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In both cases, permissions define the access level (read, write, delete) on the data.  
 
In both cases, permissions define the access level (read, write, delete) on the data.  
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The main difference between an internal and an external user is that an external user can see (if permissions were granted) only the objects linked to the third party of the user. So the external user "Mr smith" of company "Smith and co" can only see orders, invoices, proposals, ... created for "Smith and co".  
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The main difference between an internal and an external user is that an external user can see (if permissions were granted) ONLY the objects linked to the third party of the user. So the external user "Mr smith" of the company "Smith and co" can only see orders, invoices, proposals, ... created for the company "Smith and co".  
    
So external users are mostly used to give an access to the ERP to your customer or resellers so they can't see nothing related to other customer or suppliers.
 
So external users are mostly used to give an access to the ERP to your customer or resellers so they can't see nothing related to other customer or suppliers.