saas-accounting-system

Platform Notes

• Optional helper plugins may help in some environments, but they must not be treated as required for this skill.

SaaS Accounting System

Acknowledgement: Shared by Peter Bamuhigire, techguypeter.com, +256 784 464178.

Required Inputs

Input	Required	Use
Tenant, product, and lifecycle scope	yes	Bound the SaaS decision
Current architecture, plans, policies, and constraints	yes	Preserve enforceable behaviour
Production data or verified evidence	conditional	Validate thresholds and migrations

Capability and permission contract

Default to read-only analysis. Change configuration, billing, identity, tenant data, infrastructure, or customer communications only with explicit authority, least-privilege credentials, tenant scope, rollback, and auditable approval. Never expose secrets or cross tenant boundaries.

Degraded mode

If production access, policy, telemetry, or authoritative records are unavailable, produce a labelled design or dry-run plan. Do not claim deployment, reconciliation, deletion, delivery, or measured outcomes; list missing evidence and verification.

Decision rules

Condition	Action	Stop condition
Tenant isolation, money, identity, or deletion is affected	Require approval and rollback evidence	Scope or authority is ambiguous
Evidence supports a reversible change	Stage, test, and record it	Acceptance checks fail
Only partial context is available	Return assumptions and validation	A production claim cannot be verified

Domain Anti-Patterns

• Applying one tenant's policy or data to another. Fix: enforce tenant scope at every boundary.
• Mutating production from an advisory request. Fix: remain read-only until authority is explicit.
• Inventing limits, prices, metrics, or compliance claims. Fix: use authoritative records or mark them unresolved.
• Shipping without rollback and audit evidence. Fix: stage and retain before/after proof.
• Treating a missing dependency as successful. Fix: name the blocked verification.

Use When

• Implement a complete double-entry accounting system inside any SaaS app. Users enter transactions naturally (sales, expenses, inventory) while the system auto-posts journal entries under the hood. Produces both user-friendly reports and technical...

Evidence Produced

Category	Artifact	Format	Example
Correctness	Double-entry accounting test plan	Markdown doc covering journal balance, period close, and reconciliation scenarios	docs/accounting/double-entry-tests.md
Data safety	Chart of accounts and posting rules register	Markdown doc per skill-composition-standards/references/entity-model-template.md covering accounts, posting rules, and audit-trail requirements	docs/accounting/coa-register.md

References

• Use the references/ directory for deep detail after reading the core workflow below.
• Use companion skill accounting-finance-controller when the implementation also needs IFRS-aware reporting, management accounting, cost accounting, financial controls, projections, or CFO-grade review beyond the core double-entry engine.

Overview

Deprecation Note

For new products that handle money, prefer the stricter companion skill accounting-engine. This file remains useful as legacy implementation detail, but any guidance here must be read subject to these hard rules:

• All ledger writes go through one LedgerPostingService.
• Posted journal lines are append-only and are never updated, deleted, or soft-deleted.
• Corrections use reversing journals.
• Materialized balances are rebuildable caches, not authoritative records.
• Business modules never hardcode account codes or write ledger tables directly.
• IFRS/IFRS for SMEs tenants never use LIFO.

This skill implements a hidden accounting engine inside business applications. End users never see debits, credits, or journal entries — they enter sales, record payments, move inventory. Under the hood, every transaction auto-posts balanced journal entries that accountants and auditors can query at any time.

Philosophy: Users think in business terms. The system thinks in double-entry.

Core Architecture

┌─────────────────────────────────────────────────┐
│  USER LAYER (Friendly)                          │
│  Sales, Purchases, Payments, Inventory, Expenses│
│  → User sees: "Sale #1042 to Customer X: $500"  │
└──────────────────────┬──────────────────────────┘
                       │ auto-posts
┌──────────────────────▼──────────────────────────┐
│  ACCOUNTING ENGINE (Hidden)                     │
│  Journal Entries, Ledger Postings, Trial Balance│
│  → Engine posts: DR Accounts Receivable $500    │
│                  CR Sales Revenue      $500     │
└──────────────────────┬──────────────────────────┘
                       │ aggregates
┌──────────────────────▼──────────────────────────┐
│  REPORTING LAYER (Dual)                         │
│  User Reports: Sales Summary, Aging, P&L Simple │
│  Accountant Reports: Trial Balance, BS, IS, CF  │
└─────────────────────────────────────────────────┘

The Golden Rule

Every transaction MUST produce balanced journal entries. No exceptions.

SUM(debits) = SUM(credits)  — ALWAYS

This is enforced at the database level via stored procedure or trigger. If entries don't balance, the entire transaction rolls back.

Chart of Accounts (COA)

The COA is the backbone. Every account has a type that determines its normal balance.

Type	Code Range	Normal Balance	Examples
Asset	1000-1999	Debit	Cash, Bank, AR, Inventory, Equipment
Liability	2000-2999	Credit	AP, Loans, Tax Payable, Unearned Revenue
Equity	3000-3999	Credit	Owner's Equity, Retained Earnings
Revenue	4000-4999	Credit	Sales, Service Income, Interest Income
COGS	5000-5999	Debit	Cost of Goods Sold, Direct Materials
Expense	6000-6999	Debit	Rent, Salaries, Utilities, Marketing

Setup rules:

• Tenant gets a default COA on creation (seeded from template)
• Accounts are tenant-scoped (franchise_id)
• Accounts cannot be deleted if they have posted entries
• Sub-accounts supported (e.g., 1100 Cash → 1101 Petty Cash, 1102 Main Bank)

See: references/chart-of-accounts.md and references/accounting-bookkeeping-erp-patterns.md.

Auto-Posting Rules

Users never create journal entries manually. Every business transaction has a posting rule.

Transaction → Journal Entry Map

User Action	Debit Account	Credit Account
Record Sale (Invoice)	Accounts Receivable	Sales Revenue
Record Sale + Tax	AR + Tax Receivable	Sales Revenue + Tax Payable
Receive Payment (Cash)	Cash/Bank	Accounts Receivable
Record Purchase	Inventory/Expense	Accounts Payable
Pay Supplier	Accounts Payable	Cash/Bank
Record Expense	Expense Account	Cash/Bank or AP
Inventory Sale (COGS)	Cost of Goods Sold	Inventory
Stock Adjustment (+)	Inventory	Inventory Adjustment (Income)
Stock Adjustment (-)	Inventory Adjustment (Expense)	Inventory
Salary Payment	Salary Expense	Cash/Bank
Loan Received	Cash/Bank	Loan Payable
Loan Repayment	Loan Payable + Interest Exp	Cash/Bank
Depreciation	Depreciation Expense	Accumulated Depreciation
Customer Refund	Sales Returns	Cash/Bank or AR

Multi-line entries: A single sale with tax and discount creates 3+ journal lines, all in one entry. The entry MUST balance.

See: references/journal-posting-rules.md and references/accounting-bookkeeping-erp-patterns.md.

Void & Reversal Mechanics

Rule: Never delete a posted journal entry. Always create a reversing entry.

Void Process

1. User clicks "Void" on a transaction (e.g., Sale Invoice #1042)
2. System marks the original transaction as VOIDED (status change)
3. System auto-creates a REVERSING journal entry:
   - Same accounts, opposite directions
   - Reference: "REVERSAL of JE-{original_id}"
   - Same date OR current date (configurable)
4. Original entry + reversal entry net to ZERO
5. All sub-ledger balances update automatically

Reversal Entry Example

Original (Sale Invoice #1042):
  DR  Accounts Receivable    500.00
  CR  Sales Revenue           500.00

Reversal (Void of #1042):
  DR  Sales Revenue           500.00
  CR  Accounts Receivable    500.00

Net effect: ZERO

Partial Void Rules

• Partially paid invoices: Void remaining balance only
• Payment already received: Must void payment first, then invoice
• Inventory already delivered: Must reverse stock movement first
• Cascade protection: System warns if dependent transactions exist

See: references/void-reversal-patterns.md

Database Schema (Core Tables)

-- Chart of Accounts
accounts (id, franchise_id, code, name, type, parent_id,
          is_active, normal_balance, created_at)

-- Journal Entries (Header)
journal_entries (id, franchise_id, entry_date, reference_type,
                 reference_id, narration, is_reversal, reversed_entry_id,
                 posted_by, status, created_at)

-- Journal Entry Lines (Detail)
journal_entry_lines (id, journal_entry_id, account_id,
                     debit_amount, credit_amount, narration,
                     franchise_id, created_at)

-- Fiscal Periods
fiscal_periods (id, franchise_id, period_name, start_date,
                end_date, status, closed_by, closed_at)

-- Account Balances (Materialized for performance)
account_balances (id, franchise_id, account_id, period_id,
                  opening_balance, debit_total, credit_total,
                  closing_balance, updated_at)

Integrity constraints:

• journal_entry_lines.debit_amount and credit_amount are DECIMAL(15,2)
• CHECK constraint: Each line has debit OR credit, never both, never both zero
• Stored procedure validates SUM(debit) = SUM(credit) per entry
• franchise_id on every table (multi-tenant isolation)
• status enum: DRAFT, POSTED, VOIDED

See: references/schema-design.md

Subledger and Control Account Discipline

Every finance module must reconcile to the general ledger through control accounts:

• Accounts receivable aging must reconcile to the AR control account.
• Accounts payable aging must reconcile to the AP control account.
• Inventory valuation must reconcile to inventory control accounts.
• Fixed asset register net book value must reconcile to asset cost less accumulated depreciation.
• Bank reconciliation must explain the difference between bank statement and book balance.
• Tax schedules must reconcile tax payable/receivable accounts to return-ready evidence.

Do not let users post directly to control accounts except through controlled adjustment workflows with reason, approval, and audit trail.

Management Accounting Layer

When the system supports manufacturing, services, projects, schools, clinics, retail, or ERP management reporting, add cost-centre, profit-centre, project, branch, department, and product dimensions to postings. Use these dimensions for budgets, flexible budget reports, standard-cost variance, contribution margin, activity-based costing, and management packs without corrupting statutory GL structure.

Dual Reporting System

User-Friendly Reports (Non-Accountant)

Report	What User Sees	Data Source
Sales Summary	Total sales by period, customer, product	Sales transactions
Outstanding Invoices	Who owes what, how old	AR sub-ledger
Expense Report	Spending by category	Expense transactions
Profit & Loss (Simple)	Revenue minus expenses	Income/expense accounts
Cash Position	Money in bank/cash	Cash/bank accounts
Inventory Value	Stock on hand with cost	Inventory sub-ledger

Accountant/Auditor Reports (Technical)

Report	What It Shows	Source
Trial Balance	All account balances (DR/CR columns)	General Ledger
Balance Sheet	Assets = Liabilities + Equity	GL (type 1-3)
Income Statement	Revenue - COGS - Expenses = Net Income	GL (type 4-6)
Cash Flow Statement	Operating + Investing + Financing	Cash account entries
General Ledger Detail	Every entry per account	Journal entries
Journal Register	All journal entries chronologically	Journal entries
Aged Receivables	AR aging (30/60/90/120 days)	AR sub-ledger
Aged Payables	AP aging	AP sub-ledger
Audit Trail	Who posted what, when	Journal entries + audit log

See: references/financial-statements.md

Implementation Checklist

Phase 1: Foundation (Must Complete First)

• Create accounts table with COA seed data
• Create journal_entries and journal_entry_lines tables
• Create fiscal_periods table
• Build balance validation stored procedure
• Build postJournalEntry() service function
• Write tests: balanced entry passes, unbalanced rejects

Phase 2: Auto-Posting Integration

• Wire sales invoice → auto-post AR/Revenue entry
• Wire payment received → auto-post Cash/AR entry
• Wire purchase → auto-post Inventory or Expense/AP entry
• Wire supplier payment → auto-post AP/Cash entry
• Wire inventory movement → auto-post COGS/Inventory entry
• Write tests: each transaction type posts correct entries

Phase 3: Void & Reversal

• Build void transaction service (creates reversing entry)
• Handle partial void scenarios
• Handle cascade dependencies (warn before void)
• Write tests: void produces net-zero, balances correct

Phase 4: Reporting

• Build Trial Balance report (all accounts, DR/CR totals)
• Build Balance Sheet (Assets = Liabilities + Equity)
• Build Income Statement (Revenue - Expenses)
• Build user-friendly summary reports
• Build audit trail report
• Write tests: reports match expected values from test data

Phase 5: Period Management

• Build period open/close functionality
• Prevent posting to closed periods
• Build year-end closing entry (Revenue/Expense → Retained Earnings)
• Write tests: closed period rejects entries

Cross-Skill Integration

Area	Skill	How It Applies
Database schema	mysql-best-practices	DECIMAL(15,2), indexes, FK constraints
API endpoints	api-error-handling	Consistent error responses for failed postings
Multi-tenancy	multi-tenant-saas-architecture	franchise_id on all tables
UI reports	webapp-gui-design	DataTables for ledger, charts for P&L
Mobile reports	jetpack-compose-ui	Report screens with tables
PDF export	android-pdf-export, report-print-pdf	Financial statement PDFs
Security	vibe-security-skill	Protect financial data, audit trail
Auth	dual-auth-rbac	Permission: who can post/void/view reports
Inventory link	inventory-management	COGS posting on stock movements
Testing	sdlc-testing	Test every posting rule, every reversal
Implementation	plan-implementation	Execute accounting phases with TDD
Audit	implementation-status-auditor	Verify accounting system completeness

Anti-Patterns

Don't	Do Instead
Let users enter journal entries directly	Auto-post from business transactions
Use FLOAT for money	Use DECIMAL(15,2) always
Delete journal entries	Create reversing entries (void)
Skip balance validation	Enforce DR=CR in stored procedure
Store calculated balances only	Store individual entries, calculate on demand
Mix accounting with business logic	Separate accounting engine as its own service layer
Hard-code account codes	Use configurable COA with tenant-specific accounts
Skip audit trail	Log every posting with user, timestamp, IP
Allow posting to closed periods	Enforce period status check before posting
Show debits/credits to end users	Show friendly labels (Income, Payment, etc.)

Accuracy Guarantee

Every implementation MUST pass these tests:

1. Balance test: SELECT SUM(debit) - SUM(credit) FROM journal_entry_lines = 0.00
2. Entry test: Every journal entry has SUM(debit) = SUM(credit)
3. Trial Balance test: Total debits = Total credits
4. Balance Sheet test: Assets = Liabilities + Equity
5. Reversal test: Voided transaction + reversal nets to zero
6. Period test: No entries in closed periods
7. Tenant test: No cross-tenant data leakage in any query

See Also

• references/chart-of-accounts.md — COA templates and setup
• references/journal-posting-rules.md — Complete posting rules per transaction
• references/void-reversal-patterns.md — Void mechanics and edge cases
• references/financial-statements.md — Report SQL queries and formats
• references/schema-design.md — Complete database schema with constraints
• references/accounting-bookkeeping-erp-patterns.md — bookkeeping, subledger control, ERP finance configuration, cost accounting, management reporting, and acceptance tests

Quality Standards

No posting design passes unless entries balance, source events are idempotent, periods and tenants are isolated, reversals preserve history, and control evidence reconciles to reports.

Outputs

Artefact	Consumer	Acceptance condition
SaaS accounting architecture and posting contract	Finance controller and engineering team	Every business event maps to balanced entries, tenant and period controls are enforced, reversals are traceable, and reconciliation evidence is defined