Creating Your Microsoft Dynamics Chart of Accounts - Encore ...

Microsoft Dynamics NAV utilizes a Dimensions style chart of accounts. ... You still require a main or “Natural” account that defines what type of ... Home Blog WhenitcomestoimplementinganEnterpriseResourcePlanning(ERP)system(whetherit’sMicrosoftDynamicsGP(GreatPlains),MicrosoftDynamicsNAV(Navision)oranyotherERP),thecriticalelementtoconsiderinarolloutistheChartofAccounts. Withoutawell-designedChartofAccountsyouruntheriskofinvestingsignificantresourcesintoasystemwithoutdeliveringthepay-offofdecisionsupportinganalyticsandreports. IfyouhaveeverfoundyourselfspendinghoursorevendayspreparinganExcelspreadsheetforadepartmentmanageryouwillunderstandtheadvantageofcapturingkeyinformationatsource. Oneofour clientsrealizedhugebenefitsaftertheimplementationofanewERPsystemwithawell-designedaccountstructure.Withtheirlegacystructure,theywouldneverhavehadthemanpowertodeliverbusinesscriticalinsight. 15RedFlags:IsYourAccountingSoftwareHurtingYourBusiness? GetTheWhitePaper AfterimplementingMicrosoftDynamicsNAVandDimensionsforProductCategory,MarketArea,andCustomerType,theyhadvaluableinformationattheirfingertipsandwereabletoanswerquestionssuchas: Whichproductrangehasfallenoffintermsofsalesdollars? WhichmarketareawithWesternCanadaisgrowing? Arewehittingourtargetsforattractingmoreinstitutionsascustomers? Thereareanumberofbestpracticestofollowwhenchoosingyouraccountstructure.Herearefour: 1.StartattheEnd AlthoughtheGeneralLedgeristherealmofaccountants,youshouldstartbyaskingtherestoftheorganizationwhatreportstheyrequire. ArethereclearproductlinesthatneedtobeanalyzedandlistedseparatelyonaProfitandLossStatement? Arebudgetscreatedbasedonthebranchlocationsofanoperation? Firstdeterminewhatreportlayoutsyouaregoingtoneed,thiswilltellyouwhatlevelofdetailneedstobecapturedintheChartofAccounts. Rememberitisalwayspossibleto“rollup”accountsanddollarsonareportbutitisnotpossibletodisplaydetailthatwasnevercaptured. Prepareabinderofmockedupsamplereports. IncludereportssuchastheBalanceSheet,ProfitandLossStatement,OperationsReports,etc. 2.AccountBanding Determinebandsofnumbersthatwillbeusedforthekeysectionsofyourfinancialstatements. Thisallowsyoutokeepsimilaraccountstogetherandspeedsupreportdesign. Besuretoleaveenoughroomforexpansiontoaccommodateorganizationalgrowthwhetherthatisaddingnewbranchesorlinesofbusiness. Section FromAccount ToAccount Assets 10000 19999 Liabilities 20000 29999 Equity 30000 39999 Revenue 40000 49999 CostofGoodsSold 50000 59999 OperatingExpenses 60000 69999 ExtraordinaryItems 70000 79999 SomeERP’senableyoutoprovidesub-totalaccountsusedinonscreeninquiriesorreports. Forexample,MicrosoftDynamicsNAVincorporatesbeginningandendingtotalsintheChartofAccounts. Youmaywanttoreserveaccountsendingin“00”and“99”fortotallingpurposes. BeginandEndTotalsinMicrosoftDynamicsNAVChartofAccounts.   3.NumbersoverLetters ItmaybetemptingtouselettersinyourChartofAccounts. ManyERP’sallowforthisoption–butresistthetemptation! Numbershaveinherentsorting(seeAccountBandingabove).  IfyouintendtoshowOperatingExpenses,thenSalesExpenses,andthenAdministrativeExpensesandonareportandyounumbertheseDepartmentsas100,200,and300youcanbeassuredthattheywillalwaysbesortedinthisorder. IfyougotherouteofcodingtheDepartmentsasOPERS,SALES,ADMINyouwillhavemademoreworkforyourselfbecausethedefaultsortwillbealphabeticallyADMIN,OPERS,andSALES. Anotherdisadvantageofusinglettersiswheretheyareonthekeyboard. Afterall,thisisaccountingandaccountantstendtousethenumberpadonthekeyboardmorethantheletters. 4.SegmentsversusDimensions AChartofAccountcontainsmultiplebuildingblocks. Attheveryleast,youneedamainor“Natural”accountthatdefineswhattypeofdataisenteredtotheaccount. Considertravelexpenses;atthehighestlevelaccount65100couldrepresenttravelexpenses. Ifyouneedfurtherbreakdownonthisaccountforreporting,youmaycombineitwithother“Segments”or“Dimensions”suchasBranch,Department,orTypeoftravel. MicrosoftDynamicsGPutilizesaSegmentstylechartofaccounts. Youneedtodefinehowmanysegmentsyouintendtouse,howmanycharacterslongeachsegmentis,andassignameaningtoeachsegment. Itisbesttoenteravalueineachsegmentforeveryaccountnumberevenifitmeansfillingthespacewithzeros. Thisprovidesconsistencyfordataentryandforaccountsorting. Thereisnodoubtthat“000”isanintentionallyenteredvaluewhilea“blank”maymeanthefieldwasaccidentlyleftblank. TheMicrosoftDynamicsGP(GreatPlains)AccountFormatSetup AMicrosoftDynamicsGP(GreatPlains)ChartofAccountsexample. Forexample,travelexpensesmaybeassociatedtoaparticularBranchwhileamarketingcampaignappliesatthecorporatelevelandisnotassignedtoaparticularBranch. Natural Branch Department Type Description 65100 001 200 10 TravelExpense-Branch1-Sales-Transportation 65100 001 200 12 TravelExpense-Branch1-Sales-Accomodation 65100 005 200 10 TravelExpense-Branch5-Sales-Transportation 65100 005 200 12 TravelExpense-Branch5-Sales-Accomodation 65200 000 200 00 Marketing-Sales Donotmixyourmeanings. If“10”withintheTypesegmentmeans“Transportation”itshouldalwaysmean“Transportation”. Donotgettemptedtohave“10”mean“CoffeeSupplies”whenassociatedwiththeOfficeExpensesaccount. YouwillquicklygetyourselfinamuddlewhentryingtoanalyzealltheTransportationcostsifyouqueryallexpenseswithType=10. Fillingindifferentnumbersofcharacterswithinasegmentcandistortsortingsoavoidthissituation. Considertheseriesofnumbers10,20,100,and200. Howwouldyousortthis? Ifsortingbysmallesttolargesttheorderwouldbe10,20,100,200. However,somereportingtoolssortbycharacterfromlefttorightandtheorderwouldbe10,100,20,200. MicrosoftDynamicsNAVutilizesaDimensionsstylechartofaccounts. Youstillrequireamainor“Natural”accountthatdefineswhattypeofdataisenteredtotheaccount. Above,weusedtheexampleofaccount65100torepresenttravelexpenses. WithinMicrosoftDynamicsNAVyoucandefineunlimited“Dimensions”torecordfurtherbreakdownsuchasBranch,Department,orTypeoftravel. However,youdonotneedtoentereveryDimensionforeverytransaction. ThisenablesaverycleanChartofAccountlistingwhilesupportingadvancedanalysisonDimensionvalues. ADimensioncanevenhaveahierarchywithinittoprovideforsub-totalling. Natural Branch Department Type Description 65100 001 200 10 TravelExpense-Branch1-Sales-Transportation 65100 001 200 12 TravelExpense-Branch1-Sales-Accomodation 65100 005 200 10 TravelExpense-Branch5-Sales-Transportation 65100 005 200 12 TravelExpense-Branch5-Sales-Accomodation 65200 200 Marketing-Sales AMicrosoftDynamicsNAVdimensionhierarchy. MicrosoftDynamicsNAVprovidesstructureandrulesaroundDimensions. YoucanselectDefaultDimensionValuesthatwillbeappliedwheneveryouenteratransactionforaparticularCustomer,Vendor,orItem. YoucanindicatewhetheraDimensionisrequiredoroptional. YoucanapplyrulesindicatingthatwhattheDimensionvaluemustbeundercertainconditions. Theadvantagesarereducedtransactiondataentryeffortsandincreasedaccuracy. InasystemlikeMicrosoftDynamicsNAVyouhavetheabilitytore-numberyourexistingChartofAccountsorDimensionValueswithoutlosinganyofthehistoryalreadyposted. Thishelpsyouavoidastringof“DoNotUse”valuesinyourChartofAccountlisting. Withalittleupfronteffort,yourwell-designedChartofAccountswillbethefoundationforcapturingandreportingbusinessinformationusedindecisionmakingthroughoutyourorganization.Consideritcarefully. WhichDynamicsProductIsBestforYou? Answersomebasicquestionsaboutyourcompanyandyourrequirements,andfindoutwhatproductswouldfityourbusiness. TakeOurQuiz WhichDynamicsProductIsBestforYou? TakeOurQuiz Author TheEncoreTeam MorefromTheEncoreTeam RelatedArticles 5-StepERPImplementationProcess UsingExcelLayoutstoRunReportsinDynamics365BusinessCentral Bycontinuingtheuseofthissite,youagreetoallowcookiestogetthebestexperienceonourwebsite.ReadourPrivacyPolicytolearnmore. Ok