The Importance of Accounting Methodology in ERP Implementation
For businesses in Bangladesh that are adopting ERP solutions like Odoo, the choice of accounting methodology whether Anglo-Saxon or Continental has significant implications. It directly impacts inventory valuation, cost recognition, and the timing of financial reporting. While often overlooked during the ERP configuration phase, this foundational setup can define how accurate, compliant, and actionable a company’s financial insights are.
As ERP adoption rises across Bangladesh, particularly among SMEs and mid-sized enterprises, the need to align accounting configurations with operational and compliance needs becomes more critical. A recent report from LightCastle Partners suggests that over 60% of mid-sized companies in Bangladesh are in the process of digital transformation, with ERP implementation being a key priority in 2025.
Continental vs Anglo-Saxon Accounting:
| Accounting Method | Expense Recognition | Inventory Impact | Best Suited For |
|---|---|---|---|
| Continental | Upon receipt of goods from supplier | Immediate expense booking | Manufacturing and cost-centric operations |
| Anglo-Saxon | Upon sale or delivery to customer | Deferred expense until revenue is earned | Trading, distribution, and service businesses |
The fundamental difference lies in when the Cost of Goods Sold (COGS) is recognized. Continental accounting records it earlier at the time of product receipt while Anglo-Saxon accounting aligns COGS recognition with sales, ensuring better revenue-cost matching.
Application in the Bangladeshi Business Context
In Bangladesh, there is no legal mandate prescribing one method over the other. However, the prevailing practices and external influences provide some direction:
- Export-oriented businesses, multinationals, and trading firms often follow Anglo-Saxon principles to ensure global alignment and accurate profit reflection.
- Local manufacturers and government project contractors are typically more accustomed to Continental practices, partly due to auditing conventions and legacy accounting structures.
- Tax audits in Bangladesh tend to focus on supplier invoices and import documents, which aligns more closely with Continental accounting.
Despite this, companies with global suppliers or customer bases increasingly favor Anglo-Saxon accounting for its clarity in profitability reporting and adherence to accrual-based matching principles.
Odoo’s Support for Both Systems
Odoo, originally designed with Continental accounting principles, has evolved to fully support Anglo-Saxon accounting as well, across both Community and Enterprise editions.
Key Differences in Odoo Configuration
| Parameter | Continental Accounting | Anglo-Saxon Accounting |
|---|---|---|
| COGS Recognition | Upon product receipt | Upon sales invoice confirmation |
| Inventory Valuation | Uses Expense accounts | Uses Interim Asset accounts |
| Stock I/O Accounts | Typically unified or expense-linked | Separate Stock Input and Stock Output |
| Price Difference Account | Not used | Recommended for handling supplier cost variance |
| Default Setup in Odoo | Default in EU-based installations | Enabled by default in non-European instances |
In Anglo-Saxon mode, interim stock accounts are recorded as assets. Only when the product is sold does the cost shift from stock to COGS. This is more appropriate for trading businesses that rely on real-time profit calculation per sale.
Switching Between Accounting Methods in Odoo
Changing the accounting method mid-cycle can cause inconsistencies in journal entries. Therefore, it is advisable to determine the appropriate method before recording any inventory or supplier transactions.
Configuration Process
Option 1: For Enterprise Edition (via UI)
- Enable Developer Mode
- Navigate to: Accounting → Configuration → Settings
- Enable or disable Anglo-Saxon Accounting
Option 2: For Community Edition (via Data Import)
- Export the company profile from Users & Companies → Companies
- Ensure the field anglo_saxon_accounting is included
- Modify the field value to TRUE (for Anglo-Saxon) or FALSE (for Continental)
- Import the file back, ensuring you are updating and not creating a new record
It is strongly advised to perform this configuration on a test database first and ensure all transactions are posted or reconciled before switching the mode.
Practical Guidance for Bangladeshi Businesses
| Business Type | Recommended Method |
|---|---|
| General import-based trading businesses | Anglo-Saxon |
| Local manufacturers with raw material intake | Continental |
| E-commerce businesses with stock turnover | Anglo-Saxon |
| Government contractors and legacy accounts | Continental |
| Multinational joint ventures | Anglo-Saxon |
Implementers and CFOs should assess their product flow, inventory policies, and profitability tracking needs before choosing the method. Additionally, coordination with external auditors and tax advisors is advisable to ensure alignment with regulatory practices.
Conclusion
As Bangladesh progresses toward a more structured digital economy, the nuances of accounting methodologies within ERP systems like Odoo will play an increasingly important role. Choosing between Anglo-Saxon and Continental accounting is not merely a configuration toggle, it shapes how your organization perceives cost, profit, and value.
When implemented correctly, Odoo provides full support for both approaches, offering flexibility and control. However, due diligence is critical in setting this up, especially when multiple departments, multi-step inventory flows, and cross-border operations are involved.
References and Supporting Data
-
LightCastle Partners, "State of the SME Sector in Bangladesh 2024":
Over 60% of mid-sized businesses in Dhaka, Chattogram, and Gazipur are actively investing in ERP and accounting software.
-
Bangladesh Economic Review 2023, Ministry of Finance:
SMEs account for 25% of GDP and 80% of industrial jobs, many of which now involve inventory-heavy operations requiring structured accounting.
-
Odoo Documentation – Accounting Methods:
https://www.odoo.com/documentation -
International Federation of Accountants (IFAC) – Global Accounting Practices Summary:
https://www.ifac.org/knowledge-gateway -
Cybrosys Technologies, "Anglo-Saxon Accounting in Odoo 17":
https://www.cybrosys.com
