Before you start implementation, lets get familiar with the terminology that is used and some basic concepts in ERPNext.


Basic Concepts

Company

This represents the Company records for which ERPNext is setup. With this same setup, you can create multiple Company records, each representing a different legal entity. The accounting for each Company will be different, but they will share the Customer, Supplier and Item records.

Setup > Company

Customer

Represents a customer. A Customer can be an individual or an organization. You can create multiple Contacts and Addresses for each Customer.

Selling > Customer

Supplier

Represents a supplier of goods or services. Your telephone company is a Supplier, so is your raw materials Supplier. Again, a Supplier can be an individual or an organization and has multiple Contacts and Addresses.

Buying > Supplier

Item

A Product, sub-product or Service that is either bought, sold or manufactured and is uniquely identified.

Stock > Item

Account

An Account is a heading under which financial and business transactions are carried on. For example, “Travel Expense” is an account, “Customer Zoe”, “Supplier Mae” are accounts. ERPNext creates accounts for Customers and Suppliers automatically.

Accounts > Chart of Accounts

Address

An address represents location details of a Customer or Supplier. These can be of different locations such as Head Office, Factory, Warehouse, Shop etc.

Selling > Address

Contact

An individual Contact belongs to a Customer or Supplier or is just an independent. A Contact has a name and contact details like email and phone number.

Selling > Contact

Communication

A list of all Communication with a Contact or Lead. All emails sent from the system are added to the Communication table.

Support > Communication

Price List

A Price List is a place where different rate plans can be stored. It’s a name you give to a set of Item Prices stored under a particular List.

Selling > Price List

Buying > Price List


Accounting

Fiscal Year

Represents a Financial Year or Accounting Year. You can operate multiple Fiscal Years at the same time. Each Fiscal Year has a start date and an end date and transactions can only be recorded in this period. When you “close” a fiscal year, it’s balances are transferred as “opening” balances for the next fiscal year.

Setup > Company > Fiscal Year

Cost Center

A Cost Center is like an Account, but the only difference is that its structure represents your business more closely than Accounts. For example, in your Chart of Accounts, you can separate your expenses by its type (i.e., travel, marketing, etc.). In your Chart of Cost Centers, you can separate them by product line or business group (e.g., online sales, retail sales, etc.).

Accounts > Chart of Cost Centers

Journal Entry

A document that contains General Ledger (GL) entries and the sum of Debits and Credits of those entries is the same. In ERPNext you can update Payments, Returns, etc., using Journal Entries.

Accounts > Journal Entry

Sales Invoice

A bill sent to Customers for delivery of Items (goods or services).

Accounts > Sales Invoice

Purchase Invoice

A bill sent by a Supplier for delivery of Items (goods or services).

Accounts > Purchase Invoice

Currency

ERPNext allows you to book transactions in multiple currencies. There is only one currency for your book of accounts though. While posting your Invoices with payments in different currencies, the amount is converted to the default currency by the specified conversion rate.

Setup > Currency


Selling

Customer Group

A classification of Customers, usually based on market segment.

Selling > Setup > Customer Group

Lead

A person who could be a future source of business. A Lead may generate Opportunities. (from: “may lead to a sale”).

CRM > Lead

Opportunity

A potential sale. (from: “opportunity for a business”).

CRM > Opportunity

Quotation

Customer’s request to price an item or service.

Selling > Quotation

Sales Order

A note confirming the terms of delivery and price of an Item (product or service) by the Customer. Deliveries, Work Orders and Invoices are made on basis of Sales Orders.

Selling > Sales Order

Territory

A geographical area classification for sales management. You can set targets for Territories and each sale is linked to a Territory.

Selling > Setup > Territory

Sales Partner

A third party distributer / dealer / affiliate / commission agent who sells the company’s products usually for a commission.

Selling > Setup > Sales Partner

Sales Person

Someone who pitches to the Customer and closes deals. You can set targets for Sales Persons and tag them in transactions.

Selling > Setup > Sales Person


Buying

Purchase Order

A contract given to a Supplier to deliver the specified Items at the specified cost, quantity, dates and other terms.

Buying > Purchase Order

Material Request

A request made by a system User, or automatically generated by ERPNext based on reorder level or projected quantity in Production Plan for purchasing a set of Items.

Buying > Material Request


Stock (Inventory)

Warehouse

A logical Warehouse against which stock entries are made.

Stock > Warehouse

Stock Entry

Material transfer from a Warehouse, to a Warehouse or from one Warehouse to another.

Stock > Stock Entry

Delivery Note

A list of Items with quantities for shipment. A Delivery Note will reduce the stock of Items for the Warehouse from where you ship. A Delivery Note is usually made against a Sales Order.

Stock > Delivery Note

Purchase Receipt

A note stating that a particular set of Items were received from the Supplier, most likely against a Purchase Order.

Stock > Purchase Receipt

Serial Number

A unique number given to a particular unit of an Item.

Stock > Serial Number

Batch

A number given to a group of units of a particular Item that may be purchased or manufactured in a group.

Stock > Batch

Stock Ledger Entry

A unified table for all material movement from one warehouse to another. This is the table that is updated when a Stock Entry, Delivery Note, Purchase Receipt, and Sales Invoice (POS) is made.

Stock Reconciliation

Update Stock of multiple Items from a spreadsheet (CSV) file.

Stock > Stock Reconciliation

Quality Inspection

A note prepared to record certain parameters of an Item at the time of Receipt from Supplier, or Delivery to Customer.

Stock > Quality Inspection

Item Group

A classification of Item.

Stock > Setup > Item Group


Human Resource Management

Employee

Record of a person who has been in present or past, in the employment of the company.

Human Resources > Employee

Leave Application

A record of an approved or rejected request for leave.

Human Resource > Leave Application

Leave Type

A type of leave (e.g., Sick Leave, Maternity Leave, etc.).

Human Resource > Leave and Attendance > Leave Type

Payroll Entry

A tool that helps in creation of multiple Salary Slips for Employees.

Human Resource > Payroll Entry

Salary Slip

A record of the monthly salary given to an Employee.

Human Resource > Salary Slip

Salary Structure

A template identifying all the components of an Employees’ salary (earnings), tax and other social security deductions.

Human Resource > Salary and Payroll > Salary Structure

Appraisal

A record of the performance of an Employee over a specified period based on certain parameters.

Human Resources > Appraisal

Appraisal Template

A template recording the different parameters of an Employees’ performance and their weightage for a particular role.

Human Resources > Employee Setup > Appraisal Template

Attendance

A record indicating presence or absence of an Employee on a particular day.

Human Resources > Attendance


Manufacturing

Bill of Materials (BOM)

A list of Operations and Items with their quantities, that are required to produce another Item. A Bill of Materials (BOM) is used to plan purchases and do product costing.

Manufacturing > BOM

Workstation

A place where a BOM operation takes place. It is useful to calculate the direct cost of the product.

Manufacturing > Workstation

Work Order

A document signaling production (manufacture) of a particular Item with specified quantities.

Manufacturing > Work Order

Production Planning Tool

A tool for automatic creation of Work Orders and Purchase Requests based on Open Sales Orders in a given period.

Manufacturing > Production Planning Tool


Website

Blog Post

A short article that appears in the “Blog” section of the website generated from the ERPNext website module. Blog is a short form of “Web Log”.

Website > Blog Post

Web Page

A web page with a unique URL (web address) on the website generated from ERPNext.

Website > Web Page


Setup / Customization

Custom Field

A user defined field on a form / table.

Setup > Customize ERPNext > Custom Field

Global Defaults

This is the section where you set default values for various parameters of the system.

Setup > Data > Global Defaults

A title that can be set on a transaction just for printing. For example, you want to print a Quotation with a title “Proposal” or “Pro forma Invoice”.

Setup > Branding and Printing > Print Headings

Terms and Conditions

Text of your terms of contract.

Selling > Setup > Terms and Conditions

Unit of Measure (UOM)

How quantity is measured for an Item. E.g., Kg, No., Pair, Packet, etc.

Stock > Setup > UOM

Before you start managing your Operations in EPRNext, you must first become familiar with the system and the terms used. For this we recommend implementation should happen in two phases.

  • Test Phase, where you enter dummy records representing your day to day transactions and a Live Phase, where we start entering live data.

Test Phase

  • Read the Manual
  • Create a free account at www.jbstech.org  (the easiest way to experiment).
  • Create your first Customer, Supplier and Item. Add a few more so you get familiar with them.
  • Create Customer Groups, Item Groups, Warehouses, Supplier Groups, so that you can classify your Items.
  • Complete a standard sales cycle – Lead > Opportunity > Quotation > Sales Order > Delivery Note > Sales Invoice > Payment (Journal Entry)
  • Complete a standard purchase cycle – Material Request > Purchase Order > Purchase Receipt > Payment (Journal Entry).
  • Complete a manufacturing cycle (if applicable) – BOM > Production Planning Tool > Work Order > Material Issue
  • Replicate a real life scenario into the system.
  • Create custom fields, print formats etc as required.

Live Phase

Once you are familiar with ERPNext, start entering your live data!

  • Clean up the account of test data or better, start a fresh install.
  • If you just want to clear your transactions and not your master data like Item, Customer, Supplier, BOM etc, you can click delete the transactions of your Company and start fresh. To do so, open the Company Record via Setup > Masters > Company and delete your Company’s transactions by clicking on the Delete Company Transactions button at the bottom of the Company Form.
  • You can also setup a new account at https://www.jbstech.org, and use the 30-day free trial.
  • Setup all the modules with Customer Groups, Item Groups, Warehouses, BOMs etc.
  • Import Customers, Suppliers, Items, Contacts and Addresses using Data Import Tool.
  • Import opening stock using Stock Reconciliation Tool.
  • Create opening accounting entries via Journal Entry and create outstanding Sales Invoices and Purchase Invoices.

The source code is an Open Source software. It is open for anyone to understand, extend or improve. And it is free!

Advantages of an Open Source software are:

  1. You can choose to change your service provider anytime.
  2. You can host the application anywhere, including your own server to gain complete ownership and privacy of the data.
  3. You can access a community to support you, incase you need help. You are not dependant on your service provider.
  4. You can benefit from using a product that is critiqued and used by a wide range of people, who have reported hundreds of issues and suggestions to make this product better, and this will always continue.

ERPNext Source Code

ERPnext source repository is hosted at GitHub and can be found here


Alternatives

There are many Open Source ERPs you can consider. Popular ones are:

  1. Odoo
  2. OpenBravo
  3. Apache OfBiz
  4. xTuple
  5. Compiere (and forks)

ERPNext is a modern tool that covers not only accounting but also all other business functions, on an integrated platform. It has many benefits over both traditional accounting as well as ERP applications.

Benefits over traditional accounting software:

  • Do a lot more than just accounting! Manage inventory, billing, quotes, leads, payroll and a lot more.
  • Keep all your data safe and in one place. Don’t keep hunting for data when you need it across spreadsheets and different computers. Manage everyone on the same page. All users get the same updated data.
  • Stop repetitive work. Don’t enter the same information from your word processor to your accounting tool. It’s all integrated.
  • Keep track. Get the entire history of a customer or a deal in one place.

Benefits over big ERPs

  • $$$ – Saves money.
  • Easier to configure: Big ERPs are notoriously hard to setup and will ask you a zillion questions before you can do something meaningful.
  • Easier to use: Modern web like user interface will keep your users happy and in familiar territory.
  • Open Source : This software is always free and you can host it anywhere you like.

If you are already convinced you need an all-in-one system for your organization, you can skip this page.

Today, small & medium sized businesses (SMEs) are not so different from large/enterprises. The SMEs face similar complexities as a large businesses do, but have limited resources to deal with such complexity.

Small businesses (like their bigger counterparts) have to:

  • do accounts to keep track of sales/ purchases
  • pay taxes to the government
  • pay their employees
  • manage deliveries within promised timelines
  • deliver quality goods and services
  • communicate with customers, answer queries And generally try to keep everyone happy.

Large enterprises have been able to invest 100s of millions of dollars in very sophisticated systems such as SAP. Systems like SAP are able to handle requirements from such large enterprises to bring their multi countrymulti companymulti currency, global businesses into a single platform. This has helped them achieve consolidation of data / records related to basic process such as accounting, taxation, payroll, reporting and supply chain to name a few.

In contrast to large enterprises, SMEs have been left out of the 1st wave of digital revolution (1995-2015). The main reason for being left out is because they dont have the $ power to license, hire programmers and customize such software to match their needs. Systems like SAP have been no-go for most SMEs. Such systems need a minimum CAPEX or OPEX layout of $100k (Yes, One Hundred Thousand Dollars) and upwards. Even with cloud offerings (Software as a Service, SAAS) from such vendors, there is no easy Do It Yourself (DIY) people can feel confident about.

So even today, small businesses continue to struggle to keep things organized. They often use a mix of applications and tools such as spreadsheets, accounting softwares, web based CRMs to manage their day to day record keeping. As a consequence, they have to access different systems to understand customers master data, sales, cash flows or profitability. The information exists in silos. The data is hard to combine to get useful insights or alerts. As a consequence, SMEs are reactive instead of being proactive in their day to day operations. With such a constrained way of working, there is limited scope for growth.

ERPNext addresses some of the above fundamental problems of: * affordability : It is a Free & Open Source Software, freely available to download, install * completeness : All necessary modules are covered Full List * customizability : Easy to add fields, or to add more features * efficiency : Computing requirements are relatively low (cheaper to host and manage) * wholesomeness : One system & one database that allows multiple users to record transactions or extract data, simultaneously.

What is ERPNext?

ERPNext is a full featured business management solution that helps SMEs to record all the business transactions in one system. Further, SMEs can use it to make informed, fact based, timely decisions & remain ahead of the competition. It serves as the backbone of a business to add strength, transparency and control to your growing enterprise.

Among other things, ERPNext will help you to: * Track all invoices and payments. * Know what quantity of which product is available in stock. * Identify and track your key performance indicators (KPI’s). * Identify open customer queries. * Manage payroll. * Assign tasks and follow up on them. * Maintain a database of all your customers, suppliers and their contacts. * Prepare quotes. * Tracking your budgets and spending * Determine effective selling price based on the actual raw material, machinery and effort cost. * Get reminders on maintenance schedules. * Publish your website.

And a lot lot lot more.

Is ERPNext only for SMEs?

ERPNext could be used by SMEs as well as large enterprises. There is no known limitation or performance issues. So far it has scaled well. We know of several retail chains in Africa and a highly regarded equities trading company in India (with 1000+ employees) that uses ERPNext.

ERPNext Conference 2018
20 Oct 2018

ERPNext Conference 2018

October 24 – 27, Mumbai

Days 1 & 2: Contribution Sprint

In Association with

KJ Somaiya College of Engineering
Dates: 24th and 25th of October

For Developers
  • Bug quashing sprint: Try and fix all issues tagged as “bug” on GitHub Issues.
  • Build a feature: Scratch your own itch by contributing a feature you really want in the product.
  • Test Coverage Sprint: Add test coverage, refactor tests where missing.
  • Documentation Sprint: Add missing developer documentation.
For Non Developers
  • Issue Cleanup Sprint: Review and respond to un-replied issues. Review all old issues and either tag them or close them if they are not relevant.
  • Documentation Sprint: Writing missing documentation for ERPNext modules or features.
  • Article Writing Sprint: Write general purpose articles on ERP systems, benefits, challenges, implementation strategies that can be published on ERPNext.org

  • Venue: K.J. Somaiya College of Engineering (5th Floor), Vidyavihar
  • Event starts at 9.30am
  • Lunch at KJ Somaiya Canteen, included in the cost
  • Group Dinner (optional, will be decided on the spot)

Day 3 & 4: Unconference

The conference will be planned as an unconference and will be streamed live!

26th and 27th October, 2018
Mysore Association Auditorium,
King’s Circle, Matunga, Mumbai – 400019,

Day 3: Sessions on 26th October

1. Upcoming Contributions

What are the list of planned contributions? Sneak preview / demo of features being developed by various teams in the community. What are best practices while preparing and planning for a contribution?

2. Implementation Stories, Challenges and Best Practices

How did ERPNext benefit the organization? What are some nice hacks that worked well for a company? What are the challenges in implementing ERPNext? How to manage organization change? How to handle migration? How to handle integrations?

3. Service Provider Stories, Challenges and Best Practices

How to make money from ERPNext? How do we balance the needs of service providers against end users? How did successful service providers make money? What are plans of service providers? How does competition affect the service providers? What are challenges faced by service providers?


Day 4: Sessions on 27th October

1. Contribution and Volunteering

What are the things people can contribute with? What are the challenges faced by contributors? Who are the best contributors? How do contributors benefit? How can people volunteer for non technical activities? How do we improve the co-ordination between the volunteers? What has been the story so far?

2. Vision of ERPNext

What should be the long term vision of ERPNext? Should it focus on being the best product for the end user, or the service provider? What should or should not be a part of ERPNext? What are the next big things users will want, AI? How roles do all of us have to play in this vision?

3. Role of the ERPNext Foundation

What are the goals of the foundation? What should be the role of the foundation? Should foundation do more events, services, features? Should the foundation hire more developers? How should the foundation be governed?

If you want to talk in any of the sessions, please email your slides to faris@erpnext.com

  • Venue: Mysore Association Auditorium, King’s Circle, Matunga
  • Breakfast starts at 8.30am
  • Lunch break will be at 1pm
  • Dinner starts at 6.30pm at Matunga Gujarati Seva Mandal

Payment done by the customer before accepting delivery of the product is an Advance Payment. For Orders of high value, the business houses expect to receive advance.

For Example: Consider a customer- Jane D’souza placing an order for a double bed costing $10000 She is asked to give some advance before the furniture house begins work on her order. She gives them $5000 in cash.

Once Sales Order or Purchase Order is submitted, you will find option to create Advance Payment entry against it.

To directly create Advance Payment Entry, Go to:

Accounts > Documents > Journal Entry > New Journal Entry

Select a Voucher Type based on a mode in which advance payment is made.

Since the customer has given $5000 as cash advance,it will be recorded as a credit entry against the customer. To balance it with the debit entry [as per the Double accounting system] enter $5000 as debit against the company’s cash account. In the row “Is Advance” click ‘Yes’.

Figure 1 : Journal Entry -Advance Entry

Advace Payment

Double Entry Accounting

Double entry bookkeeping is a system of accounting in which every transaction has a corresponding positive and negative entry : debits and credits. Every transaction involves a debit entry in one account and a credit entry in another account. This means that every transaction must be recorded in two accounts; one account will be debited because it receives value and the other account will be credited because it has given value.

Figure 2: Transaction and Difference Entry

Advace Payment

Save and submit the Journal Entry. If this document is not saved it will not be pulled in other accounting documents.

When you make a new Sales Invoice for the same customer, mention the advance in the Sales Invoice Form.

To link the Sales Invoice to the Journal Entry which mentions the advance payment entry, click on ‘Get Advances Received’. Allocate the amount of advance in the advances table. The accounting will be adjusted accordingly.

Figure 3: Receive Advance

Advace Payment

Save and submit the Sales Invoice.

In ERPNext, you can make accounting entries in multiple currency. For example, if you have a bank account in foreign currency, you can make transactions in that currency and system will show bank balance in that specific currency only.

Setup

To get started with multi-currency accounting, you need to assign accounting currency in Account record. You can define Currency from Chart of Accounts while creating Account.

Set Currency from Chart of Accounts

You can also assign / modify the currency by opening specific Account record for existing Accounts.

Modify Account Currency

For Customer / Supplier (Party), you can also define it’s billing currency in the Party record. If the Party’s accounting currency is different from Company Currency, you should mention Default Receivable / Payable Account in that currency.

Customer Accounting Currency

Once you defined Currency in the Account and selected relevant accounts in the Party record , you are ready to make transactions against them. If Party account currency is different from Company Currency, system will restrict to make transaction for that party with that currency only. If account currency is same as Company Currency, you can make transactions for that Party in any currency. But accounting entries (GL Entries) will always be in Party Account Currency.

You can change accounting currency in Party / Account record, until making any transactions against them. After making accounting entries, system will not allow to change the currency for both Party / Account record.

In case of multi-company setup, accounting currency of Party must be same for all the companies.

Exchange Rates

When dealing with multiple currencies, ERPNext has the Currency Exchange module for managing exchange rates. It allows you to save the exchange rate quotes you require.

For foreign currency transactions, ERPNext checks Currency Exchange for any matching record. If this fails, ERPNext will attempt to get the exchange rate quote from fixer.io. If this still fails, then the exchange rate will have to be entered manually.

Exchange Rate Selection

ERPNext automatically fetches the latest exchange rate available.

Transactions

Sales Invoice

In Sales Invoice, transaction currency must be same as accounting currency of Customer if Customer’s accounting currency is other than Company Currency. Otherwise, you can select any currency in Invoice. On selection of Customer, system will fetch Receivable account from Customer / Company. The currency of receivable account must be same as Customer’s accounting currency.

Now, in POS, Paid Amount will be entered in transaction currency, instead of earlier Company Currency. Write Off Amount will also be entered in transaction currency.

Outstanding Amount and Advance Amount will always be calculated and shown in Customer’s Account Currency.

Sales Invoice Outstanding

Purchase Invoice

Similarly, in Purchase Invoice, accounting entries will be made based on Supplier’s accounting currency. Outstanding Amount and Advance Amount will also be shown in the supplier’s accounting currency. Write Off Amount will now be entered in transaction currency.

Journal Entry

In Journal Entry, you can make transactions in different currencies. There is a checkbox “Multi Currency”, to enable multi-currency entries. If “Multi Currency” option selected, you will be able to select accounts with different currencies.

Journal Entry Exchange Rate

In Accounts table, on selection of foreign currency account, system will show Currency section and fetch Account Currency and Exchange Rate automatically. You can change / modify the Exchange Rate later manually. Debit / Credit amount should be entered in Account Currency, system will calculate and show the Debit / Credit amount in Company Currency automatically.

Journal Entry in multi currency

Reports

General Ledger

In General Ledger, system shows debit / credit amount in both currency if filtered by an Account and Account Currency is different from Company Currency.

General Ledger Report

Accounts Receivable / Payable

In Accounts Receivable / Payable report, system shows all the amounts in Party / Account Currency.

Accounts Receivable Report

If you offer a service which requires renewal in the certain time period (yearly, monthly, quarterly etc.), you can use Subscription feature to track them. Subscription master captures all the details required for the auto-creation of Sales Invoice on subscription expiry.

Let’s consider a use-case of ERPNext subscription itself. Our hosting plans are available on yearly basis. Each customer’s account has subscription expiry date, after which customer must renew their subscription with us.

To manage client’s subscription expiry and auto-generation of Sales Invoice for the renewal, we use Subscription feature.

Subscription Validity

Start Date: Day from when the subscription will be valid.

Days Until Due: Enter no. of days for which subscription will be valid.

Based on the subscription start and end date, actual dates for invoices will be calculated.

Subscription Plan

The subscription plan is linked to an Item, for which Sales Invoice is created.

Subscription

Taxes

Select Taxes and Charges which will be applicable in the Sales Invoice created against this Subscription.

Discounts

Mention discounts if any which will be applied on this particular subscription.

Difference Between Subscription and Auto-Repeat

Before Subscription feature was added in ERPNext, the current Auto-Repeat feature was available as a Subscription only.

The Auto-Repeat feature which is applicable for multiple transactions like Sales Order, Purchase Order, Invoices, Journal Entry etc. Whereas based on Subscription, only Sales Invoices are auto-created.

Disabled: It will stop to make auto recurring documents against the subscription