Core Accounting

Overview

Manages general ledger, accounts payable/receivable, billing, and real-time financial reporting for clear insights.

Key concepts

Key terms, statuses, and records that appear in Core Accounting in XFatora.

Setup & prerequisites

Connect required settings, templates, and defaults for Core Accounting in XFatora.

Roles & permissions

Assign role-based access, approvals, and visibility for Core Accounting in XFatora.

Main workflows

Core Accounting module

is the financial backbone of the system, handling all your accounting needs from recording transactions and managing accounts to generating key financial statements. It transforms XFatora into a true

source of financial truth

for your business. With this module, you can maintain a general ledger, track invoices and bills, reconcile bank accounts, and ensure compliance with accounting standards. Below we outline how to set up and use the core accounting features.

Initial Setup Chart of Accounts

Default Accounts:

Upon activation, the module comes with a standard

Chart of Accounts (CoA)

a list of accounts organized by assets, liabilities, equity, income, and expenses. These might include common ones like

Cash

,

Accounts Receivable

,

Inventory

,

Accounts Payable

,

Sales Revenue

,

Salary Expense

, etc. You can view and manage them under

Accounting > Chart of Accounts

.

Adding/Editing Accounts:

Tailor the CoA to fit your business. Create new accounts as needed (e.g. add

Marketing Expense

or

Project Revenue

if not present). For each account you add, specify an account name, type/category (asset, expense, etc.), and perhaps an account code or number if you use numbering. The system might have an option to enable account numbers for the whole CoA if you prefer numeric codes (e.g., 1000 for Cash, 2000 for Payables), turn on

Enable Account Numbers

in settings for consistency.

Opening Balances:

When first implementing, enter opening balances for balance sheet accounts as of your start date. For example, if you have $5,000 in the bank when you begin using the system, record that on the Cash account (this might be done via a special opening journal entry or an opening balance setup wizard). Ensure that the sum of all opening asset balances equals the sum of liabilities + equity (carry over retained earnings or owners equity as needed) essentially your opening trial balance should balance.

Fiscal Year and Method:

In

Accounting Settings

, define your

financial year start

(e.g., January or April, depending on your fiscal calendar) and your

accounting method

Cash or Accrual. Accrual means you recognize income when earned and expenses when incurred (typical for GAAP); Cash means you recognize when cash actually moves. Most businesses use accrual for their books and perhaps cash for tax, but choose what your compliance requires. You can set the systems basis, and it will affect reporting.

Recording Transactions

Sales Invoices and Payments:

When you create

invoices

in the system (via CRM or directly in Accounting), the Accounting module records those under Accounts Receivable and the corresponding income account. For instance, a $1,000 invoice will debit Accounts Receivable and credit Sales Revenue automatically. When a payment comes in and you record it against the invoice, the system will debit Cash/Bank and credit Accounts Receivable, reducing the outstanding receivable. These behind-the-scenes entries mean your books reflect real-time customer balances and revenue. You can view customer account statements to see all invoices and payments.

Expenses and Bills:

Use

Expenses/Bills

to record what your business spends. If you enter a bill from a supplier (say for office rent or a contractor invoice), allocate it to the appropriate expense account (e.g.

Rent Expense

). Saving that bill will debit the Rent Expense and credit Accounts Payable. If its a direct expense paid immediately (like buying office supplies with a company card), you might simply record an expense which debits Supplies Expense and credits Cash/Bank. The module allows tracking unpaid bills via Accounts Payable so you know what you owe. When you pay a bill, mark it paid the system debits Accounts Payable and credits Cash/Bank (or a credit card liability if you paid by credit card).

Journal Entries:

For other transactions not covered by the above (or for adjustments), you can create manual

Journal Entries

. For example, to record depreciation or amortization monthly, youd create a journal entry debiting a Depreciation Expense and crediting Accumulated Depreciation (a contra-asset account). The interface will have a debit and credit column; the total debits must equal total credits. Common uses for journal entries include payroll summaries (if not itemized through expenses), correcting miscoded transactions, recording accruals, and opening or closing entries. The module might label these as Manual Journal or similar. Always add a clear narration/description and date to each entry for audit trail.

Transfers Between Accounts:

If you move money between accounts (say from Bank A to Bank B, or to a petty cash fund), use the

Transfer

function. It will ask for source account, destination account, date, and amount. The system then creates a journal entry for you (crediting the source, debiting the destination). This keeps internal transfers clear without affecting income/expense.

Recurrence and Templates:

For regular transactions (like monthly rent or depreciation which is same amount each period), the module may allow recurring journals or expenses. Set up a recurring template so the system auto-generates those entries on schedule. This reduces manual work and ensures you dont forget routine postings.

Accounts Reconciliation

Bank Accounts Setup:

Each bank or cash account in your chart (like

Checking Account

,

PayPal

,

Petty Cash

) can be reconciled to statements. Begin by making sure the ledger balance for that account matches your real bank balance for the starting date. Then plan to reconcile monthly (or on whatever statement frequency your bank provides, often monthly).

Importing Statements:

Many systems let you import a bank statement (CSV or OFX file). If available, use

Bank Reconciliation

tool and import the latest statement. The module will show you side by side: the statement transactions and the ledgers recorded transactions for that account. You then

match

them. If you dont have import, you can still manually tick off transactions in the reconciliation screen.

Matching Transactions:

Go through each deposit and withdrawal from your statement and match it to an entry in the system. For example, a $1000 deposit on Jan 5 might match to an invoice payment recorded on Jan 4. If a transaction is in the statement but not in the books, youll need to add it (perhaps you forgot to record a bank fee or interest). The reconciliation tool often allows quick entry for adjustments like bank fees directly during reconcile e.g., you see a $15 bank fee, you can create an expense for it on the fly (debit Bank Fees expense, credit Bank account) to reconcile it.

Balanced Reconciliation:

The goal is that the

closing balance

per the bank statement equals the

ledger balance

once all matches and adjustments are done. The module will typically show a running difference. Only when the difference is $0 can you finalize the reconcile. This process ensures every bank movement is accounted for in the books (no missing transactions or duplicates).

Reconcile Other Accounts:

Bank accounts are crucial to reconcile, but you can also reconcile things like credit card accounts or even supplier or customer sub-ledgers. For AR (Accounts Receivable), reconciliation means ensuring the total of outstanding invoices in the system equals what customers owe you in reality. The module likely manages AR/AP reconciliation inherently via the invoice and bill modules, so explicit reconciling is not needed like with banks. But you might occasionally reconcile AP by comparing supplier statements. The concept is the same verify system records against external records.

Locking Periods:

After reconciling and finalizing a period (say all transactions up to June 30 are correct and bank rec done), its wise to

close or lock

that period. The modules

Close Books

feature will prevent entries prior to a certain date. This avoids accidental edits to reconciled periods which could throw things off. You can allow admin override if changes really must be made (some systems allow unlocking with a password by an admin). In general, once financials for a month are reported, lock it to maintain integrity.

Financial Reporting

Profit & Loss Statement (Income Statement):

Under Reports, generate a Profit & Loss for a given period (e.g., month, quarter, year). This report shows revenue and expenses, grouped by account categories, and net profit (or loss). Use this to gauge performance e.g., see if sales increased, check major expense categories (are any unusually high relative to budget or prior periods?), and determine profitability. You can run P&L comparisons (month vs month, or against last year, depending on report options). Because youve diligently recorded all income and expenses, the P&L should be accurate.

Balance Sheet:

Run the Balance Sheet report to see assets, liabilities, and equity at a point in time (often end of month or year). This will list things like cash balances, receivables, equipment (less depreciation), payables, loans, and retained earnings. A balanced sheet (total assets = liabilities + equity) confirms your ledgers integrity. Examine changes for example, is Accounts Receivable growing (meaning maybe collections are slow)? Is Cash lower than last quarter (and if so, is it due to big investments or due to losses)? Balance Sheet gives a snapshot of financial health and liquidity.

Cash Flow Statement:

If provided, the Cash Flow report shows sources and uses of cash, broken into operations, investing, and financing. Even if the module doesnt auto-produce a full cash flow, you can derive it if needed using P&L and balance sheet changes. But many modern accounting modules do have a direct cash flow report which is very useful for management to understand how money is moving.

A/R and A/P Aging:

Specialized reports help manage receivables and payables.

A/R Aging

lists each customer with outstanding invoices and buckets them by age (Current, 30 days, 60 days, etc.). Use this to follow up on overdue invoices if someone is in the 60+ day column, consider a reminder or putting their account on hold.

A/P Aging

similarly shows what you owe suppliers and how overdue each bill is useful for cash planning and ensuring you maintain good supplier relationships by paying timely (or negotiating terms if needed).

Trial Balance:

The trial balance is essentially a list of every account and its debit or credit balance at a given date. Its a fundamental report for accountants to verify that debits equal credits (the total debits column equals total credits column). If using the system properly, the trial balance will always be balanced (if not, theres an issue to investigate). The trial balance can be exported and used for adjustments or tax accounting by external accountants.

Audit Trail:

The module keeps an audit log of changes. If a transaction was edited or deleted, an admin can review the audit trail. This is important for tracing any discrepancies. For example, if your bank used to reconcile but now doesnt, you might find someone edited a prior transaction after reconciliation. The audit log will show that, so you can correct it. Having this transparency is key to reliable financial data.

Period-End and Compliance

Month-End Close:

At each months end, after recording all transactions and reconciling accounts (banks, credit cards, etc.), finalize the period. Run a P&L and Balance Sheet for the month and ensure things look right. Adjust entries for things like depreciation, accruals (e.g., accrued salaries or interest) so that your P&L reflects all earned revenue and incurred expenses of that month, even if cash hasnt moved (accrual accounting). Then lock the month using the

Close Books

function up to that last date. This prevents accidental changes.

Year-End Close:

At fiscal year end, youll do all the above, plus likely a few more tasks. The accounting module can carry forward balances for instance, it will close out the income and expense accounts into retained earnings (or you do a closing entry manually). Many systems automate year-end: once you mark a year as closed, all P&L accounts zero out for the new year, and the net profit is added to equity. Check that this happened or perform a closing journal if required. Year-end is also when you might have external auditors or accountants reviewing. You can export the full general ledger or trial balance for them.

Tax Compliance:

The Core Accounting module helps with tax compliance by tracking taxable sales and expenses. For example, if you charge sales tax on invoices, the system will accumulate how much tax you collected (often in a liability account like

Sales Tax Payable

). You can then run a report on tax collected vs tax paid (if you also track input tax on purchases) to prepare tax filings. The module may have specific tax summary reports if you configured tax rates in the system. Always ensure you periodically remit taxes as needed (monthly/quarterly VAT/GST/Sales Tax returns, etc.) the accounting data will support the figures you report to authorities.

Audit and Controls:

Use user permissions to control who can do what in accounting. For instance, maybe only senior staff can delete transactions or post to certain accounts. The module likely integrates with the systems role management ensure separation of duties (the person who approves payments isnt the one reconciling the bank, etc., if possible in your team size). The audit trail logs, mentioned earlier, are a key control. Also, consider using the

Lock after Viewing Warning

or

Password for Changes after Close

(features to prevent changes to closed periods) as a control it forces discipline that once numbers are reported, they stay reported unless a formal adjustment is made next period.

Integration with Other Modules

Invoicing (Sales) and Payments:

As noted, the Sales/CRM modules invoices tie into accounting. Every invoice and payment recorded flows to the ledger automatically. You dont need to double-enter sales in the accounting just invoice through the system and its accounted for. This ensures

revenue is recorded in one system of truth

. Check that all sales have been invoiced through the system to avoid off-books revenue.

Procurement and Expenses:

If you use the Procurement module for purchase orders and vendor bills, those bills can flow into accounting (Accounts Payable). Similarly, the Expenses module entries (like employee reimbursements, miscellaneous expenses) hit the accounts. Always map new expense categories to actual ledger accounts; the system usually asks which account an expense entry goes to. This integration means

purchasing and payables are centralized

less manual entry for the accounting team.

Payroll:

If you have the Payroll module, after running payroll, you can have it post a summary to accounting (wages expense, tax liabilities, etc.). Or you can enter a journal based on payroll reports. The key is to reflect wages, withholdings, and payroll taxes accurately in the books each period. Integration makes it easier ensure payroll settings have the correct expense and liability accounts configured so that when payroll is processed, it automatically generates the right entries (e.g. Debit Salary Expense, Debit Employer Tax Expense, Credit Cash (for net pay), Credit Taxes Payable, etc.).

Inventory:

If the Inventory module is used and you track the value of stock, accounting should reflect inventory value and cost of goods sold (COGS). When you sell products and if the system deducts inventory, an accounting entry should move the cost from

Inventory Asset

to

COGS Expense

. Likewise, when purchasing inventory items (via Procurement or direct expense tagged as inventory), instead of hitting an expense immediately, it should increase the Inventory asset. Check the configurations: items likely have an Inventory asset account and a COGS account associated. This way, the Core Accounting knows how to book inventory movements. At period end, you might still do a physical inventory count and adjust for any shrinkage via a journal entry (debit COGS, credit Inventory for any write-down).

Fixed Assets (Asset Management):

If using an Asset Management module, when you add a capital asset, youd record the purchase in accounting as a fixed asset account rather than an expense, and then use depreciation entries over time. Some integration might exist to automatically schedule depreciation entries. If not, youll do it manually. But be sure any asset purchases (like new equipment) are reflected properly (e.g.

Computer Equipment

asset account instead of Office Expenses, if its capitalizable). The accounting module can then give you a depreciation schedule if you input asset cost, useful life, and method (straight-line, etc.). It might even have a built-in depreciation tool to automate monthly depreciation journals.

Multi-Currency:

If your business deals with multiple currencies, the Core Accounting module likely handles currency rates. You might have separate accounts or sub-ledgers per currency, or a way to revalue currency balances at period end. For instance, if you have a bank account in EUR and your base currency is USD, the system will allow recording in EUR and store both the original and converted amount. At period end, you might update exchange rates and revalue that bank balance to current rate, posting a foreign exchange gain/loss entry. This can be complex refer to module documentation on multi-currency handling. Always use updated rates when recording foreign currency invoices or bills so your reports reflect the correct base currency values.

By diligently using the Core Accounting module, you maintain

one source of truth for financial data

that is accurate and up-to-date. This helps in making informed decisions, ensuring compliance with regulations, and demonstrating financial health to stakeholders (investors, banks, auditors). While it might seem like a lot of record-keeping, the integration with operational modules (sales, purchases, etc.) automates much of it. The result is an accounting system that works in the background as you run your business, and with a bit of regular attention (reconciling and reviewing reports), yields powerful insights and peace of mind that the numbers are right.

Screens & fields reference

Use these screens and fields to complete tasks inside Core Accounting in XFatora.

Automations & notifications

Review automation rules and notifications available in Core Accounting in XFatora.

Reports & dashboards

Track KPIs and dashboards powered by Core Accounting in XFatora.

Common mistakes

• Skipping required configuration before the first workflow.
• Not assigning the correct permissions for team roles.
• Forgetting to review automation or notification settings.

FAQs

Troubleshooting

Related modules