We live in a time when we are accustomed to lightning-fast answers to our questions. Almost everyone has instant access to information. Want to know how the stock market is doing? Or know the score of your favorite team? Simply grab your phone, laptop, tablet, game device, smart TV or smart watch. Why should information access in your ERP be any different?
Segmented chart of accounts
There are many choices when selecting an ERP system. Regardless of the size of your company, you can be sure that there is a great ERP package just for you. These ERP packages can move your business forward. One software giant (Microsoft) can unify even the most important applications you use every day (Excel, Word, Outlook) into a seamless, easy-to-use ERP platform. If you have been in your system for more than a decade, you are missing out on the latest technologies that can streamline your processes and allow you to get information out of your system in a better way. A clear signal that you are working with an outdated system is when you are still using a segmented chart of accounts. By segmented, I mean that your account number looks something like this: 01-04-45000-2000-250. Let's assume that:
- 01 stands for Company or Establishment
- 04 stands for Location Code
- 45000 stands for General Ledger Account
- 2000 stands for General Ledger Subaccount
- 250 stands for Department
Dimensions
If that is indeed the case, you should ask yourself, why? Segmented chart of accounts are difficult to read, create a vastly expanded chart of accounts, provide less reporting capabilities, less flexibility to filter on-the-fly and generally make it more difficult for your staff to put the account numbers correctly in financial transactions. A more flexible, dynamic and user-friendly approach is to find an ERP system that uses dimensions. In a nutshell, a dimension gives you the same information as shown above (but with infinitely more possibilities) while allowing you to create a more streamlined chart of accounts. If you use dimensions, your chart of accounts will look like this:
- 45000 stands for General Ledger Account - Sale of Parts.
Now, of course, you are wondering where your other segments are! Where is my Company Number? Where is my Location Code? I'm missing information! The simple answer is that this information is still there and is added to each transaction as a dimension! Just now I began to define what a dimension is. In simple terms, Microsoft Dynamics NAV defines a dimension as an analysis category. These dimensions are set up in the preliminary phase of your implementation with the ability to expand after you work in your live environment. Each transaction in the system uses master records (such as a customer, for example) and each of these master records can store default dimension values that do not need to be assigned with each transaction; they are just default values.
Added value
Perhaps you are still wondering, what is the added value to your business of an ERP system that uses dimensions? Dimensions offer endless possibilities for:
- "Slicing & Dicing" of your data - For example, using the customer record you can create dimensions that define Customer Industry, Customer Size, Vendor, etc.
- Filter - each dimension value provides opportunities to filter on all transactions, such as transactions by branch or profit center.
- Report - Dimensions can be integrated into your reports so that you can create summary and/or detailed statements using these dimensions to gather valuable data not only by branch and profit center, but also by industry or market size.
- Customizing your system - Perhaps the strongest aspect of a dimension is that you can define each dimension yourself and what all possible dimension values are, without having to stick to the values you would have to use according to other ERP systems.
So why settle for 01-04-45000-2000-250 when you can also use 45000! Time to make it easy on yourself using dimensions in your ERP system.
Brian Coller is Senior Financial Consultant at Dysel North America and helps clients streamline financial processes.
