Finrepo » Creating and Starting Business in Finland » Accounting for Entrepreneurs and Small Business » Current Accounting in Finland. General Rules


Accounting method

There are several good options to organize accounting. The company can manage the accounting itself or outsource it to an accounting firm. It is possible to keep invoicing, payments and all business transaction records electronically. Some entrepreneurs prefer to use software either on its own machines or as a cloud service, others use software provided by the accounting firm as a cloud service.

During the process of consideration, recording or print outing of accounting documentation, it is must be checked that all entries are correct and that the accounts match.

The bookkeeping data provides information for VAT declaration and paying.

Ledger or principal book, Invoicing, Checking of receivables and payables

Ledger (in Finnish, reskontra) is a part of the bookkeeping. This is a list of company's transactions. The most common are the sales and purchases ledger, which is used for payment control. Ledgering procedure allows to determine which customers have not paid the bills (accounts receivable or myyntireskontra) and what kind of suppliers’ payments have not been paid yet (accounts payable or ostoreskontra). In general, these issues have to be monitored on a weekly basis.

Value-added taxation requires to use the accrual method of accounting. Monthly reconciliation of receivables and payables requires to have some kind of bookkeeping ledger. In practice, bookkeeping is based on invoicing date in other words you keep accounting according to the date of the invoice in a chronological order, which is permitted by the VAT Law, and only in the financial statements the value added tax is reconciled according to accrual basis.

A practice to use reference numbers (unique and specific identifier) for transactions is a viable method for sales invoicing and tracking of receivables. Information about customer payments can be obtained from the bank using the reference numbers. According to the reference number the incoming payment is matched automatically to an outstanding invoice of particular customer.

If you have a small business you can handle the ledger manually. For example, you can keep the accounts payable ledger by writing incoming invoices to the accounts payable/creditors ledger book. In addition to the information about supplier and the sum, the purchase invoice includes information that helps to identify the payment, i.e. the reference number or invoice number. The invoice is recorded to the creditors ledger book as paid according to the bank payment statement.

Cash book

If the company works with cash, it has to fill the cash book, the cash accounting must be updated daily and records must be done at least once a week. The cash book is a cash transactions summary. The best thing is to check the cash balance every day.

If the company does not sell the goods for cash, it is also worth to pay all the purchases through the bank, therefore, in such a case cash is not used at all and it is not needed to have a cash book.

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