Designing the chart of accounts and dimensions

A chart of accounts with hundreds of accounts is hard to maintain. In Business Central you can keep the chart of accounts short and let dimensions carry the detail, so that you can see revenue and costs per department, project or customer group. The choice of global dimensions and shortcut dimensions is hard to change later, though. The article shows how to design both from the start. There is an example you can use as a starting point.

A short chart of accounts plus dimensions

Create one account per accounting nature, not per department or project. Instead of three cost accounts for salaries, one per department, you use one salary account and a department dimension.

A shorter chart of accounts is easier to learn, easier to report on and leads to fewer misposted entries.

A dimension is a tag on an entry, for example department, project or channel. Each dimension has values. Dimensions can be set on customers, items, accounts and documents and follow down into the general ledger entries.

Only use dimensions you will actually report on. Every extra dimension is one more thing users have to fill in.

Global dimensions and shortcut dimensions

On General Ledger Setup you specify two global dimensions and up to eight shortcut dimensions. Global dimensions can be used as filters in reports and batch jobs. Shortcut dimensions appear as fields directly on journal and document lines.

Microsoft Learn warns that changing a global dimension or shortcut dimension requires existing entries to be updated. The Change Global Dimensions function can be time-consuming, affect performance and lock tables while it runs. Choose with care from the start.

This is an example, not a recommendation for everyone.

Global dimension 1: Department, used in almost all reports.
Global dimension 2: Project or cost centre.
Shortcut dimension 3: Sales channel.
Other dimensions outside the shortcuts, if they are rarely used.

Rules for using dimensions

Use dimension combinations to prevent illogical choices and default dimensions to suggest values on accounts and master data. You can make a dimension mandatory on an account, so that posting stops if it is missing.

Describe in a short guide who chooses values and who creates new ones. Otherwise the value list grows without control.

Maintenance and limitations

Dimensions are not a replacement for accounting structure. Statutory entries, such as VAT and payroll, still have to sit on the right accounts. Use dimensions for analysis, not to hide differences in the accounts.

If a report needs figures summed across several dimensions, you can use account schedules and financial reports. Plan them with the dimensions in mind.

Appoint an owner of the chart of accounts and of the dimensions. The owner approves new accounts and new dimension values and deletes or blocks the ones that are not used. That stops the structure slowly growing out of shape.

Block accounts and dimension values instead of deleting them if they have entries.

Talk to your auditor

The chart of accounts also has to fit legal requirements and the auditor's needs. Show the proposal to the auditor before you load it, and ask whether the breakdown supports the financial statements and any reports to banks or owners.

Also write a short description of what each account is used for. It helps new employees and prevents the same expense being posted in different places.

Test with reports

Test the design with the reports management actually uses. Can you see revenue per department and contribution margin per project without manual processing? If not, a dimension or an account is missing.

Addverk is a new Business Central partner. We help design the chart of accounts and dimensions as part of the implementation. See our services and prices.