Business Requirements: Finance Module

Problem Statement

Modern businesses require comprehensive financial management systems to:

  1. Process Transactions: Record and manage all financial movements
  2. Track Payments: Monitor customer and vendor payments
  3. Manage Expenses: Categorize and control operational expenses
  4. Monitor Cash Flow: Track money movement between accounts
  5. Generate Reports: Create financial statements for analysis
  6. Manage Debts: Track receivables and payables
  7. Multi-currency Operations: Support international transactions

The Finance Module solves these challenges by providing a complete double-entry bookkeeping foundation with modern transaction tracking.

Target Audience

Role Use Cases
Accountant Transaction recording, reconciliation, report generation
Finance Manager Cash flow monitoring, expense approval, financial analysis
Business Owner Cash position overview, P&L review, debt management
Operational Staff Expense submission, payment recording, invoice tracking

Domain Boundaries 

┌─────────────────────────────────────────────────────────┐
│               FINANCE MODULE DOMAIN                      │
│                                                           │
│  ┌──────────────────────────────────────────────────┐   │
│  │    TRANSACTION & ACCOUNT MANAGEMENT              │   │
│  │  - Money accounts and balances                    │   │
│  │  - Transaction recording                         │   │
│  │  - Multi-currency support                        │   │
│  │  - Account reconciliation                        │   │
│  └──────────────────────────────────────────────────┘   │
│                                                           │
│  ┌──────────────────────────────────────────────────┐   │
│  │    PAYMENT & EXPENSE MANAGEMENT                  │   │
│  │  - Payment processing                            │   │
│  │  - Expense tracking and categorization           │   │
│  │  - Receipt management                            │   │
│  │  - Category definitions                          │   │
│  └──────────────────────────────────────────────────┘   │
│                                                           │
│  ┌──────────────────────────────────────────────────┐   │
│  │    COUNTERPARTY MANAGEMENT                       │   │
│  │  - Customer/vendor information                   │   │
│  │  - Contact management                            │   │
│  │  - Tax identification                            │   │
│  │  - Communication history                         │   │
│  └──────────────────────────────────────────────────┘   │
│                                                           │
│  ┌──────────────────────────────────────────────────┐   │
│  │    DEBT & RECEIVABLES MANAGEMENT                 │   │
│  │  - Receivables tracking (customer debts)         │   │
│  │  - Payables tracking (vendor debts)              │   │
│  │  - Settlement management                         │   │
│  │  - Due date tracking                             │   │
│  └──────────────────────────────────────────────────┘   │
│                                                           │
│  ┌──────────────────────────────────────────────────┐   │
│  │    FINANCIAL REPORTING                           │   │
│  │  - Income statement (P&L) generation             │   │
│  │  - Cash flow analysis                            │   │
│  │  - Period-based reporting                        │   │
│  │  - Account reconciliation                        │   │
│  └──────────────────────────────────────────────────┘   │
│                                                           │
└─────────────────────────────────────────────────────────┘

         Depends on Core (User/Tenant/Auth)
         Integrates with Warehouse (Inventory)

Entity Classifications

Aggregates (Root Entities)

Entity Responsibility Constraints
Payment Payment processing, tracking, categorization Links to account, counterparty, transaction
Expense Expense categorization and tracking Links to transaction and category
Debt Receivables/payables lifecycle Tracks original and outstanding amounts
MoneyAccount Account management and balance tracking Unique account number per tenant

Value Objects

Object Purpose Properties
Transaction Core monetary movement Amount, date, type, currency
Counterparty Customer/vendor entity Name, TIN, contact, legal type
Inventory Product/service stock Name, price, quantity, currency
IncomeStatement Financial performance report Revenue, expenses, net income

Supporting Entities

Entity Role Notes
PaymentCategory Payment classification Customizable per tenant
ExpenseCategory Expense classification Customizable per tenant
Currency Financial denomination Global, referenced by accounts

Business Rules

Transaction Management

  1. Double-Entry Bookkeeping
    • Every transaction affects two accounts
    • Income/expense transactions link to transaction accounts
    • Balance must remain consistent
  2. Transaction Types
    • Income: Money in from external sources
    • Expense: Money out for operational costs
    • Transfer: Money movement between internal accounts
    • Exchange: Currency conversion transactions
  3. Multi-currency Transactions
    • Exchange rate recorded at transaction time
    • Destination amount calculated from exchange rate
    • Both amounts stored for audit trail
    • Currency codes validated against currency table
  4. Transaction Dates
    • Transaction date: When transaction occurred
    • Accounting period: Period for financial reporting
    • Both dates immutable after creation (audit trail)

Account Management

  1. Account Creation
    • Account number must be unique per tenant
    • Currency assigned at creation (immutable)
    • Initial balance recorded
    • Account name required
  2. Balance Tracking
    • Balance updated on every transaction
    • Balance in account’s base currency
    • Real-time calculation (no batch processing)
    • Balance never goes negative (business rule)
  3. Account Reconciliation
    • Manual reconciliation supported
    • Variance tracking for audit
    • Period-based reconciliation

Payment Processing

  1. Payment Requirements
    • Counterparty must exist
    • Account must exist with sufficient balance
    • Payment category optional
    • Transaction created automatically
  2. Payment Tracking
    • Payment linked to transaction
    • Category optional (uncategorized allowed)
    • Multiple payments per counterparty
    • Settlement tracking
  3. Payment Categories
    • Custom categories per tenant
    • Category names unique per tenant
    • Optional descriptions
    • Used for reporting aggregation

Expense Management

  1. Expense Recording
    • Expense category required
    • Transaction created automatically
    • Category immutable after creation
    • Linked to accounting period
  2. Expense Categories
    • Unique names per tenant
    • Standard and custom categories
    • Hierarchical organization (future)
    • Budget tracking support (future)
  3. Expense Approval (Future)
    • Two-tier approval workflow
    • Department head approval
    • Finance approval required
    • Audit trail maintained

Debt Management

  1. Debt Types
    • RECEIVABLE: Money owed by customers
    • PAYABLE: Money owed to vendors
    • Immutable after creation
  2. Debt Status
    • PENDING: Not yet settled
    • PARTIAL: Partially settled
    • SETTLED: Fully paid
    • WRITTEN_OFF: Uncollectible debt
  3. Debt Tracking
    • Original amount and currency recorded
    • Outstanding amount tracked separately
    • Settlement transaction optional
    • Due date for aging reports
  4. Multi-currency Debts
    • Original currency recorded
    • Conversion tracked
    • Settlement in any currency

Counterparty Management

  1. Counterparty Types
    • Customer: Purchaser of goods/services
    • Supplier: Provider of goods/services
    • Individual: Personal customer/vendor
    • Can have multiple types
  2. Counterparty Identification
    • TIN (Tax ID Number) unique per tenant
    • Supports multiple contact persons
    • Legal entity type recorded
    • Legal address stored
  3. Contact Management
    • Multiple contacts per counterparty
    • Name, email, phone tracked
    • Primary contact designation

Inventory Management

  1. Inventory Items
    • Name unique per tenant
    • Price and quantity tracking
    • Currency-specific pricing
    • Description for details
  2. Stock Levels
    • Quantity tracked in units
    • Replenishment tracking (future)
    • Valuation method (FIFO/average) (future)

Financial Reporting

  1. Income Statement (P&L)
    • Period-based reporting
    • Revenue aggregation by category
    • Expense aggregation by category
    • Net income calculation
    • Year-to-date totals
  2. Cash Flow Statement
    • Operating activities aggregation
    • Investing activities aggregation
    • Financing activities aggregation
    • Net cash change calculation
    • Period comparisons
  3. Report Accuracy
    • Multi-currency consolidation (future)
    • Accrual vs cash basis (configurable)
    • Audit trail for all numbers

Business Constraints

Financial Integrity

  • Transaction amounts must be positive
  • Balance never goes negative
  • Exchange rates must be valid
  • Currency codes must exist

Multi-tenancy

  • Complete financial data isolation per tenant
  • No cross-tenant financial visibility
  • Separate currency configurations
  • Isolated account numbering

Audit Requirements

  • All transactions immutable
  • Modification history tracked
  • User responsible person captured
  • Timestamp for all operations

Reporting Compliance

  • Period-based reporting accuracy
  • Currency consolidation support
  • Audit trail for all calculations
  • Decimal precision (2-8 places per currency)

Success Criteria

Functional

  • All transaction types supported
  • Multi-currency transactions work correctly
  • Account balances accurate in real-time
  • Financial reports generate correctly
  • Debt tracking accurate

Security

  • Permission checks enforced on all operations
  • User responsible person tracked
  • Transactions immutable after creation
  • Multi-tenant isolation maintained

Performance

  • Transaction creation < 100ms
  • Balance update < 50ms
  • Report generation < 5 seconds
  • Account listing < 200ms

Usability

  • Users can record transactions intuitively
  • Reports accessible to authorized users
  • Counterparty management straightforward
  • Debt aging reports clear

The Finance Module enables:

  • Warehouse Module: Product costing and inventory valuation
  • HRM Module: Employee payroll and expense reimbursement
  • CRM Module: Customer payment tracking
  • Projects Module: Project profitability analysis
  • Reporting: Business intelligence and analytics

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IOTA SDK - Multi-tenant Business Management Platform