Product Ledger vs General ledger (GL)

Double Entry

The term double entry tends to be used with various semantics in mind, namely:

1. The transaction model, from a mathematical point of view, referring to concepts e.g

   1. A transaction always involving ≥ 2 account, in compensating directions

   2. An account balance being devised as an equation on an immutable log of transactions involving the account

2. The accounting model business rules, typically referring to e.g.

   1. The classification of accounts as assets, liabilities, equity, etc

   2. The balancing imposed by the accounting equation

   3. The set of convention in devising a chart of account

   4. The debit and credit nomenclature, and a balance equation taking into account the account type regarding them

We may want to clear the fact that, while the Formance Ledger forces you to adhere to 1. by design, it is more flexible on 2. and let you choose the extent of which you want to solve accounting problems in real-time in the product vs keeping most of the accounting for the general ledger — in async data processes and use the product ledger from more technical point of view as a tool to implement the flow of funds.

Product Ledger vs General Ledger

• The main goal of a general ledger is to efficiently organise financial events in a way that can produce some clarity regarding the financial position of a business. It typically exist in an ERP (e.g. Sage) or GL-specific tool (e.g. Quickbooks).

• The main goal of a product ledger is to provide a technological foundation for the implementation of automated flow of funds. It focuses intensively on problems related to scarcity, rivalrousness, concurrency, auditability, immutability and performance.