Opening Balance | ERPNext

Introduction to Importing Opening Balances

Hi everyone, I'm Lynette Sharon. In the previous video, we have understood the concept of the chart of accounts and configuration of default accounts in the company master. In this video, we will help you set up your ERPNext system by importing your opening balances.

By the end of this video, you will have learned how to import accounting information from your existing system into ERPNext, how to import details of assets, and finally, how to import opening stocks. Most companies use basic accounting software or even spreadsheets to record transactions when they start and later move to ERP solutions.

Understanding Opening Balances and Data Preparation

It is very likely that there would be some data which needs to be imported into the ERPNext solution. Opening balances are balances of the ledger on the day you start to use ERPNext. Also, moving forward, the closing balance of the first year would be the opening balance of the next year.

Before you migrate data from any legacy accounting software to ERPNext, you need to close the books of accounting. This will ensure that the total assets is equal to the total liabilities, and your opening balance is very accurate.

For some accounts, it is sufficient to import just the dollar values. For example, the cash you hold on the day you start to use ERPNext is the opening balance for your cash account. Well, for some other accounts, you need to capture more data. For example, the creditor's account, which represents the amount a company owes to its suppliers in the form of unpaid invoices. We need to capture the supplier's name as well as the invoice number along with the dollar values. In such cases, we need to use multiple tools in order to import the opening balances.

Importing Ledger Balances via Journal Entry

To update the opening balance of ledgers like cash, bank, etc., we need just the dollar values. We can use the journal entry for this. To navigate journal entries, from home, click on Accounting and then on Journal Entry under General Ledger. Click on Add Journal Entry and select Company and Posting Date.

Next, set Entry Type to Opening Entry, and all the ledgers are populated in the accounting entries table. Set the opening balance for each ledger by entering values in the debit or credit column. Finally, save and submit the journal entry.

If there are a lot of ledgers, you can post multiple journal entries and select a batch of ledgers in each journal entry. You can use the temporary opening ledger to balance the debit and credit value. Once all the opening balances have been imported correctly, the balance against temporary opening becomes zero.

Importing Existing Assets and Depreciation

Asset record represents physical or virtual assets of the company. Buildings, furniture, machinery are examples of physical assets. Software that the company has purchased which will be used for multiple years is an example of a virtual asset.

Generally, assets have a useful lifetime of multiple years and are partially depreciated every year. To view the asset screen, from home, click on Assets and then on Asset under the Report and Masters. You can also type "asset" in the awesome bar and click on Asset List in the results shown.

Click on Add Asset and enter details like item code, asset name, and location. Tick "is existing asset" checkbox, which will allow you to add the gross purchase amount, purchase date, and available for use date. Also, set value in opening accumulated depreciation. Save and submit the asset. Once the asset is created, create a journal entry to update the ledgers.

Importing Opening Stock with Stock Reconciliation

Opening inventory is the inventory the company carries on the day it starts to use ERPNext. To import opening balances of items, Stock Reconciliation is used. To navigate to Stock Reconciliation, from home, click on Stock and then on Stock Reconciliation under Tools.

Click on Add Stock Reconciliation and enter posting date, posting time, and set the purpose to Opening Stock. Next, set the item code, warehouse, quantity, and valuation rate. Batch number and serial number of items can also be entered here. You can click on download and prepare the data in a spreadsheet and then upload it into the table.

Set the difference account to Temporary opening and select the cost center. Finally, save and submit. This will update the opening stock in warehouses and also opening balances in accounts linked to warehouses.

Importing Opening Sales and Purchase Invoices

The details of the unpaid invoices which have been sent to to clients and which have been received from vendors can be imported via the opening invoice creation tool. To navigate to this tool, from home, click on Accounting and then on Opening Invoice Creation Tool under Opening and Closing. Select the company, set the invoice type to Purchase or Sales, and enter cost center and accounting dimension details.

Next, enter the details of the individual invoices like client or vendor name, total outstanding amount, quantity in the invoices table. You can also download the format and prepare the data in a spreadsheet and upload it. Finally, click on Create Invoices.

Conclusion and Next Steps

Hope you found this video helpful in understanding how to create opening balances in ERPNext. You can read more on ERPNext at docs.erpnext.com. In the next video, we will learn how to create invoices and manage taxes in ERPNext.