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Gloria Braunschweig, Computeration

Cost Center Accounting In QuickBooks versus Dynamics GP


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As your business evolves, you will need your accounting software to evolve with it. To illustrate, consider this scenario:

Imagine you're a single location vitamin retailer in Portland running QuickBooks. The QuickBooks system allows creation of general ledger accounts with or without account numbers. Creating a chart of accounts without numbers at first may be very appealing to the sole owner needing 20 accounts. Just call the accounts by reasonable names and you’re okay as long as the account type is set correctly:

  • Cash
  • Accounts Receivable
  • Prepaid Expenses
  • Inventory
  • Fixed Assets….

But as your business takes off, say you appear on The Shark Tank and they think you're going places and agree to fund your expansion second location. So you set up shop in San Francisco, and leave your existing accounts in place and call the new ones:

  • SF-Cash
  • SF-Accounts Receivable
  • SF-Prepaid Expenses….

But soon enough, along comes your LA branch, so you know what happens next. At some point, it gets annoying even to the non-financial owner and somebody leaves the historical data behind in QuickBooks and starts the new year with a new database with segmentation like this:

  • 10-Cash or 10-1000
  • 20-Cash or 20-1000
  • 30-Cash or 30-1000

So you’re back on track. For awhile. QuickBooks allows up to two segments of eight characters each.

Then your growing vitamin franchise decides to start opening companion exercise clubs in PDX and LA. SF decides it wants a yoga club instead and The Sharks want you to compare:

  • Vitamin only locations against
  • Vitamin + yoga locations against
  • Vitamin + exercise locations

At this point, QuickBooks is in trouble unless 1. you have an Excel genius on staff AND 2. the person who designed your would-be chart of accounts understood parsing.

Not a Problem in Dynamics GP

  1. Dynamics GP can start with a chart of accounts as small as 1 character – kinda foolish – so let’s just say 4 characters to start. That’s the smallest reasonable chart I’ve seen. I had an owner with a loaded shotgun on the wall tell me he wanted only 2 characters in his single segment chart back in the mid 1990’s. I didn’t argue with him and I didn’t go back to help him two weeks later when he begged me to help him expand it.
  2. If you want to expand that segment to 6 characters, that’s easy.
  3. If you want to add a second segment, that’s easy.
  4. If you want to start all over and do something like a 1-3-4-2 segmentation, that’s easy. We use either the Professional Services Tools Library or a third-party product called Changer to convert one format into another.

So you might be asking, how big can the Dynamics GP chart of accounts become?

66 characters over 10 segments.

Then you’d be asking, isn’t Dynamics GP a bit too complicated?

You can keep it as simple or as complex as you need. And usually (not always) we would use other methods to either attribute entries with Analytical Accounting or separate them into separate databases and use Intercompany Accounting and Management Reporter consolidated financial reports.

Or we branch into Dynamics GP Project Accounting or any one of the third-party job cost modules to attach attributes, manage budgets, link to purchase orders, or finely break down cost categories for time, expenses, equipment, inventory, and miscellaneous expenses. We assist our clients with a good needs analysis to recommend what we think best suits their unique needs.

Eight or ten segments might be required for a wholly-owned subsidiary whose parent company uses the output from Dynamics GP to roll up into international consolidated financial statements. After all, when those weight-loss centers spread across Canada, the U.S., Mexico, and the Bahamas, you have multi-currency conversion and international financial standards reporting to deal with. Dynamics GP handles the growth without an expensive, time-consuming conversion in the middle of a high-growth stage.

Dynamics GP Starts Simple and Grows With You

If you have the vision for your small company to grow into something big, start with an accounting product that won’t hinder you. You can start with a single user in a hosted environment, fluctuate with your seasonal sales or plateauing growth stages, but you won’t be halted at any stage.

If you want advice for how to Dynamics GP can simplify your business, call Computeration to help you today (www.computeration.com). We’ve dealt with a company that grew from $0 to $40 million in 3 years and another company that went along for years at $1 million and then was $50 million in 4 years. We know how to plan for and accomodate rapid growth.

by Computeration

2 Responses to “Cost Center Accounting In QuickBooks versus Dynamics GP”

  1. Viola Allen says:

    How will this entire process affect the economy of a business?

  2. Viola Allen says:

    How will other accounting software such as Sage ACT deal with Dynamics GP?