# How Finance works

The two document chains everything else hangs off, what actually reaches the ledger, and why a record is never copied between screens.

Finance is not thirty unrelated screens. It is two chains, one for money coming in and one for money going out, plus the accounting that sits underneath both.

## Highlights

- **Two chains**, sales and purchases, each running from an agreement to a payment.
- **Each step carries its lines forward**, so nothing is retyped and the two documents cannot disagree.
- **Draft posts nothing.** A document only reaches the ledger when it leaves draft.
- **One record, many screens.** A customer is not copied into Inventory; it is the same row.
- **Reports read, never write.** Nothing in Reports can change a figure.

## Money coming in

1. **Quote**: What you offered
2. **Sales Order**: What they committed to
3. **Invoice**: What you are charging
4. **Customer Payment**: What they paid

Not every sale uses all four. A quote is worth raising when the price is still being agreed, and a sales order when there is a gap between agreeing and delivering. When there is neither, raise the invoice directly.

> **Note:**
>
> **Converting is not copying**
>
> A quote converted to an invoice carries its lines, its customer and its rates across. The two documents stay linked, so the invoice knows where it came from and the quote knows it was fulfilled.

If goods physically move, fulfilment sits inside that chain rather than beside it.

1. **Confirm**: Order committed
2. **Picklist**: Warehouse pulls stock
3. **Package**: Boxed and labelled
4. **Shipment**: Stock leaves
5. **Invoice**: Customer billed

## Money going out

1. **Purchase Order**: What you agreed to buy
2. **Purchase Receive**: What actually arrived
3. **Bill**: What they charged you
4. **Vendor Payment**: What you paid

The purchase receive is the step people skip, and it is the one that earns its keep: it records what arrived, which is how a short delivery is caught before you pay for the full order rather than after.

> **Tip:**
>
> **An expense is the short version of this chain**
>
> When there is no order and no bill to match, an expense records the cost and its receipt in one step. Use bills for what you were invoiced for and expenses for what you simply spent.

## When something goes the other way

Neither chain is edited backwards once a document is out. Corrections get their own record, which is what keeps an audit trail intact.

| What happened | What you raise | Against |
| --- | --- | --- |
| You over-invoiced a customer | Credit Note | The invoice |
| A customer sent goods back | Return | The sales order. A return cannot be raised against an invoice. |
| A vendor over-billed you | Vendor Credit | The bill |
| Stock does not match the count | Stock Adjustment | The item |
| Something needs correcting in the ledger directly | Journal Entry | The accounts |

## What reaches the ledger

Nothing you are still drafting. This is the single most useful rule in the product, and the one behind most "why is this figure wrong" questions.

**Draft**

- No: Appears in receivables or payables
- No: Counted in a report
- Yes: Editable in full
- Yes: Deletable

**Open or sent**

- Yes: Appears in receivables or payables
- Yes: Counted in a report
- No: Editable in full
- No: Deletable

![The Invoices list. Columns read Date, INV number, Reference Number, Customer, Status, Amount, Balance Due and Due Date. The Status column carries a coloured label per row: Paid on most, Overdue by 24 days on INV-00031, Partially Paid on several including INV-00030 with a balance due of 5,431.23, and Draft on INV-00020 whose balance due equals its full amount of 416.76. The foot reads Showing 1 to 25 of 34 results.](https://www.sorviai.com/help/getting-started/invoices-list.png)

*Every list carries the status. The draft at the foot is in no report until it leaves draft.*

> **Warning:**
>
> **Costs looking low is usually drafts, not a missing feature**
>
> A bill in draft is invisible to payables, to the balance sheet and to every report. Before investigating a number that looks wrong, filter the list for drafts.

## One set of records, several apps

Finance shares its records with the rest of the SorviAI suite rather than keeping its own copies. An item created in Inventory is the item you invoice; a customer created in Finance is the customer a repair ticket is raised for.

- **Items**: Shared with Inventory and Repairs. Stock levels are one number, wherever you look at them.
- **Customers and vendors**: Shared across the suite, including the customer and vendor portals.
- **Documents**: A file attached to a bill in Finance is the same file, not a second upload.

> **Note:**
>
> **Reports never change anything**
>
> Every figure in Reports is read from documents you have already posted. A report is safe to run at any time, on any period, including one you have closed.