the
amount to deposit as "$10" instead of "$100" at the bank, but I enter
the correct amount of "$100" in our accounting system.

Now, my records don't match the bank records of the same account. How do
I audit the bank statement from the bank to catch this error?

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Fabrice Henrion
Hello,

We are aware that there is a limitation with OpenERP 7 on these operations.
We have identified it and we are working on it (no ETA though). We also
acknowledge that certain misleading terms might need to be changed in this
context. As you have pointed out, some process flows require 2 steps when
"reconciling". The first step reconciles customer invoices with customer
payments, and the 2nd step reconciles (or should I say "compares" or
"cross-checks") a bank statement that you create in OpenERP by importing
"things" with the paper statement you receive in the mail from your bank.

In OpenERP 6.1, these "things" can be:
- customer invoices, in which case a customer payment will be created and a
journal entry will take place at the time of import. This is done through
Accounting > bank & Cash > Bank statements, or
- customer payments. This is done through Accounting > Periodical processing
> Statements > Statements reconciliation
The problem is that it can be either one of these, not both on the same
view, which makes it impossible to compare the starting and ending balance
of the OpenERP statement vs. the paper statement if you are dealing with
both open invoices and posted payments.

In OpenERP 7.0, for some reason the import of customer payments has been
removed.

Also be aware that in OpenERP 6.1 and 7.0, the concept of deposit ticket for
customer payments doesn't  exist. However it exists for supplier payments
but this is another topic. We have started a new module called
account_deposit that allows to manage deposit tickets for checks and cash,
or credit cards transaction batches. This is still in development stage and
the branch is here:
https://code.launchpad.net/~openerp-dev/openobject-addons/trunk-account_depo
sit-jam

In my opinion, we need to solve the following issues to have a working bank
statement reconciliation flow:
- introduce the concept of deposit ticket (with account_deposit).
- have only one view for the bank statements reconciliation that allows to
import open customer invoices, posted payments, or posted deposit tickets.
This view will allow to compare the starting and ending balances.
- probably improve the matching algorithm between the csv downloaded from
the bank website and the records in OpenERP (based on amounts comparison and
string distance).
- reuse the conflict management mechanisms of the interactive reconciliation
of the banking-addons (from http://www.youtube.com/watch?v=qJ5YYBJOeHM ).
- change the terms to make them more meaningful according to en_US
practices.

Best,
__
Fabrice Henrion
Director of Business Development Americas
OpenERP Inc.
260 Main Street - Suite 203
Redwood City, CA 94063
Tel: +1 (650) 307-6736
http://www.openerp.com


-----Original Message-----
From: openerp-community-bounces+fhe=[hidden email]
[mailto:openerp-community-bounces+fhe=[hidden email]] On
Behalf Of Phil Frost
Sent: Friday, January 18, 2013 10:55 AM
To: [hidden email]
Subject: Re: [Openerp-community] Seeking clarification on reconciliation
functionality in 7.0

I thought it might help to have a specific example of the sort of error I'm
trying to catch. Say I invoice a customer for $100. Then, I receive a check
for $100 in the mail. I register a payment against the invoice, and now the
invoice is reconciled.

Later, I take that check to the bank. But, accidentally I write the amount
to deposit as "$10" instead of "$100" at the bank, but I enter the correct
amount of "$100" in our accounting system.

Now, my records don't match the bank records of the same account. How do I
audit the bank statement from the bank to catch this error?

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Phil Frost
On 01/18/2013 10:36 PM, Fabrice Henrion wrote:

> In my opinion, we need to solve the following issues to have a working bank
> statement reconciliation flow:
> - introduce the concept of deposit ticket (with account_deposit).
> - have only one view for the bank statements reconciliation that allows to
> import open customer invoices, posted payments, or posted deposit tickets.
> This view will allow to compare the starting and ending balances.
> - probably improve the matching algorithm between the csv downloaded from
> the bank website and the records in OpenERP (based on amounts comparison and
> string distance).
> - reuse the conflict management mechanisms of the interactive reconciliation
> of the banking-addons (fromhttp://www.youtube.com/watch?v=qJ5YYBJOeHM  ).
> - change the terms to make them more meaningful according to en_US
> practices.

Why so complicated? The "things" that are reconciled against a bank
statement aren't invoices, deposit tickets, etc. They are simply the
debits and credits to the account, and OpenERP already has those.

One simply needs a dialog where one selects an account and enters a
statement date and closing balance. The opening balance must be the sum
of all credits and debits that have been previously reconciled through
this mechanism. The user is then presented with a list of unreconciled
debits and credits, and checks them off until adding or subtracting them
to the sum makes the new balance equal to the closing balance, and the
total debits and total credits equal to those two numbers on the
statement. The reconciliation is then confirmed, and now all of these
debits and credits that were checked are marked as reconciled. Some
automated matching algorithm is useful, but by no means necessary. A
great many (most, perhaps) companies reconcile from paper statements,
around here.

The important point here is that there is _no other way_ than a bank
statement reconciliation to set this flag on a credit or debit. Also,
_accounts_ are reconciled, not journals, and _any_ account may be
reconciled. It makes the most sense for credit cards and checking
accounts, but there are times it is useful for even income and expense
accounts.

It's typical for this statement reconciliation dialog to offer, in a
small number of clicks, to create a new accounting record for amounts
discovered on the statement that were not present in the company's
records. So if I discover a deposit of $10, I can apply it to an
invoice, or credit an interest income account. This seems to me to be a
superset of the functionality offered by "Bank Statements" in 7.0.

Lastly, this doesn't replace the already present reconciliation of
payments and invoices. There seems to be an understanding on this list
that "reconciliation" means only that. I don't know if it's OpenERP
terminology, or differing accounting jargon in other countries, or a
translation of non-english terms that is causing the confusion here, but
"to reconcile" has a broad meaning that doesn't apply to just one thing:

rec·on·cile
Verb
1. Restore friendly relations between: "she wanted to be reconciled with
her father".
2. Cause to coexist in harmony; make or show to be compatible.

An accountant in the US will probably think of reconciling accounts to
statements first, but would also understand reconciling payments to
invoices. The two are not mutually exclusive: they are reconciling two
entirely different things. I don't find the existing terminology
confusing, but this missing functionality is a pretty big deal.

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Colin Mollenhour
I'd like to echo/validate what Phil has stated. My company manages a handful of companies which are currently all using Quickbooks Online. We've out-grown it (too many customers/txns) and are looking for a new platform. OpenERP is awesome from a technical standpoint (Postges, XML-RPC, addons), but for US companies the lack of features such as account reconciliation are show-stoppers. We are perfectly willing to contribute to OSS, but when we're on such a crunched timeline to migrate we can't spend months implementing missing features and if we move to a different platform then there is no reason for us to contribute to one we aren't using.

The Quickbooks market (SMB) is enormous (larger than SAP in the US) despite their software being basically unchanged for 20 years. I see it as the single biggest opportunity for market-share gains for OpenERP's new hosted offering. But, there is no way it can topple Quickbooks without matching the basic functionality required for GAAP accounting. (OFX import would be nice too)

Alas, my company is still considering OpenERP for our new platform, but not 7.0. We are looking at 6.0 since the basic functionality we need doesn't appear to be present in newer versions but may be with the addition of some community modules for 6.0. I think community addons and customizability are great, but not when you have to use them to get your most basic feature-set. IMO the OpenERP 7.0 launch was premature and has therefore split the community between completing unfinished work on 6.x modules and porting/starting work to 7.0 leaving a huge gap in the interim. Waiting until 7.0 was 100% ready to launch and not disrupting the 6.x ecosystem would have been wise since companies like mine are left with a hard decision about jumping onto a platform that is already being abandoned or one that was "released" prematurely.

Thanks,
Colin

Sunday, January 20, 2013 8:31 AM


Why so complicated? The "things" that are reconciled against a bank statement aren't invoices, deposit tickets, etc. They are simply the debits and credits to the account, and OpenERP already has those.

One simply needs a dialog where one selects an account and enters a statement date and closing balance. The opening balance must be the sum of all credits and debits that have been previously reconciled through this mechanism. The user is then presented with a list of unreconciled debits and credits, and checks them off until adding or subtracting them to the sum makes the new balance equal to the closing balance, and the total debits and total credits equal to those two numbers on the statement. The reconciliation is then confirmed, and now all of these debits and credits that were checked are marked as reconciled. Some automated matching algorithm is useful, but by no means necessary. A great many (most, perhaps) companies reconcile from paper statements, around here.

The important point here is that there is _no other way_ than a bank statement reconciliation to set this flag on a credit or debit. Also, _accounts_ are reconciled, not journals, and _any_ account may be reconciled. It makes the most sense for credit cards and checking accounts, but there are times it is useful for even income and expense accounts.

It's typical for this statement reconciliation dialog to offer, in a small number of clicks, to create a new accounting record for amounts discovered on the statement that were not present in the company's records. So if I discover a deposit of $10, I can apply it to an invoice, or credit an interest income account. This seems to me to be a superset of the functionality offered by "Bank Statements" in 7.0.

Lastly, this doesn't replace the already present reconciliation of payments and invoices. There seems to be an understanding on this list that "reconciliation" means only that. I don't know if it's OpenERP terminology, or differing accounting jargon in other countries, or a translation of non-english terms that is causing the confusion here, but "to reconcile" has a broad meaning that doesn't apply to just one thing:

rec·on·cile
Verb
1. Restore friendly relations between: "she wanted to be reconciled with her father".
2. Cause to coexist in harmony; make or show to be compatible.

An accountant in the US will probably think of reconciling accounts to statements first, but would also understand reconciling payments to invoices. The two are not mutually exclusive: they are reconciling two entirely different things. I don't find the existing terminology confusing, but this missing functionality is a pretty big deal.

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Friday, January 18, 2013 10:36 PM
Hello,

We are aware that there is a limitation with OpenERP 7 on these operations.
We have identified it and we are working on it (no ETA though). We also
acknowledge that certain misleading terms might need to be changed in this
context. As you have pointed out, some process flows require 2 steps when
"reconciling". The first step reconciles customer invoices with customer
payments, and the 2nd step reconciles (or should I say "compares" or
"cross-checks") a bank statement that you create in OpenERP by importing
"things" with the paper statement you receive in the mail from your bank.

In OpenERP 6.1, these "things" can be:
- customer invoices, in which case a customer payment will be created and a
journal entry will take place at the time of import. This is done through
Accounting > bank & Cash > Bank statements, or
- customer payments. This is done through Accounting > Periodical processing
The problem is that it can be either one of these, not both on the same
view, which makes it impossible to compare the starting and ending balance
of the OpenERP statement vs. the paper statement if you are dealing with
both open invoices and posted payments.

In OpenERP 7.0, for some reason the import of customer payments has been
removed.

Also be aware that in OpenERP 6.1 and 7.0, the concept of deposit ticket for
customer payments doesn't exist. However it exists for supplier payments
but this is another topic. We have started a new module called
account_deposit that allows to manage deposit tickets for checks and cash,
or credit cards transaction batches. This is still in development stage and
the branch is here:
https://code.launchpad.net/~openerp-dev/openobject-addons/trunk-account_depo
sit-jam

In my opinion, we need to solve the following issues to have a working bank
statement reconciliation flow:
- introduce the concept of deposit ticket (with account_deposit).
- have only one view for the bank statements reconciliation that allows to
import open customer invoices, posted payments, or posted deposit tickets.
This view will allow to compare the starting and ending balances.
- probably improve the matching algorithm between the csv downloaded from
the bank website and the records in OpenERP (based on amounts comparison and
string distance).
- reuse the conflict management mechanisms of the interactive reconciliation
of the banking-addons (from http://www.youtube.com/watch?v=qJ5YYBJOeHM ).
- change the terms to make them more meaningful according to en_US
practices.

Best,
__
Fabrice Henrion
Director of Business Development Americas
OpenERP Inc.
260 Main Street - Suite 203
Redwood City, CA 94063
Tel: +1 (650) 307-6736
http://www.openerp.com


-----Original Message-----
From: [hidden email]
[[hidden email]] On
Behalf Of Phil Frost
Sent: Friday, January 18, 2013 10:55 AM
To: [hidden email]
Subject: Re: [Openerp-community] Seeking clarification on reconciliation
functionality in 7.0

I thought it might help to have a specific example of the sort of error I'm
trying to catch. Say I invoice a customer for $100. Then, I receive a check
for $100 in the mail. I register a payment against the invoice, and now the
invoice is reconciled.

Later, I take that check to the bank. But, accidentally I write the amount
to deposit as "$10" instead of "$100" at the bank, but I enter the correct
amount of "$100" in our accounting system.

Now, my records don't match the bank records of the same account. How do I
audit the bank statement from the bank to catch this error?

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Phil Frost
On 01/21/2013 10:40 AM, Colin Mollenhour wrote:
> We are perfectly willing to contribute to OSS, but when we're on such a
> crunched timeline to migrate we can't spend months implementing missing
> features and if we move to a different platform then there is no reason
> for us to contribute to one we aren't using.

If the discussion can come to a consensus on the proper solution for
this problem, there might be people coming out of the woodwork to
implement this. NPG had something for 6.0 [1], but since it wasn't ever
updated or adopted upstream, it seems abandoned.

As the discussion stands now, I'm not even really sure there's
acknowledgement that this is a problem that needs fixing, and much less
that there's any consensus on how it should be fixed. That makes it
unlikely anyone will step forward with a solution, knowing that their
time may be wasted in doing so.

[1]
http://bazaar.launchpad.net/~npgllc/npg-addons/6.0/files/head:/npg_bank_account_reconciliation/

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Phil Frost
In reply to this post by Fabrice Henrion
On 01/18/2013 10:36 PM, Fabrice Henrion wrote:
> We are aware that there is a limitation with OpenERP 7 on these operations.
> We have identified it and we are working on it (no ETA though).

Is there a branch? Feature specification? I'd much rather not duplicate
my efforts with something already in progress.

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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

Colin Mollenhour
In reply to this post by Phil Frost

Monday, January 21, 2013 10:57 AM


If the discussion can come to a consensus on the proper solution for this problem, there might be people coming out of the woodwork to implement this. NPG had something for 6.0 [1], but since it wasn't ever updated or adopted upstream, it seems abandoned.

This is what I was referring to when I said 6.0 was abandoned but 7.0 was missing too much functionality. This kind of community-given work not making it into 7.0 makes OpenERP a difficult adoption for US companies and severely reduces my confidence that OpenERP (esp 7) can be a US-friendly platform (at least within 1-2 years). Our company's core competency is eCommerce, not accounting, so we are looking at the path of least resistance.

We're actually considering paying $20,000 plus some insanely huge monthly fee to migrate to (redacted-a closed-source commercial solution) just because they have all (or just more) of the features we need out of the box. As a developer who loves OSS, I'd much rather adopt OpenERP and pump that money into the community in the form of adding customizations or improving existing functionality, but when major features are missing that process is too slow and our situation is very time-critical. It is this kind of steep adoption curve that turns away businesses from ultimately adopting OSS projects like OpenERP that meet 90% of the needs but leave the other 10% as an exercise for the user. All we need is something that matches Quickbooks for functionality, has a decent API, and scales to thousands of transactions per day.


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Re: [Openerp-community] Seeking clarification on reconciliation functionality in 7.0

ADPowers
This post has NOT been accepted by the mailing list yet.
In reply to this post by Phil Frost
This feature used to be in OpenERP 6.0, why has it been removed in latter versions? It is one of the most primitive requirement to be able to check off in the accounting system, against the matching records on a bank statement that comes in the mail or online, to ensure the opening and closing balances match, and that no records have been omitted...
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