Opening Balance In ERPNext

When you start a new fiscal year or switch from one accounting system to another, your books start with the opening balance. As of the day you started using ERPNext, it shows the balances of your accounts (assets, liabilities, receivables, payables, etc.).

1. Introduction

When you first start a business, you might only have a few balances to bring in, such as your initial capital or bank balance. However, you will have a complete set of account balances to transfer if you are switching from another system, such as Tally, QuickBooks, or any legacy software. This covers everything, including supplier payables, fixed assets, and customer debt.

2. Assets You Must Add

2.1 Fixed Assets

These are your long-term material possessions, such as computers, machinery, furniture, and cars. They will be imported at their current value, net of any applicable depreciation. ERPNext's Asset module allows you to list them along with their purchase dates and values.

2.2 Assets in Stocks

Raw materials, completed goods, and work-in-progress are all included in this inventory. The item-by-item quantities and the valuation rate are required. Opening Stock Entries or Stock Reconciliation can be used to bring these in.

2.3 Receivables (AR)

These are bills that you have sent to clients but have not yet received payment for. To make them appear as customer dues, you will enter them using the Opening Invoice Creation Tool. This guarantees that ERPNext will display that your clients still owe you money.

2.4 Present-Day Resources

This comprises cash on hand, bank account balances, security deposits, pre-paid bills, etc. Under the appropriate ledger accounts, each of these will be updated.

3. Liabilities You Must Add

3.1 Capital Accounts

This represents the capital invested in the business by your owners or shareholders. This could be your personal investment in the company if you're a sole proprietor. As of the start date, include the opening capital and any retained earnings.

3.2 Present Debts

These are temporary commitments, such as credit card bills, employee salaries, GST/TAX payable, and loans.

3.3 Payables (AP)

Payables should be used to record unpaid invoices from vendors or suppliers. Similar to AR, but from the supplier's perspective, you will accomplish this using the Opening Invoice Creation Tool.

4. Check the Starting Balance

ERPNext determines the net position after all of your assets and liabilities have been entered. Any discrepancy is recorded in a unique ledger known as "Temporary Opening." Once every entry has been made correctly, this balance should ideally be zero.

If there is a discrepancy, it probably indicates that you neglected to record a balance, possibly for a payable or bank account. Compare your closing balance sheet from the previous system.

5. Step by Step Guide for Adding Opening Balances In ERPNext

Step 1: Finalize Your Previous Books

1. As of a certain cut-off date (such as June 30 or December 31), confirm that your books from the prior system (such as Tally, QuickBooks, Excel, etc.) are completely closed.

2. Export the assets, liabilities, payables, receivables, and other components of your closing trial balance.

Step 2: Prepare Your Chart of Accounts

1. Navigate to Accounting > Chart of Accounts.

2. Ensure all required accounts exist:

   • Bank accounts

   • Cash accounts

   • Payables and Receivables

   • Fixed Asstes

   • Taxes, loans, capital, etc.

3. If any account is missing, you can create it manually or using the Chart of Accounts Importer.

Step 3: Create Opening Invoices (for AP and AR)

ERPNext offers a tool that uses real invoices to import supplier and customer balances.

1. Navigate to Accounting > Opening Invoice Creation Tool

2. Choose a Supplier or a Customer

3. Enter:

   • Date of Posting (your start date)

   • The invoice amount (outstanding balance)

   • Reference Number

   • Due Date

4. Click "Create Invoice."

5. Repeat for every supplier and customer.

This guarantees that you can accurately monitor ageing, payments, and due dates in the future.

Step 4: Import Stock Opening (Inventory)

1. Go to Stock > Tools > Stock Reconciliation

2. Create a new Stock Reconciliation

3. Select the Date of Posting

4. Add one item at a time:

   • Item Code

   • Warehouse

   • Amount

   • Rate of Valuation

5. Save and Submit

This causes the system to update your stock quantities and values.

Step 5: Make a Journal Entry for Other Opening Balances

For every other balance, such as:

• Bank Balances

• Loans

• Fixed assets

• Cash

• Capital

1. Use a Manual Journal Entry:

   1.1. Select Accounting > Journal Entry > New.

   1.2. Posting Date: Your cut off date, such as July 1, 2025

   1.3. Add each account one by one:

   • Debit your assets (cash, bank, and fixed assets).

   • Credit your capital and liabilities.

   1.4. Verify that the entry is balanced.

   1.5. Save and Submit.

Step 6: Check the Trial Balance

1. Go to Accounting > Reports > Trial Balance.

2. Select posting date.

3. Check if **Total Debits = Total Credits

4. If there is a difference, it will appear in the Temporary Opening Account.

6. Important Things to Consider:

1. Opening entries do not apply to profit and loss; they are only for balance sheet accounts.

2. To make this easier, ERPNext provides you with a dedicated tool called the Opening Invoice Creation Tool

3. Unless a mid-year go-live is required, begin with a clean date (such as July 1st or January 1st).

4. To guarantee accuracy, reconcile with the closing balances from your previous system.

5. Additionally, balances for journal entries or stock can be imported in bulk using the Data Import Tool (via Excel or CSV).

7. Related Topics

1. Chart of Accounts

2. Journal Entry

3. Payment Entry

4. Payment Reconciliation

8. More to Follow

• Zikpro ERPnext Demo

• www.zikpro.com