We live in a day and age where we are accustomed to instant gratification. Just about everyone has access to information instantaneously. Want to know how the stock market is doing? How about the scores of your favorite team? Just use your phone, laptop, tablet, gaming system, smart TV or smart watch. Why should accessing information from your ERP be any different?
Segmented Chart of Accounts
There are plenty of choices when it comes to picking an ERP system. No matter the size of your company, you can rest assured that there is a great ERP package out there just waiting for you. These ERP packages can move your business forward. One software giant (Microsoft) can even unify the core applications that you use every day (Excel, Word, Outlook) into one seamless, easy to use ERP platform. If you have been in your system for over ten years, you are missing out on the newest technologies that can streamline your processes and enhance your ability to pull information out of your system. One dead giveaway that you are using an antiquated system is if you’re still using a segmented chart of accounts. By segmented, I mean does your account number look something like this 01-04-45000-2000-250? In this scenario let’s say that:
- 01 represents Company or Branch
- 04 represents Location Code
- 45000 represents GL Account
- 2000 represents GL Sub-segment
- 250 represents Department
If your answer is yes, then you should be asking yourself, why? Segmented Chart of Accounts are challenging to read, create enormous Chart of Accounts, give you fewer reporting capabilities, less flexibility to filter on the fly and overall make it more difficult on your staff to get the account numbers correct on 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 all the same information as seen above (albeit with infinitely more possibilities) and at the same time allows you to create a more streamlined aerodynamic Chart of Accounts. Using Dimensions, your Chart of Accounts would now look like this:
- 45000 represents GL Account – Parts Sales
I’m sure at this point you are demanding your other segments! Where’s my Company Code, where’s my location code, I won’t stand for this! The simple answer is, this information is still present and gets attached to each transaction as a Dimension! We previously began to define what a Dimension is. In simple terms, Microsoft Dynamics NAV defines a Dimension as an analysis category. These Dimensions are described in the preliminary stages of your implementation with room for growth after you are in your live system. 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 don’t need to be assigned on every transaction, they are just default values.
So, at this point, you might still be asking, how does an ERP system that uses dimensions add value to your company? In short, Dimensions give you endless opportunities for:
- Slicing and dicing your data – Using the Customer Record as an example, you can create dimensions that define Customer Industry, Customer Size, Salesperson, etc.
- Filtering – Each Dimension value gives you opportunities to filter all transactions for example that belong to a specific Branch Code or Profit Center.
- Reporting – Dimensions can be integrated into your reporting thus allowing you to define summary and or detailed Account Schedules using these dimensions to pull out valuable data not only by Branch and Profit Center, but Sales by Industry, or Market Size.
- Customizing your System – Perhaps the most powerful aspect of a dimension is that you get to manually define what each Dimension is and what all the possible Dimension values should be, without having to stick with whatever values the other ERP’s think you should be using.
So why settle for this 01-04-45000-2000-250 when you could have this 45000?! Time to make things easier for yourself by using Dimensions in your ERP system.
Brian Coller is Senior Financial Consultant at Dysel North America and helps customers in streamlining their financial processes.