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Im working with a GP company who manufactures confectionary items (biscuits, fruit juices etc.) and we're looking at restructure the the GL account code. I want to find out what is good practice regarding the GL account code structure for this type of business.
Is it standard practice to incorporate the product type into the GL account code? The proposed structure of the GL account code is: legal entity - location - department - Account number - Product Type - Product ID (flavour).
The GL account code for example will be:
01-96311-19-4000-60-01 : Sales Revenue - Product A - Flavour A
01-96311-19-4000-60-05 : Sales Revenue - Product A - Flavour GG
01-96311-19-4000-61-01 : Sales Revenue - Product B - Flavour A
01-96311-19-4000-61-05 : Sales Revenue - Product B - Flavour GG
What are other manufacturing companies doing to incorporate products into their GL account code?
Thanks,
Louella
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In my experience, please go only for those accounts for which balances will not be brought forward - Non balance sheet accounts (Profit & Loss Accounts), as Analytical accounting does not brought forward the dimension codes balances for analysis purpose in next fiscal year.
Hope you understand my point. I would also strongly recommend to use subsidiary modules for reporting purpose. You can provide figures from COA and support reports can be generated by sub-ledgers.
Hope this would help you.
It can be a hard one to get your head around! Best of luck with it. The best way is to set up a test company and play around with it. Post any issues you are having.
Hello again & thanks for the responses. We will definitely considering restructuring the GL account codes with as little segment in the GL as possible and get the info from the module. Im testing Analytical accounting at the moment (if I can get it to work correctly!)
Louella
I have a client that is a good example of what can happen when you use the chart of accounts to classify everything. They have over 46,000 accounts in their COA! A lot of their growth is via acquisition. When they add a new business unit, that expands the COA geometrically. From a reporting and account maintenance perspective, it's a nightmare. In fact, they wanted to use Unit Accounts and Variable Allocations but decided it would be too much to maintain the accounts due to the size of the COA.
I'm with Ian on this. I've spent a good part of my career convincing C-level executives that it's in their best interest to break out of the box and utilize more advanced reporting tools than they've been used to the last 20 years.
However, I understand the push-back you can receive with such radical ideas! LOL So, if you must, the account structure you are suggesting will work. And as Ian suggests, take a look at Analytical Accounting.
Good luck!
Yes, you're thinking is correct.
This is a hobby horse of mine...getting people further up the food chain to change how the like to get their reports! So many times new users ask me to duplicate the month end reports they got from their old system..why?...because that is they way it was always done!...and management like (read understand) the format of the old report.
You do have other options however. Look at Analytical Accounting and also look at the FRS Report Server product.
Hi Guys
Thanks for your responses! I agree with all of you to use the module for the information as much as possible but I asked the question in order to provide management reports. Unless there is a way that I can get the module informatio from FRx there is no way that a CEO is going to run or even look at a separate report. Using class IDs and module info is great for analysis of the GL not the financial reports itself. This is why Im asking whether a segment for product types is necessary in the GL account code. Is my thinking incorrect?
Louella
I concur with Ian. I would strongly discourage incorporating product-related codes into your chart of accounts. The reason clients typically do this is because they don't understand the options available in the software to stratify this information using Class IDs in the Sales/Purchasing/Inventory modules (sub-ledgers as Ian refers to them).
Make the chart of accounts as generic as possible. Learn how to use Class IDs and other classification fields in GP to stratify your reporting.
Hope this helps,
Hi, the only advice I can give you is try to push as much of the analysis requirements back into the sub modules. If you can analyse your sales by product type, flavour etc...then do so...and print your sales analysis reports from SOP, not from the GL...same for Inventory and purchasing etc. I always ask customers to investigate if gettig this type of analysis from the sub ledgers works before deciding on a complex chart of accounts.
You will end up with a very large GL chart of accounts if you don't. There may of course be a valid reason why in your case you want to get all the analysis from the GL...and in this case you must provide for this in your accounts structure. The acconts structure you outline above seems fine for this.
Hope this helps.
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