How Accounting Works

What Accounting does

The Accounting module is a full double-entry bookkeeping system. It keeps your financial records in order: bank transactions are imported and matched to invoices and bills, VAT is calculated and reported, and you can produce a profit & loss or balance sheet at any time.

Important distinction: Billing handles invoicing and payments. Accounting handles the ledger. They work together automatically — every payment in Billing creates a journal entry in Accounting — but they serve different purposes.

Key concepts

Chart of Accounts — Your account structure (revenue accounts, expense accounts, asset accounts, liabilities). Plenix ships with a default UK-style chart of accounts which you can customise.

Journal Entry — The fundamental accounting record. Every financial event (invoice paid, bill received, salary run) creates at least one journal entry with matching debit and credit sides.

Bank Account — Import your bank statement (or connect via Open Banking in future) and reconcile transactions against your invoices and bills.

Tax Rate / VAT Rate — Defined once, applied to invoice and bill line items. The system tracks input VAT (on bills) and output VAT (on invoices) separately for the VAT return.

What gets posted automatically

The following create journal entries without any manual action:

Event	What gets posted
Invoice paid	Revenue account credited, bank account debited
Bill paid	Expense account debited, bank account credited
Payroll run (HCM)	Salary expense debited, PAYE/NI liabilities credited
Credit note issued	Revenue account debited, client liability account credited

This means your P&L and balance sheet are always up to date as long as invoices are being paid through the platform.

Bank reconciliation

1. Import your bank statement (CSV from your bank, or direct connection if configured).
2. Plenix matches each imported transaction to the corresponding invoice payment or bill payment.
3. Unmatched transactions are flagged for manual categorisation.
4. Once matched, the transaction is marked as reconciled.

Reconciliation gives you confidence that your bank balance matches your books.

VAT Returns

Plenix tracks VAT automatically based on the tax rates applied to invoices and bills. At the end of each VAT period:

1. Go to Accounting → VAT Returns.
2. Review the boxes (Box 1 through Box 9 for UK MTD).
3. Submit or export for manual submission.

Multi-entity accounting

If you have multiple legal entities (e.g. a holding company and operating subsidiaries), the Accounting Entity module handles intercompany transactions and consolidation — producing consolidated group accounts across all entities.

How accounting connects to the rest of the platform

Billing: All invoice payments and credit notes flow automatically into Accounting as journal entries.

HCM (Payroll): Each payroll run creates accounting journal entries for salary costs, PAYE, and National Insurance.

Purchasing: Bills from suppliers (purchase invoices) are entered in Purchasing and flow into Accounting as accounts payable entries.

ERP (Budgets): Project budgets in ERP are tracked against actual spend visible in Accounting.

Reports: The Accounting module feeds the Profitability and Financial Performance reports.

Where to go next

• Reconcile a Bank Account
• Set Up VAT Returns
• How Billing Works