As your business keeps growing, there’s a good chance that your chart of accounts (COA) is growing too. Eventually, many businesses struggle with an unwieldy COA that becomes a bottleneck to data analysis, reporting, and other key business functions.
Fortunately, there is an alternative to the ever-growing COA. Modern accounting software solutions are moving from a linear chart of accounts—which leads to COA bloat—to dimensional accounting. Let’s look at what that is and what it means for your business.
What is dimensional accounting?
Traditional ERP systems have a linear, hard-coded structure for the COA. That means you have to assign transactions to hard-coded individual accounts, which makes growth a lot of work. For example, to track two locations, six departments, and five projects, you’d need 72 account code combinations! Over time, you can see how that leads to creation of a large and cumbersome COA.
Modern ERP systems like Sage Intacct support dimensional accounting, which simplifies the COA, from setup through reporting. With dimensional accounting, you can track revenue, expenses, and profitability across a host of segments (dimensions) such as department, location, or employee. That allows you to maintain each segment separately—and that limits the overall maintenance required on your general ledger accounts.
Better reporting with new dimensions
Sage Intacct has a dimensional COA with a single general ledger account where you only need to set up your primary account codes. You can tag transactions and operational data with dimension values, and once you create a dimension, you can use it for any transaction. As your business changes, you can add dimensions—including an unlimited number of user-defined dimensions.
There are numerous benefits of Sage Intacct dimensions, including how they can help you create a simpler, leaner COA. You’ll also see big benefits in reporting, where dimensions provide the visibility you need to slice and dice data quickly to support better and faster business decisions.
Because dimensions are integrated into the user interface of Sage Intacct’s financial report writer, you can view performance from any angle. To create reports, you can simply use handy drop-down lists to filter, group, and organize your data by dimensions.
Insero & Co. is a public accounting firm with decades of experience working with businesses and nonprofits of all sizes. We can help you weigh the benefits of dimensional accounting and help you make the transition to best-in-class software. We also provide affordable direct-hire solutions, as well as outsourcing and co-sourcing solutions. Whatever type of help you’re looking for, we’re here to help you find the right solution.