Every business, whether small or rapidly growing, needs a clear, well-organized Chart of Accounts (COA). In the world of accounting, the COA is the backbone of financial clarity: it lists all ledger accounts you’ll use to record income, expenses, assets, liabilities, equity, and more. In Odoo you can use default COA templates, but customizing and organizing them properly pays off as you scale.
Using a hierarchical COA (i.e. grouped accounts) helps you:
- Consolidate related financial accounts (e.g. all expense sub-accounts under “Operating Expenses”) for easier reporting.
- Maintain clarity when the number of accounts grows, avoid cluttered lists where things get lost.
- Generate better structured reports (trial balance, P&L, balance sheet), with subtotals per group.
For ERP consultants and businesses adopting Odoo (like many SMEs in Saudi Arabia, GCC, etc.), a clean COA is foundational.
What’s “Hierarchical Groups” in Odoo 18?
In Odoo 18, “Account Groups” (or hierarchical groups) let you assign multiple ledger accounts under a broader parent group. This establishes a parent-child (or group-subgroup) relationship among accounts.
By default, Odoo handles groups automatically based on account code prefixes (if you follow a coding convention). For example, accounts with codes starting 131200 automatically fall under group 131000, if defined.
For advanced or customized structuring, you can manually create groups:
- Go to Accounting → Configuration → Account Groups (in developer/debug mode) to define a new group, set a code prefix, and designate its range (“From” – “To).
- Then, when creating/editing ledger accounts, select the proper group so the account becomes a subgroup under that parent group.
This allows you to build a hierarchical COA – e.g., a top-level group “Assets”, with sub-groups “Current Assets”, “Fixed Assets”, and then child accounts like “Bank Account”, “Inventory”, etc.
Why This Matters for Any Growing Business
- It simplifies financial reporting, audit readiness, and tax compliance (especially when VAT or other fiscal requirements apply).
- It gives clarity when businesses scale: whether they add product lines, open new branches, or expand operations, the chart of accounts framework stays clean.
- For clients (small “from-zero” companies scaling to mid-size or even MNC level), you can deliver a robust accounting backbone from day one, saving future rework and avoiding messy migrations.
- It aligns well with modularity of Odoo: as they add modules (inventory, manufacturing, e-commerce, VAT), the COA remains reliable and consistent.
Conclusion
Setting up a hierarchical Chart of Accounts in Odoo 18 isn’t just a “nice-to-have”, it’s a strategic foundation. With structured parent-child groups, correct account types, and disciplined account coding, you get a finance backbone that scales with your business.
If you follow the steps above, based on Odoo’s built-in configuration and best practices, you’ll be in a strong position to deliver clean financial reporting and flexibility to support growth.
For SMEs in Saudi, GCC or globally, this structured approach reduces accounting complexity, supports VAT/tax requirements, and simplifies audits or external reporting.