How It Works

Complete calculation guide

How It Works

Invoices & Revenue

Invoice Total Calculation

An invoice's total is calculated in this order:

Subtotal = SUM(item.quantity × item.unitPrice)
After Discount = Subtotal − (Subtotal × discount%)
Tax = After Discount × (tax rate / 100)
Total = After Discount + Tax + Fees

Example: 2 items @ $100 each = $200 subtotal, 10% discount = $180, 19% tax on $180 = $34.20, +$5 fee = $219.20 total

Payment Tracking

Payments are applied individually to invoices:

• Amount Paid = Sum of all payments applied
• Remaining Balance = Total − Amount Paid
• Status (auto-updated):
draft → Not sent to client
sent → Sent but not paid
partially_paid → 0 < Paid < Total
paid → Paid ≥ Total
overdue → Due date passed, unpaid

Overpayment → Client Balance

When a payment exceeds the remaining invoice balance, the excess is automatically added to the client's credit balance:

Applied to Invoice = min(Payment Amount, Remaining Balance)
Excess = Payment Amount − Applied to Invoice
Client Balance += Excess

Example: Invoice total = $200, already paid $150, remaining = $50. Client pays $80 → $50 applied to invoice (status → paid), $30 added to client balance.

The client's balance is then auto-applied to future invoices at creation time.

Cost of Goods Sold (COGS)

Product costs are snapshotted at invoice creation time:

• Each item records unitCost at creation
• Item COGS = unitCost × quantity
• Invoice COGS = Sum of all item COGS
• Used in profit calculations, never changes

Automatic Balance Application

When a client has an outstanding balance (from overpayments), it automatically applies to new invoices. If new invoice = $500 and client balance = $100, the client owes only $400.

Clients & Payments

Client Balance Tracking

A client's balance is tracked cumulatively:

• Total Invoiced = Sum of all invoice totals
• Total Paid = Sum of all payments applied
• Pending Balance = Amount owed without invoices (e.g. from Excel imports)
• Total Pending = (Total Invoiced − Total Paid) + Pending Balance
• Client Balance = Available credit from overpayments

Bulk Payment Distribution (FIFO)

Payments are distributed in 3 priority steps:

  1. Invoices first: Apply to unpaid invoices, oldest first (FIFO)
  2. Pending Balance: If remaining, reduce the client's pending balance (imported amounts with no invoices)
  3. Credit Balance: Any remaining excess goes to client credit balance

Example: Invoice 1: $500 unpaid, Pending Balance: $200. Client pays $800 → Invoice 1 fully paid ($500), Pending Balance reduced by $200, Client Balance += $100.

Stock & Inventory

Stock Quantity Tracking

Stock is tracked differently for simple and composite products:

Simple Products: Quantity is stored directly
Composite Products: Effective Qty = floor(min(component1_available / component1_needed, ...))

Example: Chair (composite) needs 1 frame + 4 wheels. Available: 10 frames, 32 wheels → Effective qty = floor(min(10/1, 32/4)) = floor(min(10, 8)) = 8 chairs

Low Stock Alerts

Products are flagged as low stock when: Effective Quantity ≤ Minimum Stock (default minStock = 5)

Stock Deduction on Invoice

When an invoice is created:

  1. Validation: Check sufficient stock exists BEFORE allowing creation
  2. Deduction: After invoice saved, subtract from stock
  3. Simple: quantity -= item.quantity
  4. Composite: For each component, quantity -= (component.quantity_needed × item.quantity)

⚠️ Stock deduction is atomic: If validation passes, deduction WILL succeed. If validation fails, invoice creation is blocked entirely.

Automatic SKU Generation

SKUs are auto-generated during creation or category change:

SKU = [Category Prefix] + [Sequence Number]

Example: Category "Furniture" with 3 existing products → new product gets SKU "Furniture-4"

Expenses & Recurring Charges

One-Time Expenses

Fixed amount expenses included in reports only if date is within report period. No pro-ration applied.

Recurring Expenses

Stored as a rate and pro-rated based on recurrence pattern:

RecurrenceFormulaExample
Weeklyrate × (days ÷ 7)$100/week × 10 days = $142.86
Monthlyrate × months (calendar-accurate)$1000/month × 1.5 months = $1500
Quarterlyrate × (months ÷ 3)$3000/quarter × 2 months = $2000
Yearlyrate × (days ÷ 365)$12000/year × 100 days = $3287.67

Calendar-Accurate Month Calculation

When you have a monthly expense or salary, the system needs to figure out how many months fit between two dates. Instead of assuming every month has 30 days, it counts using the real calendar.

The idea is simple: split the date range into 3 parts:

1. Remaining days in the first month — how much of the starting month is left?
2. Full months in between — any complete months from start to end?
3. Days used in the last month — how far into the ending month?

Example: Feb 15 → Mar 17 (expense is $1,000/month)

Step 1 — Rest of February: Feb has 28 days. From Feb 15 to Feb 28 = 14 days remaining.
14 ÷ 28 = 0.5 (half a month)
Step 2 — Full months between: Feb and Mar are next to each other, so there are 0 full months in between.
Step 3 — Days used in March: 17 days into March. March has 31 days.
17 ÷ 31 = 0.5484 months
Total = 0.5 + 0 + 0.5484 = 1.0484 months → $1,000 × 1.0484 = $1,048.40

Another example: Jan 1 → Mar 31

Step 1: Jan 1 to Jan 31 = full month → 1.0
Step 2: February is one full month in between → 1.0
Step 3: Mar 1 to Mar 31 = full month → 31 ÷ 31 = 1.0
Total = 1.0 + 1.0 + 1.0 = 3.0 months exactly
Consistent across reports:
• Both the P&L and Comprehensive reports use the exact fractional value (e.g. 1.0484 months) so the two reports always agree for the same period.

Employees & Payroll

Salary Calculation by Period

Base salary is calculated differently by employee's salary period:

Weekly

Salary = rate × (days ÷ 7)

$1000/week, 21 days (3 weeks) = $3000

Monthly

Salary = rate × calcMonths() [calendar-accurate]

$3000/month, Feb 15–Mar 17 (1.0484 months) = $3145.20

Salary Advances: Deduction & Pro-rating

Advances reduce take-home pay, pro-rated by overlap between the advance's pay period and the report period:

Remaining Days = calcDays(Advance Date, Period End)
Daily Rate = Advance Amount ÷ Remaining Days
Overlap Days = calcDays(max(Advance Date, Report Start), min(Period End, Report End))
Deduction = Daily Rate × Overlap Days
Net Salary = Base Salary − Sum of Deductions

Example: $3000/month employee, $500 advance on Jan 25. Period end = Jan 31. Remaining days = calcDays(Jan 25, Jan 31) = 7. Daily rate = $500 ÷ 7 = $71.43. If report covers full January: overlap = 7 days → Deduction = $71.43 × 7 = $500. Net salary: $3000 − $500 = $2500.

If report only covers Jan 25–Jan 28 (4 overlap days): Deduction = $71.43 × 4 = $285.71.

Advance Status & What Each Means

Every salary advance has one of 3 statuses:

Pending — The advance was given but the pay period hasn't ended yet. It will be deducted from the employee's salary.
Deducted from Salary — The pay period has ended and the advance was automatically deducted from salary. This happens on its own — you don't need to do anything.
Returned — The employee gave back the money directly (not through salary). The advance is NOT deducted from salary.

When does it auto-change to "Deducted"?

• Weekly employee → when a new week starts after the advance
• Monthly employee → when a new month starts after the advance

What can you change manually?

• You can mark a Pending advance as Returned (employee gave the money back) — it will no longer be deducted from salary
• You can switch a Returned advance back to Pending if needed
• Once an advance is Deducted from Salary, you cannot change it — it's already been applied

Employee Inactive Date

Employees can have an inactive date that stops salary calculation from that date:

• If inactiveDate is set, salary is only calculated up to that date
• The salary end date = min(inactiveDate, report end date)
• If inactiveDate is before the report start date, the employee is excluded entirely
• This applies to both P&L and Comprehensive report salary calculations
• Dashboard earnings also respect the inactive date

Example: Employee earns $3,000/month, hired Jan 1, inactive date = Feb 15. For a Jan 1 – Mar 31 report: salary is calculated for Jan 1 – Feb 15 only (1.5 months = $4,500), not the full 3 months.

Supplier Bills & Payables

Bill Type

Each supplier bill has a type that determines how it is treated in financial calculations:

Stock / Inventory — The bill is for purchasing stock or raw materials.This cost is already reflected in COGS when products are sold, so it is NOT included in operating expenses. This avoids double-counting.
Operating Expense — The bill is for services, rent, utilities, or other operational costs.This IS included in operating expenses on reports, dashboard, and expense listings.

Bill Payment Tracking

Similar to invoices, supplier bills track:

• Bill Amount = Stored at creation
• Amount Paid = Sum of all payments
• Remaining = Bill Amount − Amount Paid
• Status: pending (0%), partially_paid (0–100%), paid (100%)

Days Overdue

daysOverdue = floor((now − dueDate) ÷ 86400000)

Aging categories: Current (0 days), 1-30, 31-60, 61-90, 90+

Chart of Accounts (COA)

Account Structure

The Chart of Accounts organizes all financial accounts into 5 types:

Assets — What the business owns (Cash, Receivables, Inventory)
Liabilities — What the business owes (Payables, Tax Payable)
Equity — Owner's stake (Retained Earnings, Capital)
Revenue — Income earned (Sales Revenue)
Expenses — Costs incurred (COGS, Salaries, Rent)

Account Codes & Hierarchy

Each account has a unique code (e.g. 1000 = Cash). Accounts can be nested under parent accounts for sub-categorization.

Code RangeTypeExamples
1000-1999Assets1000 Cash, 1100 Accounts Receivable, 1200 Inventory
2000-2999Liabilities2000 Accounts Payable, 2100 Tax Payable
3000-3999Equity3000 Owner's Equity
4000-4999Revenue4000 Sales Revenue
5000-5999Expenses5000 COGS, 5300 Salaries, 5900 Other Expenses

Default Accounts & Auto-Creation

Default accounts (Cash, AR, AP, Revenue, COGS, etc.) are auto-created when needed by the auto-journaling system. You can add custom accounts at any time.

• Default accounts are marked with a default badge
• Default accounts cannot be deleted (they are used by auto-journaling)
• Custom accounts can be created, edited, and deleted freely

Account Ledger

Click any account balance to view its ledger — a chronological list of all journal entries affecting that account with a running balance.

Running Balance = Previous Balance + Debit − Credit (for Assets/Expenses)
Running Balance = Previous Balance + Credit − Debit (for Liabilities/Equity/Revenue)

Journal Entries & Auto-Journaling

Double-Entry Bookkeeping

Every financial transaction is recorded as a journal entry with at least two lines that must balance:

Total Debits = Total Credits (always)
Each line: Debit OR Credit (never both)

Auto-Journaling

The system automatically creates journal entries for business transactions:

EventDebitCredit
Invoice CreatedAccounts ReceivableSales Revenue + Tax Payable
Invoice PaymentCashAccounts Receivable
Expense RecordedExpense AccountCash
Supplier Bill PaymentAccounts PayableCash
Salary AdvanceSalaries ExpenseCash

Auto-journaling happens silently in the background. You never need to create journal entries manually for standard transactions.

Journal Entry Types

Invoice Payment — Cash received from clients
Invoice Created — Revenue recognized at invoice creation
Expense — Operating costs paid
Supplier Payment — Bills paid to suppliers
Salary Advance — Advance paid to employee
Manual — Entries created manually

Trial Balance

What is a Trial Balance?

A trial balance lists all accounts and their balances to verify that total debits equal total credits. It is the primary check for accounting accuracy.

Total Debits = SUM(all debit balances)
Total Credits = SUM(all credit balances)
If Total Debits = Total Credits → BALANCED
If Total Debits ≠ Total Credits → ERROR exists somewhere

How Balances Are Calculated

• Assets & Expenses: Normal debit balance → Debit Balance = Total Debits − Total Credits
• Liabilities, Equity & Revenue: Normal credit balance → Credit Balance = Total Credits − Total Debits
• Accounts with zero balance are excluded from the trial balance
• You can filter by date to see the trial balance as of a specific date

Budgets

Budget Structure

Each budget covers a fiscal year with monthly allocations per account:

• Name & Year: e.g. "Operating Budget 2026"
• Monthly Amounts: Set a budget amount for each account for each month (Jan-Dec)
• Copy From: Create a new budget by copying from an existing one
• Status: Active or Archived

Spreadsheet Editor

Edit budgets in a spreadsheet-style grid. Tips:

• Double-click any cell to copy that value to all 12 months
• Add Account button to add new accounts to the budget
• Accounts are grouped by type (Revenue, Expense, etc.)
• Annual totals are calculated automatically

Budget vs Actual

Compare budgeted amounts against actual journal entry totals:

Actual = SUM(journal line amounts) for account in that month
Variance = Budgeted − Actual
Variance % = (Variance ÷ Budgeted) × 100
• Green = under budget (good)
• Amber = >80% of budget used (warning)
• Red = over budget (action needed)

Balance Sheet (Journal-Based)

How It Works

The balance sheet is computed from actual journal entries, giving you a real-time snapshot of financial position:

Assets = SUM(debit − credit) for all Asset accounts
Liabilities = SUM(credit − debit) for all Liability accounts
Equity = SUM(credit − debit) for all Equity accounts
Net Income = Revenue − Expenses (from journal entries)
Equity + Net Income = Total Equity
Assets = Liabilities + Total Equity (accounting equation)

Date Filtering

Filter by "as of" date to see the balance sheet at any point in time. Only journal entries on or before the selected date are included.

Excel Import

Client Import

Import clients in bulk from an Excel or CSV file. Supported columns:

• name (required) — Client name
• email, phone — Contact details (duplicates within the org are skipped)
• address, city, country — Location info
• balance — Credit balance (overpayment credits)
• pending — Pending balance (amount owed without invoices)
• notes — Free text notes
• Rows with duplicate email or phone (within the org) are skipped with a reason
• Rows without a name are skipped
• The balance column sets the client's credit balance directly
• The pending column sets the client's pendingBalance — this is included in totalPending calculations and can be reduced via bulk payments

Supplier Import

Import suppliers in bulk from an Excel or CSV file. Only details are imported — no bills are created. Supported columns:

• name (required) — Supplier name
• contact_name — Contact person
��� email, phone — Contact details (duplicate emails are skipped)
• address, city, country — Location info
• payment_terms — Payment terms in days
• notes — Free text notes

Import Behavior

• Column headers are case-insensitive and spaces/underscores are normalized
• Alternative column names are supported (e.g. "supplier_name", "contact", "telephone", "mobile")
• After import, a summary shows: count imported, count skipped, and details for each skip
• All imports are logged in the Activity Log

Tax Calculations

Tax per Invoice

Tax is calculated on the discounted amount:

Tax = (Subtotal − Discount) × (Tax Rate ÷ 100)

Default tax rate: 19%

Tax Collection Tracking

Total Tax: Sum of tax from all invoices regardless of status (draft, sent, partially paid, paid)
• Tax is treated like COGS — it is recognized in full at invoice creation, not pro-rated by payment

Tax in P&L Reports

Tax is calculated on all invoices within the report period:

Tax Collected = SUM(invoice.tax) for all invoices in period

Example: 3 invoices in January — $190 tax (paid), $95 tax (partially paid), $50 tax (draft) → Total tax = $335

Financial Reports

Profit & Loss (P&L) Report

Calculates profitability over a date range.

Revenue = SUM(payments in period) [cash basis]
COGS = SUM(unitCost × qty) for invoices with payments in period
Tax = SUM(invoice.tax) for all invoices in period [full amount regardless of payment status]
Gross Profit = Revenue − COGS
Total Expenses = one-time + recurring + salary + bills
Net Profit = Gross Profit − Expenses

Balance Sheet Report

Snapshot of financial position.

Assets: Cash + Accounts Receivable + Inventory
Liabilities: Tax Payable (full tax from all invoices)
Equity: Total Assets − Total Liabilities

Comprehensive Report

Combines P&L with detailed breakdowns:

  • Revenue breakdown (period vs. old invoices)
  • COGS by invoice with gross profit
  • Receivable aging (by days overdue)
  • Payable aging (supplier bills)
  • Profit margins (COGS, Gross, Net)

Cash Out (Total Sales Section)

Both P&L and Comprehensive reports include a "Total Sales in Period" section with a Cash Out metric:

Cash Out = One-Time Expenses + All Supplier Bill Payments
Net Profit (Sales) = Total Paid − Cash Out
• One-Time Expenses: Only expenses with recurrence = "none" (no recurring, no salaries)
• Supplier Bill Payments: All types (both stock and expense bills)
• Excluded: Recurring expenses and salaries — these are estimated/prorated amounts, not actual one-time payments

Why? Cash Out shows what you actually paid out as discrete payments, so you can compare it to the cash received (Total Paid) to see real cash flow.

Profit Margins

COGS Margin = (Total COGS ÷ Revenue) × 100
Gross Margin = (Gross Profit ÷ Revenue) × 100
Net Margin = (Net Profit ÷ Revenue) × 100

Dashboard KPIs

Earnings Summary

• Gross Earning: Sum of all invoice totals
• COGS: Sum of (unitCost × qty) for all invoiced items
• Total Tax: Sum of tax across all invoices
• Total Supplier Bills: Sum of all bill amounts
• Total Expenses: Sum of one-time + recurring
• Total Salaries: All employees prorated from hire date to today (minus advances)
• Net Earning: Gross − COGS − Tax − Bills − Expenses − Salaries
• Pending Amount: Sum of unpaid invoice balances

Revenue Trend

Groups invoices by month (12-month lookback):

Trend % = ((current month − prior month) ÷ prior month) × 100

Green indicates positive trend, red indicates negative.

New This Month

Counts new clients and invoices created after month start.

Low Stock Products

Lists products where Effective Quantity ≤ Minimum Stock Threshold.

AI Assistant

What It Can Do

The AI assistant has full context of your business data and can:

• Query data: "How much revenue did we make this month?"
• Create records: "Add a new client called Tech Solutions"
• Update records: "Update USB-C Hub stock to 50"
• Export PDFs: "Export all January invoices as PDF"
• Generate reports: "Create a financial summary report"
• Accounting queries: "Show me the trial balance" or "What is the balance of account 1000?"

Voice Input

Supports voice input in English, French, and Arabic (Lebanese and Standard). Click the microphone button and speak — the AI will auto-send after 2 seconds of silence.

Action Confirmation

Write actions (create, update, delete) require explicit confirmation before execution. Read-only actions (exports, queries) execute automatically.

• Admin: Can perform all actions
• Employee: Can only query data (no write actions)

Data Integrity & Validation

Invoice Creation Validation

  • Client must exist
  • At least one invoice item required
  • Item quantity > 0
  • Product must exist with sufficient stock
  • Item unit price must be ≥ product cost
  • Invoice date must be valid
  • Tax rate (if provided) must be 0–100%

⚠️ If validation fails, invoice is NOT created and error is shown.

Rounding & Precision

Value TypeFormatExample
Currency2 decimals with symbol$1,234.56
Percentage1 decimal place19.5%
Month (pro-ration)4 decimals (internal)1.5048
DaysInteger (floor)30
Quantity2 decimals or integer5 or 2.5

Payment Boundary Checks

  • Payment amount must be greater than 0
  • If payment exceeds remaining balance, only the remaining is applied to the invoice — excess goes to client balance
  • Invoice payment records never exceed the invoice total
  • Client balance auto-applies to new invoices at creation

Audit Trail

All actions are logged in Activity Log: invoice creation/update/delete, payments, expenses, stock adjustments, employee changes, advances.

Frequently Asked Questions