Accounting records a business's financial transactions; financial reports are how the business sees the resulting picture. This piece explains the Odoo financial reports.
What financial reports are for
A business's accounting records every financial transaction, building up a detailed record. But a detailed record of transactions is not, by itself, an understandable picture of the business's finances. Financial reports turn the accounting into that picture: they present the business's financial situation and results in the structured, summarised forms a business needs to understand and report its finances. The Odoo financial reports are how a business running on Odoo sees its financial picture.
The core financial reports
Financial reporting has a recognisable core, the fundamental reports that show a business's finances. There are the reports that show the business's financial position, what the business owns and owes, its assets and liabilities, at a point in time. There are the reports that show the business's financial performance, the revenue, the costs, and the resulting profit, over a period. These core reports are the fundamental view of a business's finances, and the Odoo financial reports provide them, built from the business's accounting.
Built from the accounting
The Odoo financial reports are built from the business's accounting, and this is the important point about them: the reports are not a separate thing the business has to construct; they are the structured presentation of the accounting the business has been recording. Because the accounting in Odoo is one connected thing, and because, in a connected system, the financial consequences of the business's operations flow into the accounting as the operations happen, the financial reports reflect the genuine, current state of the business's finances. The reports are the accounting, presented in understandable form.
Why this matters: trustworthy reporting from current accounting
The value of the Odoo financial reports being built directly from the connected accounting is that the reporting is trustworthy and current. The reports reflect the genuine accounting, and the accounting, in a connected system, reflects the genuine operations as they happen. So a business can look at its financial reports and trust that they show its genuine financial picture, kept current, rather than the reports being a separately constructed thing of uncertain currency. For a business, financial reports that are genuine and current are the basis for understanding its finances and for the financial reporting it has to do.
Reports depend on the accounting being right
An honest note. Financial reports present the accounting, so the reports are only as good as the accounting they are built from. If the accounting is genuine and correct, the financial reports show a true picture. If the accounting has problems, an unsound chart of accounts, transactions wrongly recorded, the reports inherit them. So trustworthy financial reports rest on sound accounting, which rests in turn on the accounting being set up correctly, the chart of accounts, the taxes, all the foundations, and run correctly. The reports reveal the picture the accounting holds; making sure that picture is true is the accounting itself.
The takeaway
The Odoo financial reports turn a business's accounting into an understandable picture of its finances: the core reports of financial position, what is owned and owed, and financial performance, revenue, costs, and profit. They are built directly from the connected accounting, so they reflect the genuine, current financial picture, which makes the reporting trustworthy. The reports are only as good as the accounting they present, so sound, correctly run accounting is what makes the financial reports genuine. For how we approach Odoo, see our ERP practice.