 So who knows what I mean when I talk about double entry accounting? Okay, so I've got a knowledgeable audience. So that's good. I'll skip over the the basic stuff more quickly We're in Montreal today, but what's the what's the French word for double entry accounting? Does anyone know any French speaker? Okay, and the concept of double entry accounting is the same all around the world The terminology is is different in each language, but it means the same thing and Who uses an accounting system for their personal finances? Okay What solutions are people using would anyone like to give an example? Your new cash Your new cash. Yep, anything else Ledger, okay anybody else any other products you're using Okay, um So who is a freelancer or contractor here? Okay And you're using This software for your freelancing purposes or your personal finances or both Both both For freelancing. Yep. Okay Okay, and Who who runs a business that you know where you keep inventory or employee people what what's your business? Okay, and do you use an accounting system? Which one? You know cash Okay, very good. Okay, so I hope we can help you. Okay and Who supports Solutions like this for other businesses as part of their job. Does anyone do consulting Around accounting software or installing software for accounting Okay so Some people have never used an accounting system before so maybe I just ask Is there anyone who hasn't used double-entry accounting software? Would you maybe put up your hand? Yep So we've got a few people. Okay So I'll go through a couple of very basic things quite quickly Just to bring you up to speed on what we're trying to do and then I'll go through a demo of a couple of the products We have in Debian and why it's important using them from Debian and There are two aims of this talk And the first is to actually show that that using an accounting system Will improve your control over your finances whether it's your personal investments or Whether it's freelancing And invoicing your customers or whether it's running a business that using one of these systems will improve The way that you manage the money and The other aim is to show you that the best Choice you can make is to use free software For your accounting system. So that means a free Software accounting solution running on a free operating system like Debian So people like to categorize things in fact research in in neuroscience and psychology Demonstrates that if we don't organize things By categorizing them and other techniques Then it can have all kinds of negative effects of stress and anxiety and being disorganized and Not being able to make good decisions And so who's been to IKEA? Do you have IKEA here in Montreal? It's like a giant maze you go in there for a couple of hours And you can come out with a wardrobe like this And there's a catch you have to build it yourself So this provides a good analogy with accounting software But using the wardrobe you can sort things into groups you can put your shirts together in one place You can put your socks in another place And then you might have a couple of unusual things like you can see the the hats and the teddy bears Stuffed away into corners up at the top of the wardrobe and that these Are problems you also have in accounting you will have unusual transactions that you don't know where to put them But some of the techniques for organizing those accounts are very similar to organizing a wardrobe Who's been to Las Vegas or to a casino? How much is the black chip worth One thousand depends on the casino. Yeah, it can be a hundred or a thousand. It's Can you tell me at a glance how many black chips there are in that picture? It's not so easy. There might be a few hidden underneath Have you noticed in the casino that the people stack their chips and they group them by the color And so this is what categorizing things is all about It's it's much easier to see at a glance how much money you've got the casino makes the chips in the different colors Because colors make it very easy to do this and they could just write the values on the face But then you wouldn't be able to see them in a pile. So they color them as well It makes everything go a lot more quickly So financial accounting is much the same as picking up all the clothes and off the floor and getting them into the wardrobe and in finance One of the most significant categories we use is the account So when you start setting up an accounting system, you'll one of the first things you'll do is to set up a chart of accounts So I've created a very basic one here and Each transaction that you make like paying a bill writing a check Receiving some money each transaction can be categorized by associating it with an account It's just like putting it into one of the drawers or the hangers in your wardrobe is you associate it with one of these accounts The accounts Themselves can be categorized and we can say that an account is an asset account or a liability account it can be an income account or an Expense account and we also have what we call an equity account. So these are the five main categories for the accounts and Can anyone see a trend in this chart of accounts Is there something that you notice looking at this list of accounts Expenses what do you notice a lot of expenses? Yes, so when you set up your chart of accounts It's not uncommon To have more expense accounts than all the other types of account combined Whether you're doing your personal finances or running a business and this is quite common So just looking at some of those accounts, we have a Current account which represents a bank account a relationship. We have with a bank Accounts receivable that represents money that people have to pay us So if you're freelancing and you give a bill to your customer Then until they give you that money, it's categorized in the accounts receivable account when you receive the money It's in your bank account You can see a couple of liability accounts We've got a credit card and we've got an accounts payable account So your accounts payable is the opposite of the accounts receivable and Then we go through the income from consulting account and a number of ordinary Expenses for rent telephone insurance. Yeah, most people have seen these types of expenses before and So once we start processing transactions and putting them into the system The place where they end up is called the general ledger So think of it as like a big spreadsheet or a big database table And in the general ledger We can input our bills The payments we make to pay the bills the income we receive from other people And we can record the The categories that we associate those things with or the accounts so in this first example You've got a transaction With a date the 5th of August and and I've specified two accounts the telephone expense account and The accounts payable Now this is a double entry accounting system So you've got a debit and a credit that equal the same amount And what this does is it records that we now have a debt For 50 you know Canadian dollars for example, it could be 50 euros or 50 US dollars In the accounts payable and and the reason we have that debt is because we received a telephone bill So here's another transaction Let's say at the end of the month We pay that bill using cash from the current account So we create another transaction and in that second transaction We eliminate the debt in the accounts payable account And and then we reduce the balance of the current account By that same amount so once again the debits on one side and the credits on the other side of that transaction are equal So if you add up everything in the debit column in the credit column They should always be the same even when you have millions of transactions in your system The final example Is a bank fee so in this case the bank fee doesn't go through the accounts payable The bank just takes the money out of your bank account. So the bank fees account is an expense account and that's a debit of two dollars and the The amount is taken out of your current account. So that's a credit for two dollars And So an accounting system is much like any other software you can talk about it in terms of inputs and outputs So all these little transactions are the inputs and And the outputs that we get from that system reports and You know a summary of which bills you have to pay at the end of the month for example or a list of which Customers have not paid you already a balance sheet that shows how profitable you've been or how successful you are So those are the reports that we get out so by putting in all these transactions We'll be able to get those reports very very easily Now it doesn't require a lot of math One thing you might have noticed is that a lot of these transactions that I've shown you already are quite simple almost boring One of the main Themes in accounting and Can be summarized by this simple equation that your assets should be equal to your liabilities plus equity so this is Really basic math. There's not there's no Calculus or statistics or anything that you need to master accounting So looking at your personal finances If you have a house as an asset and the liability might be the mortgage and the equity you have in the house is your It may be your net worth or your savings for your retirement So it's the same equation So that's an example with some numbers in this case your house is worth $200,000 You have a mortgage of 100,000 so you have equity of 100,000 as well And here I've taken those figures and I've put them into a balance sheet And is there anyone who has not seen a balance sheet before? Okay, so the balance sheet is based on that same equation and As you've got your assets your liabilities And your equity and they all add up the Liabilities and equity have added up to 200,000 the same as the Assets on the balance sheet So a couple of years ago I wrote a blog post Comparing some of the free software solutions for accounting Mainly on on Debbie and and other Linux distributions Can you read that at the back? No, don't worry. It's on my blog. This this table has been cut and pasted from my blog And I'll just read the names of the packages. I've compared I won't go through every box in this table So we've got postbooks and Triton a new cash ledger SMB Home Bank Scrooge came my money BG finances and Griabi or a Grisby it's a bit difficult to read even up here. So these Most of these are actually packaged as well. They're all free software You can download the source code and most of them You can even install them with a package and start using them into two to three minutes and And some of the things I've compared in the table whether or not they have a GUI So that's the first row in the table whether they have a web interface is the second row in the table Whether or not they're a multi-user system Whether they store data in files or in a sequel back-end like postgres Whether they support multi-currency Some of them support the accounts receivable and accounts payable some of them don't if you're only tracking your personal Finances like investments and things you might not worry about accounts receivable But if you're a freelancer, you will need accounts receivable. So I've basically compared Most of those features. There are a few other things that you can look at in the blog Yeah, so when you look at something like this wardrobe There's quite a lot of effort in actually going into the IKEA store Walking around comparing like a hundred different wardrobes. They have on display Loading it on to the trolley taking it through the cash register taking it home Then you've got to put it together as well So it's a big effort. It's the same thing with setting up an accounting system Who set up their accounting system themself? Yep and How much time did it take you Too long, okay Like half a day a day weeks, yep Day or two Yeah, and who has actually changed from one accounting system to another Yes, and how long did that take it's still going on. Yes, this is not uncommon and so yeah the setting up an accounting system is more complicated than building the wardrobe and Because you've got to take everything out and then get it back into the new thing and and what have you? It can be a huge task. So it's really important to choose the right Solution at the beginning and so one of the benefits of using free software and Is that you can really explore the complete? Solution before you commit to it before you put in all of your business data You can download all these solutions and you could spend two or three months just getting to know them to Make the right decision before you actually spend a month entering all your business data You don't change wardrobes every year and once you set up an accounting system You're not going to change it for maybe four or five years maybe ten years Some people will keep using the same system for 20 years So The second thing to think about is that with the wardrobe Would you get a wardrobe that is smaller than what you need? Or would it be better to get a wardrobe that might be a bit bigger than what you need? That you can use some of the space later Yeah, so a wardrobe that will fit in the room. So with with wardrobes. Yes, this can be a problem You may want to deliberately limit what goes into the wardrobe and throw some things away but with with accounting systems Another problem that people have is when they're starting a business like they're a startup company They just pick whatever software is recommended by a friend or an accountant or they buy something that they find in a shop And it may be smaller than what they need and after six months They find that it's like a wardrobe that's too small and things are overflowing They they cannot close the drawers and they need to change and then they have this Crisis scenario that they have to spend three months changing their accounting system So a second thing about free software is that you can take the most extensive system that has Features that you'll never use or that you never think you're going to use and you can start using that system and just ignore those features For six months for two years, maybe for five years But you know that they're there and that you can turn them on if you do want to use them in future So this is that one of the second big benefits of using free software and that proprietary Accounting software and Thrives on making things optional on on having different plans and licenses and Strategies to make you move on to a different product when you need a new feature With free software There are none of these games. The license is free. Otherwise, it wouldn't be in Debian and if you're installing software for other businesses and then this is also important and because your clients Will choose a free software solution that you recommend and they'll keep using that solution for many years Their business will be more successful because of the flexibility of that solution and and they will Come to respect free software because it's at such a vital place in their business that every business Depends on their accounting system You know they they have to pay their salaries and pay their bills and pay their rent and they're using Debian Based solutions to do that So they're going to have a lot of respect for Debian and free software after they've been doing that for a few years So that's good for anyone who is in the business of promoting free software and giving a high-quality service to their clients and So moving on to postbooks and This is a very basic client server architecture and Postbooks uses the PostgreSQL database as the server. There is no postbooks Server unless you want to run the web interface and then you need to run their web server process And if you only use their GUI client on the desktop, then postgres itself is the server Here we've got three people running the GUI client and we've also got the The web server and web user over on the right hand side of the diagram But you could cut those out and just have one person running the client and Running the PostgreSQL database on the same computer In fact the way that we're going to do the demo today is running the whole thing from the laptop the postgres is in my laptop And the GUI client is in my laptop So to install postbooks on Debian You can open Synaptic which is the GUI for installing packages you can search for postbooks That's the GUI client These are the schemers so this is the demo schema that we're going to look at you don't need to install all the Schemas, but you will need at least one of them And you also need to install the PostgreSQL package, so we've got PostgreSQL Like there are a lot of PostgreSQL packages you also need This PostgreSQL Contrib package, this is all in the readme.debian so that you will get all these things and you install those with the package manager and then you can run it so We minimise that so when you start it and Before you can log in you need to load the database which you can do from the command line The command for that is in the readme.debian And then you can log in for the first time. We're logging into the demo database here, which already has a whole bunch of transactions in it and When you're doing an Evaluation the demo database is great because you can just put things in and mess around with them You can even delete it and load it again, but when you're putting in real business data And and you want to use it, you know for real, please don't put your data into the Demo database because then your data will be mixed up with the demo data and there's no way to separate them And Just popped up on the wrong screen. So I move it over here. So this is the main window so So if we look at accounts payable This is how we put in a bill Miscellaneous voucher is the word they use for it in in postbooks in other software they might say a bill But here they call it a voucher So we choose a vendor so they gave us the bill we put in a date. So let's say it was today and Then we put in the the bill number or the invoice number from the bill So I've put in a number from a bill We put in the amount of the bill. So it's a hundred u.s. Dollars there This is this demo also supports euros and British Pounds and We can tell it what the The bill was for so we can choose it one of the accounts from the chart of accounts and we'll say that bill was for about professional services Okay, save so that's down there now We could put multiple services on the same bill. We can keep going back and adding them here But let's try and save that And it gives us a warning A voucher for this vendor has already been entered with the same vendor invoice number So it's saying that this number has already been entered before So that means I've already entered that bill When you've actually got a lot of bills, this is not an uncommon mistake to make And this is just one of the small things that that you avoid when using Accounting software to manage all of your bills and payments Is anyone ever paid a bill twice? Yes, yeah, this is not an uncommon mistake and when you've actually got multiple people in an organization who are Collaborating to manage the the accounts and then the probability of these mistakes increases But the software tries to stop that with those little warnings, but we can put the bill Anyway with a different number just because we're doing a demo and we don't really care that there isn't really a bill from this company and And we post it to the general ledger and that's done And so now we can go and see the general ledger transactions Window has popped up in the wrong place again, but here it is. So if we look at all the transactions for August and there's our debit and credit in the general ledger The important thing to note here is that by using the accounting software We didn't have to remember the name which amount was a debit and which amount was a credit and The software takes care of all those little details for you So this makes it a lot easier for people doing this for the first time Finally and we can see some reports. We go to financial statements View financial report once again we have to move the window And I'm going to ask for the basic balance sheet For August and I query that so there we go. We have an accounts payable liability of $100 and on our balance sheet So everything happens quite quickly after we put in all our bills if we put more bills Then that line on the balance sheet would change immediately If we receive some income then that will also appear as an asset on the balance sheet At the moment the assets are zero so we're not in a very good position Now this is a demo database So they actually have a lot of data in there already from previous years. So if I go backwards To about 2012 for example, I can see quite an elaborate Balance sheet with a whole lot of things on it And if you're learning accounting or if you just want to learn about the capabilities of this software Because you've used other software and you want to make a comparison Then you can use all this data to play with and to see what it can do If you wanted to print this You can click preview and you can see a nice report that you can print And so if you're Running a non-profit organization or a community organization, for example, and you have a board meeting And do you want to bring some financial information to the meeting? Then this can be a very quick way of extracting that information and having more transparency in your organization To get these reports, you know, someone has to be putting the data in From day to day or maybe once a month and then if all the data is in the system Then whenever people ask for you know, what's our position? Are we solvent? Are we profitable and you can just click and give them the answer with a nice report So the other thing I was going to bring up today is Triton So we're only going to spend a couple of minutes on Triton The Triton also has a Agui We can also install it as a package to install Triton you just look for Triton client The Triton server and the Triton modules all And if you install those three packages then everything will be on your system The readme.debian file includes some steps for setting up the database and So that will take maybe five to ten minutes And then when you've done that you can log in to Triton for the first time so Can people read that up at the back? Okay, and at the front It's it. Okay. I'll go through it quickly and I'll explain what I'm doing The font is a little bit small in most of these things So if we go into this financial tree We can do various things like putting in an invoice So here instead of vouchers, they've got supplier invoices. So these are the bills you receive from your suppliers So we can go through the same process that we followed in postbooks we can put in The amount the date the currency and You can put the invoice number from the supplier Now I've already created some Journal entries in the system. So I'm just going to bring those up. Yeah, so there we go. So that's already been posted So that's a transaction for ten Swiss francs I set this one up using the Swiss franc as the currency And finally we can go down to reporting just like we did in postbooks We can report on the general ledger so we can see that The ten Swiss francs there in the revenue account and we can see the balance sheet so once again this time in this Demonstration we've got an asset rather than a liability And So this is a more positive balance sheet this setup is far less complete. This is not a demo database This is an empty database. So there are a lot of basic things missing from this demo I haven't even put in the names of any customers for this demo. That's one reason I didn't fill out the the supplier invoice in the demo But nonetheless you can see that it has all the same concepts that we looked at in postbooks and Postbooks is developed in C++ and the QT Yeah, we're sorry the GUI The web interface for postbooks is based on node Whereas in the Triton system most of the development is in Python and there's a very different style of programming Yeah, there are different use cases. There are some people who have specialized postbooks for manufacturing Whereas with Triton for example, there's a very well-known product that you know health which is for health care So depending on the industry you're working in The programming language you prefer and all kinds of other factors You've got to look at each of these very carefully to work out which one is going to be more relevant for you So what next you know play with the demo databases ask in the mailing lists and forums and things Find a chart of accounts. That's usually the first step in setting up an accounting system They differ a little bit from one country to the next and sometimes they'll be specialized for your industry And then you can just get started the software is there the licenses are there for you to download it Copy it and modify it as you need to Yeah, why use one of these solutions and it's easier to share responsibility The forms they hide all the debits and credits for you so that people can just enter things straight from a bill and You can get the reports in just a few seconds like we did today Yeah, when you're talking about money Yeah, one thing that people often say Is that either you control your money or your money controls you? and and the same can be said with software with free software and Like Debian with a free license you're in control of the computer and yeah with With proprietary software the software and the vendor controls you so when you put Free software together with managing your money Then isn't it likely that you're going to have more control in the long run than if you went down any other path and So I'd encourage you to you know to have a look at these solutions ask any questions use the Debian Mailing lists or feel free to approach me today, and so thank you for coming so Do do we have time for questions? Okay, so just wait for the microphone before asking questions, so yeah Hello, thanks. Yeah, maybe I stand up So you mentioned that the different software suits well different industry So do you have an advice for the IT industry like IT services? Which software would so better for an individual or for an IT service company with many staff IT service startup Okay, I Think that the best thing to do in that case is to look at your skills So if you have people who do Python for example Then you might start looking at Triton First because you know you'll be able to maintain it in-house If you have people who know c++ you might start looking at postbooks And if you don't have any developers in the company, then you might look around your community To see what other people are using in your city or if you're involved in groups within Debian For example, then you might speak to other people, you know there and see what they're using It's good to have a support network around you so that you're not on your own with these solutions So these are all different things you could take into consideration so So we have a second question So it's a question. It's a comment on free software usage in accounting in Germany The customer of mine was running on new cash actually and then the tax office did a an audit on them and then Well, first of all what was missing was a certain export feature for the German tax system That was not so problematic But they said actually that the software for accounting in Germany has to be revision safe So that includes actually a closed source format because you Are not supposed to reverse engineer actually what's in the accounting database and that actually blocked From my point of view free software completely out locked it out and What the German tax people said actually is no you need to use a commercial product So that the data format is is undisclosed So it's not known how to actually play with that and and manipulate the data in the accounting This is interesting because it's often found that this is not Really achieving the outcome they're talking about You hear the same argument with many things people always find ways around these artificial restrictions It's the same with obfuscation instead of encryption people think that if you write something Like in another language people won't understand it Well, maybe for half a day, but then they'll figure out a way around it But is there anyone who knows the German solution and can talk about it more? We just go on to the next person though I'm can't talk about text stuff and so but I know from general practitioners that there is a solution where You should also not change your medical record of your patients, right? And the solution was to build a hash zoom of the record and send them to some notification server So you have no access to it anymore and can't change it afterwards And this should be a solution also also in this case because the thing is not that the format is closed But that you are not able to change it and this would solve the problem Yeah, I mean in finance. They're talking about doing the same thing with blockchains so that when banks make transactions between each other Like currency trades and they would use the the blockchain as a public blockchain To record those transactions So everyone has a copy and it's open and it can't be modified So they all know that the records are accurate So you could actually argue that to ensure accuracy you need to have something that's open as opposed to closed So so this we could have an extended debate about this But I think that's worth, you know looking at more closely and I believe there are people using free software in Germany for accounting, so that's worth looking at so and to the next Hi, thank you so much for your presentation today I invited a couple of people that are interested in this but probably the rain Took them home. So I Had a question through you in terms of advocacy. What do you think would be needed to break the cycle where people get advised some software and then the accountants are only trained on commercial proprietary software and then they advise people to use it and it stays into that Vicious cycle What do you think would be needed to break that? Because if I if I see the interface the general presentation Just by the looks and feel of the software feels like it's ready And I know some of these projects have been around for years and are used by thousands or people elsewhere But what what do you think would be needed to break that cycle? Okay, so there are a few answers to that one is to look at students who are studying accounting and To say look we have a solution with Debian that you can do your course work You can become an expert in accounting you can run a complete accounting system on your laptop and get to know it inside out Before you even graduate So for students, that's a great opportunity before they start working in a company They might not have a lot of experience So if a lot of students get into free software early on then they will remember that throughout their careers even when they come across other solutions and This can be achieved by working with groups on campuses Helping them with their events inviting them to events like this Another opportunity is to work with startup companies as I mentioned during the talk You know people often choose something and then they don't change it until they have a really good reason So if they're starting their business and you get them started with a free software solution And they start using it and they write scripts and things to integrate with it Especially if they are an IT startup or an app developer Then they're going to be locked into that and whatever their accountant says is going to rate, you know write down here Compared to the effort of changing all their scripts and reports, which is a huge effort They're not going to change unless they really need to they're going to change accountants before they consider changing their software So any other questions or okay, so Maybe we have we have time for one this will be the last one. Okay just about the German thing the maintainer of tried and he's a German and he has a small business Where your office is so this so I don't know his solution, but I'm definitely sure it's possible to use try it in Germany Okay, I don't think so he was last year Okay, so thank you very much Daniel and everyone to come So thank you