Shrinking and Expanding Microsoft Dynamics® GP’s Chart of Accounts Structure - Part 2

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In this tree-part series we’re looking at the heart of the Microsoft® Dynamics GP system, the Chart of Accounts. The structure is difficult to shrink once implemented, but can be much more easily expanded. Careful analysis of the structure will ensure a balance between current financial reporting needs and future growth. The Professional Services Tools Library (PSTL) and third-party products are available to make shrinking or expanding more user friendly.

In the previous post, you saw an explanation of the standard functionality. Now I’ll temper that explanation with my recommendations and experience.

Segmentation Capabilities and Consequences

Based on thousands of implementations, Computeration offers the first five (of ten) explanations and recommendations on how to create a powerfully simple chart of accounts.

Recommendation 1: Keep it Simple

Clients often see the capability of a structure with multiple segments, but go overboard in creating segments. Consider an account structure of State – Location – Account – Division (xx-xxx-xxxx-xx). If every number were utilized there would be a potential of nearly 50 billion accounts! Fewer segments make human entry error less likely.

Recommendation 2: Use Only Numerical Values

Requiring your personnel to move hands between the keyboard for alpha values and the keypad for numerical values substantially slows down input and causes more entry errors. Use alpha characters only if you don’t care about cost and accuracy.

Recommendation 3: Don’t Create a Segment if the Segment Can Move

Each segment should tie to a stationary item – equipment or people are not static. If you create a segment for a region or manager that changes from time to time, every time a change occurs, you’ll leave information behind or have to run a utility to move data. For example:  

  • If we expand the structure to Department-Account-Manager-Location, and
  • The Managers exchange Locations,
  • We leave behind a partial year of information under one Manager and
  • Create a partial year of information under the new Manager.
  • And if the Managers exchange again….

The solution is to use Management Reporter Reporting Trees (formerly FRx Report Designer Reporting Trees) to drag and drop the movable segments, allowing you to keep the transactional data in one account. Segments should only be created for the finest detail of reporting required – groupings can be achieved through reporting row and tree structures.

Management Reporter makes it simple to do multiple levels and layers of financial accounting without the need to add additional account segments. Management Reporter allows you to easily drag account groups to various headings and subheadings.

Recommendation 4: Don’t make a Segment Represent Multiple Values

This common mistake makes you and reporter writers work overtime. Management Reporter and FRx automatically link to your account segments. They pivot around the Main segment and the other segments powerfully with tools called hooks, wildcards, accounts sets, and Report Trees. Don’t bypass its power by assigning mixed values such as:


Recommendation 5: Provide for a moderate amount of growth

Ensure segments allow for future growth; two years is a good rule of thumb. A location with only one number allows for only 10 locations (0-9). If you’re adding locations at the rate of two a month, you’re modifying the structure in the sixth month.

That’s the first five explanations and recommendations. Remember to check back for the remaining five recommendations on how to create a powerfully simple chart of accounts.

©2011, Computeration, Inc.

Looking for more information on your Chart of Accounts? See the discussion on “Adding a Dimension to Your Existing Chart of Accounts” in our IFRS Accounting series.

By Gloria Braunschweig, The IFRS Implementation Expert for Dynamics GP, with Computeration, a Pacific Northwest Microsoft Dynamics GP Partner.

Computeration specializes in ways to enhance your company’s solutions with Microsoft Dynamics GP in Idaho, Oregon, and Southwest Washington, with clients around the world, Computeration makes your implementation successful by offering experienced project management, data integration, training, and consulting services.

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