The double-entry ledger

Prestafolio runs double-entry accounting underneath everything you do. You don't need to know accounting to use it: the system builds the entries by itself. But understanding how it works gives you something valuable: certainty that your money adds up.

What it's for

Double-entry is a very old and very simple idea: money doesn't appear or disappear, it only moves from one place to another. If you take RD$10,000 out of your cash box to lend it to someone, that money didn't evaporate: it's now on the street. It left one place and entered another.

That's why every operation is recorded twice: where it came from and where it went. The part that "comes in" is called a debit, the part that "goes out" a credit. The golden rule is:

At all times, the sum of debits equals exactly the sum of credits.

If that equality breaks, there is unexplained money. Prestafolio will not let you break it: an entry that doesn't balance is rejected before it is saved.

What an entry is

An entry is the record of one operation. It has a date, a description, a sequential number and two or more lines. Each line touches one account and goes either to debit or to credit, never both, never neither.

Real example: you lend RD$10,000 to a client.

Read it like this: your cash went down RD$10,000 and your portfolio (what people owe you) went up RD$10,000. You lost nothing: you swapped cash for a debt in your favour.

The entries Prestafolio posts by itself

You write none of these: they are posted automatically, inside the same operation, so that either everything is saved or nothing is.

Loan disbursement

Collecting an instalment with arrears

Client pays RD$2,300: RD$1,500 of principal, RD$500 of interest and RD$300 of arrears.

Notice what this entry says: of the RD$2,300 that entered your cash, only RD$1,500 is recovery of your own capital. The other RD$800 is profit (interest + arrears). That distinction is what lets you know how much you truly earned, and a notebook doesn't give you that.

Collecting a service charge

Client pays RD$1,650 on a recurring service: RD$1,500 for the charge and RD$150 of arrears.

Service arrears use the same account 4102 as loan arrears: it is the same kind of income.

Other automatic operations

• Loan renewal: two separate entries: one returns the outstanding principal of the settled loan to cash (DR 1101 / CR 1200) and another disburses the new loan (DR 1200 / CR 1101), exactly like a normal disbursement.
• Principal adjustment: if you raise the amount, DR 1200 / CR 1101; if you lower it, the reverse. A zero adjustment posts no entry.
• Write-off: see Uncollectible provision.
• Provisioning: same article.

Reversals: nothing is deleted, it is counter-posted

When you reverse a payment or void a loan, Prestafolio does not delete the original entry. It creates a reversing entry: the same lines with debits and credits swapped, so the net is zero.

This is deliberate. A ledger whose lines can be erased is evidence of nothing. The full trail, what happened and what was undone, stays forever.

One practical consequence: if the accounting module were deactivated after a collection, the reversal of that collection still posts. The original entry is never left orphaned.

Cash is the ledger

This matters: account 1101 Cash is the single authority on your cash balance. There is no separate "cash balance" stored elsewhere that could drift out of sync. What 1101 says is what you have.

The overdraft protection comes from the same place: if a disbursement would leave cash negative, the whole operation is rejected: neither the loan nor the entry is created.

Which plan includes it

The accounting engine is active on all plans, including the Free plan. Everything above happens in your account from day one, whatever you lend: every entry is recorded under the hood and your books balance.

What changes per plan is how much of that ledger you can see and touch. On Free the engine runs, but there is no accounting panel: you don't see the summary or the reports until you move to a paid plan.

If something goes wrong

• "The accounting module is not active": this is a configuration error on your account, not something you did. Without accounting active money cannot move: that is the protection that keeps a disbursement from draining your cash with no trace. Contact support.
• "The fiscal period is closed": you tried to record an operation dated inside an already-closed period. See Periods and closing.