ERPNext Accounts Settings
You can adjust how your accounting functions across important modules like invoicing, payments, ledger, and multi-currency in ERPNext's Accounts Settings section. These settings assist in automating and managing tasks related to party accounting, payment processing, invoice cancellation, and compliance audits. It ensures that your accounting system complies with your company's policies.
1. Invoice Cancellation
1.1. Unlink Payment on Cancellation of Invoice
When enabled, the system will automatically remove any associated payment entry from a cancelled invoice (sales or purchase), allowing it to be used again.
1.2. Unlink Advance Payment on Cancellation of Order
Any advance payment associated with a cancelled order (purchase or sale) will likewise be unlinked. You can use the advance elsewhere as a result.
1.3. Delete Accounting and Stock Ledger Entries on Deletion of Transaction
If enabled, the associated GL (General Ledger) and stock entries will be deleted along with the document, such as an invoice.
1.4. Enable Immutable Ledger
When checked, it stops changes to ledger entries from being made in the past.
Instead of altering historical data, the system generates a new reversing entry on the cancellation date.
Contributes to the integrity of audits.
2. Invoicing Features
2.1. Check Supplier Invoice Number Uniqueness
When checked, it ensures that no supplier invoice numbers for the same fiscal year are entered more than once.
This stops fraudulent double entry and accounting errors.
2.2. Automatically Fetch Payment Terms From Order
When enables, the terms of payment specified in a Sales/Purchase Order will automatically be applied to the associated invoice.
This reduces errors in manual entry and saves time.
2.3. Enable Common Party Accounting
Allows you to manage a single ledger for organisations that serve as both your suppliers and customers (a common party).
This makes reporting and reconciliation between transactions easier.
2.4. Allow Multi-Currency Invoices Against Single Party Account
Enables you to use a single account to generate invoices for the same client or supplier in multiple currencies.
Useful for companies that deal with clients from other countries in a variety of currencies.
3. Journals
3.1. Merge Similar Account Heads
When this option is enabled, ERPNext will automatically merge rows in journal entries that use the same account head.
By consolidating duplicate lines into a single line, this keeps the general ledger neater and simpler to read.
For instance, three entries posted to "Cash" in a journal will appear in reports as a single line.
4. Deferred Accounting Settings
Instead of recognising the entire amount at once, deferred accounting spreads out revenue or expenses over a later time frame.
4.1. Book Deferred Entries Based On
Days (Selected): Since the deferred amount is divided daily, it is more accurate if your revenue or service is dependent on precise time frames.
Months: Regardless of the number of days in a given month, a set amount is reserved for each one.
For instance, if revenue is distributed over three months and you select "Days," February's share will be less than March's because there are fewer days in February.
4.2. Automatically Process Deferred Accounting Entry
ERPNext will automatically generate accounting entries to book deferred revenue or expenses at the specified time when this is checked.
Prevents you from manually creating entries each month or period for deferrals.
ERPNext will automatically record revenue each month if you sell an annual subscription.
4.3. Book deferred Entries Via Journal Entry
ERPNext will generate a Journal Entry for every postponed reservation if it is enabled.
If left unchecked, deferred entries won't require a separate journal and will be posted straight to the general ledger.
Why Use Journal Entries?
For improved auditability and visibility.
Easier for accountants to keep track of reversals or adjustments.
5. Tax Settings
5.1. Determine Tax Category From Field:
Select address tax category from Choices i.e Shipping/Billing Address.
Indicates to the system which address (shipping or billing) to use when figuring out the transaction's applicable tax category.
Choosing the Billing Address guarantees that the right tax is applied based on the buyer's billing location, for instance, if tax laws vary between provinces or states.
For service-based businesses, use the billing address. If tax is dependent on the actual delivery location, use the shipping address.
5.2. Automatically Add Taxes and Charges From Item Tax Template
The system automatically applies the tax rules from the tax template if the item in the order or invoice has one set.
Prevents having to manually enter taxes for every item, which is particularly helpful if different items have different tax rates (for example, food is taxed at 5% while electronics are taxed at 17%).
Unless both are permitted, this occurs at the item level and is overridden if a general Taxes and Charges Template is used.
5.3. Automatically Add Taxes From Taxes and Charges Template
ERPNext looks for a Taxes and Charges Template at the document level and automatically applies the tax if no item-level tax is set.
The goal is to save time by applying the same tax regulations to every item on an order or invoice.
You choose a single standard tax template because you are only selling taxable goods and your sales tax is set at a flat 17%.
5.4. Book Tax Loss on Early Payment Discount
The tax component of a discount received by customers who pay early is also recognised. This configuration guarantees that ERPNext divides the discount into:
Loss of income (to your account)
Tax loss (adjusted in tax liability)
In many nations, providing an early payment discount necessitates lowering the tax collected on the lower price. That is automated by this field.
For instance, a client who pays early receives 2% off. The system appropriately lowers your income and tax liability.
5.5. Round Tax Amount Row-wise
Rather than computing the total tax and rounding at the end, it rounds off the tax amounts separately for each item row.
Avoids rounding errors, particularly when there are several items with varying tax rates and fractional tax values (such as 1.786 PKR) are frequently encountered.
When rounding errors accumulate in high-volume billing or on invoices with numerous lines.
6. Print Settings
These determine what shows up when you print documents such as quotes, purchase invoices, and sales invoices.
6.1. Show Inclusive Tax in Print
If this is enabled your printed invoice will indicate that the item prices already include tax.
It enables clients to comprehend that there are no surprises because the prices they view are final and include taxes.
For instance, the item's price (including 17% tax) is Rs. 1,000. This field allows the printout to display that tax inclusion.
6.2. Show Taxes as Table In Print
Displays a distinct table with each tax component—such as sales tax, VAT, GST, and so on—in the print view.
Provides a clear breakdown of all tax charges to your clients.
For instance, it prints the following instead of just the total:
170 rupees for sales tax (17%)
2 percent provincial tax: Rs. 20
6.3. Show Payment Schedule In Print
This option will print the entire schedule in the document if a payment is divided into installments or is due on a later date.
This Helps with installment-based invoices by keeping the buyer or customer updated on due dates and amounts.
For instance: 50% is due on August 1, 2025. 50% is due on September 1, 2025.
7. Item Price Settings
7.1. Maintain Same Rate Throughout Internal Transaction
When enabled, this guarantees that item prices for internal documents such as inter-warehouse transfers, stock transfers, and material issues stay the same.
Prevents confusion when moving items internally and aids in maintaining clean costing.
For instance, if Item A is valued at Rs. 500 in Warehouse X, its value will remain at Rs. 500 upon transfer to Warehouse Y; internal rates will not change.
8. Currency Exchange Settings
8.1. Allow Stale Exchange Rates
If no current rate for a currency is available, ERPNext will permit the use of old (stale) exchange rates when this option is selected.
When the most recent exchange rate hasn't been updated, this helps to prevent transactions from being blocked.
8.2. Allow Implicit Pegged Currency Conversion
- If enabled, ERPNext will use a third (base) currency, such as USD, to automatically convert between two currencies. For instance, it will use the pegged rate between AED and USD to calculate AED→USD→INR if you don't have AED→INR directly.
9. Payment Reconciliation Settings
9.1. Auto Reconcile Payments
When enabled, ERPNext will automatically match outgoing payments to purchase invoices or incoming payments to unpaid sales invoices.
This lessens the amount of manual labour required, particularly if you receive hundreds or even thousands of payments every day.
9.2. Auto Reconciliation Job Trigger
- This field determines the frequency (in minutes) at which the system should attempt to automatically reconcile invoice payments. For instance, ERPNext will execute this background job every 15 minutes if it is set to 15.
9.3. Reconciliation Queue Size
- This specifies the number of documents that will be processed simultaneously when auto-reconciliation is activated. The range must be between 5 and 100. A value of 5 indicates that it will attempt to reconcile 5 documents each cycle.
9.4. Posting Date Inheritance for Exchange Gain or Loss
When ERPNext records a currency exchange gain or loss, this dropdown selects the appropriate posting date. If you select "Payment," the profit or loss will be recorded on the day of the payment. If you choose "Invoice," it will be based on the invoice date.
This has an impact on how foreign exchange adjustments are reflected in your general ledger, which is crucial for accurate financial reporting.
10. Credit Limit Settings
10.1. Overbilling Allowance (%)
This sets the maximum amount you can charge over the initial order amount. For instance, the system permits invoicing up to $110 if the sales order is for $100 and this is set to 10%.
Useful for minor price variations or rounding small prices.
Any attempt to overbill if set to 0% will be prevented unless permissions are granted.
10.2. Role Allowed to Over Bill
Here, you can assign a particular user role that has the authority to go over the overbilling cap.
Invoices exceeding the tolerance specified in the preceding field may be generated by users with this role.
This is helpful when certain roles (e.g., Managers) need more flexibility.
No one may overbill beyond the percentage tolerance if they are not assigned.
10.3. Role Allowed to Bypass Credit Limit
This field specifies who is allowed to completely disregard customer credit limits.
Users with this role can continue even if a customer's outstanding balance is greater than their credit limit.
Higher-level access to override credit control measures is made possible by it.
Perfect for senior employees such as directors or finance managers.
11. POS Settings
11.1. Create Ledger Entries for Change Amount
When this option is enabled, any change returned in a Point of Sale (POS) transaction will result in accounting entries (ledger entries) being created by the system.
For instance, the system will enter the $10 change as a separate entry in your ledgers if a customer pays $100 for a $90 bill and gets $10 back.
This enhances cash handling transparency and reconciliation by tracking every aspect of cash movement.
It's especially useful for businesses handling large volumes of cash transactions, where every amount needs to be properly accounted for.
12. Asset Settings
12.1. Calculate Daily Depreciation Using Total Days In Depreciation Period
This setting allows the system to use the precise number of days in the depreciation period to calculate depreciation on a daily basis.
This means that rather than merely assuming that each month has 30 days or that the year has a set number of days, it takes into account whether the year is a leap year (366 days) or a regular year (365 days).
Particularly when an asset is added or removed midway through a year or period, it guarantees accurate depreciation amounts.
This is helpful when employing daily pro-rata depreciation techniques, as precise time-based computations are crucial for audits and financial reporting.
12.2. Book Asset Depreciation Entry Automatically
If you enable this option, the system will automatically post fixed asset depreciation entries at the conclusion of each relevant period (monthly, quarterly, or annually, depending on your configuration).
The system will generate depreciation journal entries based on the depreciation schedule, saving you the trouble of creating them by hand.
By ensuring that asset values and expenses are updated consistently, this automation lowers the possibility of missed entries and the manual workload.
Large organisations with numerous assets that require regular depreciation tracking will find it especially useful.
13. Period Closing Settings
13.1. Accounts Frozen Till Date
This field sets a deadline beyond which no accounting entries (such as purchase invoices, sales invoices, journal entries, etc.) may be made or modified.
It serves as a safeguard against unintentional modifications to closed or audited financial periods.
Only certain authorised users (specified in the role below) are able to modify dates prior to this once it has been set.
Following the completion of audits or the finalisation of financial statements, it helps to preserve data integrity.
13.2. Ignore Account Closing Balance
When enabled, this option instructs the system to generate reports without taking into account balances posted through Period Closing Vouchers.
Instead, the General Ledger (GL) Entries will be used to directly calculate reports such as the Balance Sheet and Profit & Loss.
This should be enabled if:
Closing the Period For a few years, vouchers are absent or skipped.
Closing the Period The creation of vouchers is not sequential; for example, you closed 2023 but not 2022.
This guarantees that, even in cases where certain formal closing procedures were not fulfilled, your reports accurately depict transactions.
13.3. Role Allowed to Set Frozen Accounts and Eidt Frozen Entries
You indicate in this field which user role or roles are permitted to:
"Accounts Frozen Till Date" should be set, and before the frozen date, make or edit accounting entries.
It's a method of limiting important financial adjustments to senior or reliable staff members, like the finance manager or accounts administrator.
Only authorised individuals can override the freeze thanks to role-based access, which also helps protect historical data.
14. Chart Of Accounts
The system will show the current account balances in the Chart of Accounts (CoA) view when you select the "Show Balances in Chart of Accounts" option.
This implies that the current debit or credit balance based on the most recent General Ledger (GL) entries will be displayed next to each account (such as Cash, Sales, and Expenses).
It provides a brief summary of your financial situation without requiring you to run different reports.
For accountants and finance users who wish to keep an eye on balances while navigating the account structure, this setting is helpful because it makes it simpler to:
Identify odd balances, such as a debit in a liability account.
Examine group-level totals, such as total income or assets.
Investigate accounts that appear suspicious as soon as possible.
15. Banking
15.1. Enabling Automatic Party Matching
When enabled, this option enables ERPNext to automatically identify and set the "Party" (such as a supplier or customer) in your bank transactions when importing bank statements or performing bank reconciliation.
ERPNext reads the description or narration in each transaction line when you import a bank statement (either via CSV or a bank integration).
Next, it looks for names or keywords in that narration that correspond to the names of:
Clients
Suppliers
Workers
Other Users in Your System
15.2. Benefits:
Saves time: You can choose the right party without having to go over each queue by hand.
Error reduction: Lowers the possibility of choosing the incorrect client or vendor.
Accelerates reconciliation: Facilitates quicker and easier matching payments to bills or invoices.
16. Reports
16.1. Remarks Column Length
16.1.1. General Ledger
You can adjust the number of characters that appear in the "Remarks" field in the General Ledger report by using this setting.
ERPNext will display the entire text of the Remarks field without cutting it if it is set to 0.
ERPNext will truncate or shorten the remarks displayed in the report to the first 50 characters if you enter a number, such as 50.
It helps keep reports organised if comments are often lengthy.
16.1.2. Receivable/Payable Accounts
It is comparable to the previous one, but it pertains to reports for accounts payable and receivable rather than the general ledger.
Set the text length in the Remarks column to a fixed size (e.g., 30 or 60 characters) here.
If you want the entire remarks text to appear, set it to 0. Enhances the readability of reports, particularly when printing or exporting them as PDFs.
16.2. Accounts Receivable/Payable Tuning
16.2.1. Data Fetch Method
Default Buffered Cursor: Reduces memory usage and speeds up the loading of large reports by fetching records in chunks or pages.
The buffered cursor is more effective and made to work better in big databases.
Unless you have particular problems with the way records are retrieved, it is advised that you leave this enabled.
16.3. Legacy Fields
16.3.1. Ignore Is Opening Check for Reporting
When creating reports, this setting disregards the "Is Opening" flag in GL Entries.
The "Is Opening" field was used to identify opening balances (entries carried forward from before ERPNext started being used) in older versions or migrated databases.
If this option is selected, ERPNext will include those entries in financial reports as regular entries rather than treating them as separate entries.
If you want more accurate, current reporting and are seeing discrepancies because of legacy balances, use this.
17. Payment Request
17.1. Create In Draft Status
- ERPNext will automatically generate new documents in "Draft" status rather than submitting them right away if this option is enabled.
This means:
Although the document (journal entry, invoice, etc.) is saved, it is not yet complete.
Before the document is submitted, users can review, edit, or approve it, and it can have an impact on inventory or accounts.
17.2. Why use this?
Internal control: Allows managers or approvers to check entries before they are recorded.
Flexibility: The form can be partially completed, saved, and then returned at a later time.
Error prevention: Stops unintentional data submissions that contain errors.
17.3. When disabled
Documents are generated and sent right away, which means transactions will appear in the stock or accounting system.
Unless you cancel and change the document, there is no approval or editing.