How can this be true?

ERPNext Accounting
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how can this be true?

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cost of goods is 10000
expenses is 2500
sales is 20000

profit is 10000??

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Expenses is -2500 and not 2500

Cost of goods is 12,500

Total expenses is 10,000 (including cost of goods)

That’s why profit is 10,000

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I think it is a journey that we all undertake. A journey of trust. Of belief. As we stumble into ERPNext, we are super impressed with what we see. But as we try to make it work for us, we realize that there are just too many moving parts, too many technicalities. So when things go wrong and we don’t get the results we expect to get, instead of taking responsibility for what we have done, we choose to cast the blame on ERPNext. But as we get more familiar with ERPNext our confidence grows and we then start looking within ourselves to see where the problem is. And when we do that we find the mistakes we make.

Apologies if I am sounding preachy, but two main themes:

Making an ERP work for even a small organization is a tad complicated
ERPNext works wonderfully well. In my 5+ years of implementing ERPNext for over 30 clients - the larger clients with fairly complex manufacturing, never have I found a bug or a problem with ERPNext. Most times it’s a mistake I made (rarely) or a mistake the client made (most times).

Thanks

Jay

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Maybe this is not about trust (or to say distrust to ERPNext) but more about lack of benchmark.
I see that many (perceived as) problems here also because lack (or miss) of understanding what is going on behind ERPNext.
One way to overcome these is to have a good documentation explaining the process of (business) workflow. So users can benchmark the result they see with the documentation to see why ERPNext gives that result.
The docs ERPNext has now is good in explaining the technical process of using the system. But less in explaining why and relation of tehcnical to business.
Adding to this, experience of using other system also cause users to benchmark the process or result with their previous system. While this might be true for some issues but different system most likely have different rational behind it.

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Jay, 100% agree with your honest assessment.
Same applies for me.

In the end this is the price to pay for not paying a consultant who can take you by the hand. But hey, that’s the opportunity to get real deep understanding.

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Hi Paul,

My post wasn’t a plug for consultants. It was more to share my experience with ERPNext. And to state that ERPNext works great. Let’s also give the Frappe team and the community that’s built ERPNext some respect. If ERPNext cannot calculate a simple P&L correctly, I mean would this project (ERPNext) end up being where it is today. So, learn to trust ERPNext and thou shall seek the answers within thyself.

In this particular case (wrong P&L reported by the original poster) there is the Debit Side and the Credit Side. There is accounting involved, there are technicalities involved. And as you rightly point out that if you want to immerse yourself into the understanding of how to make ERPNext work for you, immerse yourself totally and completely. Understand accounting concepts, inventory concepts, sales concepts, purchase concepts. Understand how the person that designed the system conceptualized the system and it becomes easier to implement ERPNext.

As I tell all my prospective clients: You really don’t need me. You just need to step away from your day job for 6 months and immerse yourself into ERPNext implementation and you shall do a way better job than I can ever hope to do.

Not sure how helpful (or coherent) this post is generally, but hey, you got it. :slight_smile:

Thanks

Jay

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Welcome to the open source world. We are way ahead in features. We are a little behind in documentation. But hey, it’s a free world, right? If you document it for the users in your organization, also share it here so that it can help other organizations.

Or pay tributes and respect to John Clarke’s memory and fix some of those deficiencies by contributing your time, energies and answers.

Thanks

Jay

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I didn’t mean to complain. Actually my post was to encourage users to dig in to ERPNext and documentation.

I have a story about one of my new client…
Similar to first post, he questioned if his P&L was right. First I put my trust that ERPNext is correct (after I checked there was no bug related to his issue).
Then I use this issue even to propose the power of ERPNext by doing drill down analysis to detailed expenses, journal entry and down to transaction level (which can’t be done with accounting-only system).

And as Jay said most of the mistakes are in us users :slight_smile:. Well, in my client’s case it was not a mistake of data entry but was not managing his transaction.
So by the finding I suggest him to use ERPNext to monitor his selling and buying transactions.

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Right, same story with us.

What I find very helpful, is to explain the basic work flow for bying and selling by using the visual graphs in the documentation like this one:

Just went through this with one of our client and they got it after going through the process first…

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Agree Jay :wink:

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Hi @Tawfiq_Murtaja
You need to make Payment Entry for Freight and Forwarding Charges (Accrued through Landed Cost Voucher)
Once you make that entry, the P&L will make sense
Thanks,
Manan

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Jay, your analysis is spot on. It is very frustrating when you are in the in between stage of super impressed and too many moving parts. However, if you stick with it you and develop the support network which suits you, you will get to the position of understanding and power. Its a bit like growing up. I have not seen wisdom for sale on Ebay, yet!
Anyone struggling with ERPNext, be encouraged, it does work and great things can happen. When stuck, reflect on yourself as much as blaming the software and you will get the answer.
My business, income and that of my 16 staff rely on this software 100%.
Is it perfect? No.
Does it become more perfect every day for your business? Yes
But it is a joint effort, you and ERPnext.
I must thank John Clark on this forum for helping me get through frustrating times. RIP.
And the journey continues…
Chris

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Great observations, Chris. I especially like the tribute you paid to John Clarke. Man, we miss him!

Thanks

Jay

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Another encouragement is the fact that many businesses have submit tax report using ERPNext and are accepted. No “legitimation” is better than the government :slight_smile:

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