Utilize dimensions and let your chart of accounts do its job.
The building block of a business’s financial reporting has always been its business intelligence tools; especially the chart of accounts. As your business grows larger and more complex, and seeks better, faster and more detailed business intelligence, your chart of accounts grows, too. Soon you find yourself adding extra segments in order to track even more information, complicating the core operations of your business.
While the chart of accounts may be here to stay, it’s time to take your business intelligence reporting beyond the chart and into the next dimension. Let’s take a closer look at the pitfalls of the traditional account number, and how a straightforward solution from Intacct called dimensions, can help.
Hard to Isolate the Good Stuff
The complex, multi-segmented chart of accounts structure inherently complicates financial reporting, as your reporting tools must be able to isolate and aggregate individual segment data. These types of business intelligence tools are also inherently limiting, because you can only easily report upon data defined by a segment, not by other attributes. And really – how many segments should one account number have?
In addition to complicating financial reporting tasks, charts of accounts can grow to be huge and overly cumbersome. With a segment representing the core account number, another the department, yet another the location, and so on, account numbers for some companies can grow to over 40 characters and 10 segments long. Printing a simple general ledger account listing might consume an entire ream of paper. It’s simply not sustainable.
The lengthy account structure not only complicates financial reporting, but it means that a whole new group of account numbers needs to be created every time you add a new location or department. It’s a huge amount of manual data entry that takes time away from more strategic tasks.
Dimensions are a Better Way
Essentially, we’re creating longer and more complex account numbers to track specific transactional and operational data. We’re tagging that data with additional information to help us analyze it later. What if you could tag that data independently of its general ledger account number? You can with Intacct business intelligence tools.
Intacct perfects the use of dimensions. Think of dimensions as bits of user-defined information associated with any transaction. And a transaction can have multiple dimensions. By using dimensions, you need only set up your primary account code. No more segments!
When you add a new location, there’s nothing to add to your chart of accounts – you just fill in that location code in the appropriate dimension field associated with a transaction. As your business gains more complexity – simply add additional dimensions. Some of our clients use dimensions to track information like Salesperson, Vendor, Employee, Industry or Department. You likely have a list of your own data that up until now has been too difficult to track via your current business intelligence tools.
Using dimensions and Intacct’s powerful, flexible reporting tools, you can slice and dice your financial information to create more focused and more intelligent analyses that reveal previously unavailable facts and trends about your business.
This content was originally posted here.