Does your accountant run books in 1C, but you don’t understand the real state of the business? Finances in Excel, exchange rate differences calculated manually? Don’t know if the business is profitable until you close the quarter? This is the classic gap: operational accounting in one place, financial accounting in another. There should be one General Ledger.

In this article, we’ll break down how to automate financial accounting — from the chart of accounts to period closing with exchange rate differences.

How is financial accounting different from management accounting?

These two concepts are often confused. In short:

• Financial accounting — formal, by standards (GAAP or IFRS). General Ledger, chart of accounts, double-entry, balance sheet, income statement. Needed for tax authorities, audit, investors.
• Management accounting — for the owner. Shows profitability of business lines, client profitability, manager effectiveness. Not regulated by standards.

In large companies, these are two separate systems — accounting in 1C or SAP plus custom BI dashboards. For small businesses, that separation is an unaffordable luxury. You need one system that does both. We wrote separately about the management accounting side.

Why won’t Excel replace a General Ledger?

Excel is a powerful calculator. But it’s not an accounting system. Here’s what it can’t do:

Function	Excel	ERP with General Ledger
Double-entry (debit = credit)	Manual, error-prone	Automatic on every document
Entries from source documents	Manual re-typing	Automatic from invoices, payments, stock
FX differences	Formulas break	Automatic at central bank rates
Period closing	Many hours manual	3 clicks
VAT accounting	Separate spreadsheet	Automatic tax invoices
Audit trail	Absent	Immutable change history
Multi-currency	RATE() formulas	Dual amounts in every line

As we discussed in the Excel vs ERP article — for small businesses, Excel works up to a point. For financial accounting, that point arrives quickly.

How does automated financial accounting work in ERPJS?

Key idea: every business operation automatically creates an accounting journal entry. You don’t need to re-type data from invoices into the General Ledger — the system does it.

Here’s what it looks like in practice:

Operation	Automatic journal entry
Issued invoice to customer	Debit “Accounts Receivable” / Credit “Sales Revenue”
Customer paid	Debit “Bank” / Credit “Accounts Receivable”
Received goods from supplier	Debit “Inventory” / Credit “Accounts Payable”
Sold goods	Debit “Cost of Goods Sold” / Credit “Inventory”
Accrued payroll	Debit “Payroll Expense” / Credit “Payroll Liabilities”
Accrued fixed asset depreciation	Debit “Depreciation Expense” / Credit “Accumulated Depreciation”

The accountant no longer copies data from documents into the journal — they control the correctness of settings and review ready-made entries. If needed — they manually create specific entries (adjustments, reserves).

The chart of accounts is configured for your business: assets, liabilities, equity, revenue, expenses. ERPJS supports national, international, or any custom scheme.

How to close a financial period: 3 steps

Closing a month/quarter/year in Excel takes 2-3 days of accountant work. In ERPJS — 3 sequential steps via the “Closing Books” register:

Step 1: Revalue foreign currency balances. The system automatically recalculates balances in foreign currencies at the central bank rate on the closing date. The difference between old and new value hits the “FX Differences” account — gains or losses.

Step 2: Close revenue and expense accounts. Balances of all income and expense accounts transfer to the financial result account. You get the net profit or loss for the period.

Step 3: Distribute financial result. Net result transfers to the retained earnings account in equity.

All three operations are reversible — if you find an error, remove the flag, fix it, close again. No need to redo the entire Excel.

Multi-currency and FX differences

If you work with imports, exports, or have foreign currency accounts — FX differences can eat into margins. In Excel, they’re calculated manually with errors.

In ERPJS, multi-currency is built-in:

• Dual amounts. Every journal line stores the amount in both base currency and foreign currency.
• Auto rates. The system fetches current rates daily from central bank APIs. No manual updates.
• Period-end revaluation. All foreign currency balances are automatically recalculated at the closing date rate. FX difference posts to P&L.
• Currency purchase/sale. A separate register for exchange operations with automatic conversion rate calculation.

Budgeting: plan vs actual

Financial accounting shows what happened. Budgeting — what should happen. In an ERP, these two systems are integrated.

How it works:

1. Create a budget for year/quarter/month. By each account, by each department or project.

2. Actuals accumulate automatically. All entries in budget accounts add up on their own — from supplier invoices, payments, payroll.

3. The system shows variances. Plan 150K, actual 127K, remaining 23K. Or: plan 150K, actual 168K, overrun 18K.

For each department, you see how it fits within budget — before the quarter ends. You can react in time.

Analytical objects: accounting in 3 dimensions

The balance sheet shows “how much was spent.” But the director wants to know on what it was spent — by line, project, department.

In ERPJS, every journal entry can have analytical objects: department (Sales / Production / Admin), project (Site A / Site B), cost center (Office / Warehouse / Production floor).

Then you build reports by dimensions:

• P&L by department — which brings more
• Expenses by project — whether we hit margin
• Balance by cost center — where excess spending is

This is the management side of financial accounting. Classical bookkeeping doesn’t give this — it reports one number for the whole company. Why this is critical — we showed in our article on real profit.

Which reports does the manager get?

ERPJS produces a full set of financial reports at the click of a button:

Report	What it shows	For whom
General Ledger	All entries for the period	Accountant, auditor
Trial Balance	Opening and closing balances, movements	Accountant, manager
Balance Sheet	Assets = liabilities + equity	Manager, investor
Income Statement (P&L)	Revenue, expenses, net profit	Manager, owner
Analytical Balance	Balances by object (departments, projects)	Manager
Account Correspondence	Which accounts clear against which	Accountant
Budget vs Actual	Variances from plan	Manager, CFO

All reports are built for any period — month, quarter, year, or custom dates. Excel export — for working with reports outside the system.

Who benefits from automated financial accounting?

ERPJS as a financial accounting system is useful for:

• LLCs on general taxation — need full General Ledger, balance sheet, VAT
• Importers/exporters — multi-currency and FX differences are critical
• Manufacturing companies — cost accounting, calculation, shop-floor budgets. See our manufacturing article.
• Companies with multiple legal entities — multi-company, consolidation
• Project-based businesses — accounting by project, margin per project

For sole proprietors on simplified tax, full financial accounting is usually unnecessary — a basic cash book suffices. For such businesses, see simplified accounting.

Frequently asked questions