Analytic Accounting is used to manage and forecast income and expenses, to allocate them and then to analyze profitability. In short, it is a cost and revenue center.
What is it useful for?
Analytic Accounting, unlike financial accounting, is more useful for internal decisions. By managing both expenses and income, it allows forecasts to be made and allows for more guided decision making.
Financial accounting, on the other hand, focuses on data on the company's economic situation. This is usually more relevant for third parties related to the company, such as investors or creditors.
On the other hand, it is also possible to manage budgets, both globally and by project, customer, supplier, product or service, etc. After creating a budget, we can allocate costs to it and see how they are deducted from the total amount. By setting objectives we can also analyze the results based on time, if the budgets are annual, we can see the percentages for a more accurate decision making.
Advantages of Analytic Accounting
As previously mentioned, analytic accounts can be applied to any area, they are not limited to the accounts belonging to the chart of accounts. This allows us to have a global vision, since we can see how the different departments are related. We can account for both expenses and revenues within the same account.
In this way, if we want to see the profitability of a project for which we have different sources of income, such as an investment from a third party and the price charged to the end customer, versus expenses that may be, for example, materials or labor, we can charge them in the same place, thus seeing the difference between costs and benefits for later analysis.
On the other hand, it is also possible to manage budgets, both globally and by project, customer, supplier, product or service, etc. After creating a budget, we can allocate costs to it and see how they are deducted from the total amount. By setting objectives we can also analyze the results based on time, if the budgets are annual, we can see the percentages for a more accurate decision making.
How does it work in Odoo?
To be able to work with Analytic Accounting, the first thing to do is to go to Settings to activate it. Opening the Accounting application, we access the configuration, look for the Analytic Accounting section, activate the checkboxes and save the changes. With this configuration, the following will appear in the Accounting module menu: analytic accounts, analytic plans and analytic distribution models.
Plans and analytic accounts are differentiated in order to be able to manage different aspects. A simple example to understand how it works is to have the vision of a company; the analytic plans would be the departments (logistics, commercial, marketing, etc.) and the accounts will be where both income and expenses are allocated.
It is always possible to go further in the framework, for example, if we have an analytic account associated with a project, it will be possible to link it to all the departments that are affected. In this way, the profitability analysis can be as detailed as possible, drawing statistics for each project and each department.
Finally, the analytic distribution models can be configured. Having seen how we can allocate expenses and revenues to different accounts and/or plans, there is also the possibility of creating standardized rules for the allocation.
When creating these automated rules we will select the desired account and the allocation will be made according to: the prefix of the account belonging to the chart of accounts we select, by the contact or tag we have assigned to it, either customer or supplier, by product or service, by product or service categories and, in case of having multi-company, we will also be able to select the desired company.
Unlike financial accounting, in Analytic Accounting it is possible to add expenses and income without the need for invoices or for them to be posted yet, in this way it will be possible to make forecasts.
In case of having financiers, investors, creditors, etc. these revenues can be imputed within the analytics. As aforementioned, if, for example, a municipality always finances 10% of a project, it will be possible to automate the allocation of this income to the corresponding accounts and plans.
More technical information about Analytic Accounting in Odoo can be found in the documentation.
Analytic Accounting