Financial management for any organization is a huge task – not only is it lengthy, but it’s also time consuming and complicated. Since every business conducts several hundred transactions within each accounting year, they should be recorded in different accounts as required by their accounting standards. Dynamics AX uses robust principles to manage the ledger and sub-ledger processing of entries, simplifying the financial management activity for organizations.
Difference between General Ledger and Sub-ledger
Although general ledger and sub-ledgers are both used for recording transactions, there are some differences:
Sub-ledger Processing in AX
In Dynamics AX, you can define additional performance optimization and summarization rules for the transfer of sub-ledger journal entries to general ledger. During the transfer process, you can summarize the sub-ledger journal entries for similar source documents or select a particular source document to reduce the amount of data in the general ledger.
There are two rule types that can be used for batch transfer:
- Document rule lets you select specific source documents
- Company rule lets you choose all the source documents linked to the particular legal entity
Batch Transfer Modes
Dynamics AX offers three types of transfer modes:
- Schedule batch which runs batch jobs at a scheduled interval; you can transfer source document sub-ledger entries to the general ledger using a scheduled batch.
- Synchronous mode executes batch jobs from within the posting process as initiated by the user; you can transfer source document sub-ledger entries to the general ledger immediately. The source document is journalized into the sub-ledger journal at the same time.
- Asynchronous mode will create document and sub-ledger lines from the client process and the server will pick sub-ledger lines and process them as soon as possible; you can transfer source document sub-ledger entries to the general ledger after the source document is journalized into the sub-ledger journal. Transfer occurs whenever server resources are available to process them, which may be immediately or later.
Due to various requirements, companies generally incorporate different types of sub-ledgers in their accounting systems. In addition, accounts receivables and accounts payables, which are common general ledgers, reflect accounts that apply to individual customers and vendors. Each invoice and payment made is recorded which adds up to the total accounts payables and receivables. The ledger and sub-ledger processing of entries in Dynamics AX offers a host of advantages:
- You can maintain detailed information in each of your subsidiary ledgers – detailed transaction information is recorded against each vendor listed in the accounts payable ledger. The ledger includes invoices, date received, amount and payments made to the vendor.
- You can achieve a sufficient amount of control with the financial information contained in the subsidiary ledger – by controlling the current balances of every customer, you can review every transaction within that account, and determine the authenticity of that transaction.
- You can limit access to selected accounts through the use of access controls and ensure confidentiality with respect to customer and vendor accounts.
- Since sub-ledgers reflect updated information on an individual account’s balance, you can have a real-time view of all the data.
- Since general ledgers reflect precise data of every sub-ledger, you can ensure a precise trial balance.
Streamline your Financial Management
With organizations struggling to manage, maintain, and control their financial information, the ledger and sub-ledger processing of entries in Dynamics AX is a great way to streamline your financial management. Using various rule types and batch transfer modes in Dynamics AX, you can define and manage your financial records, allocate or distribute monetary amounts to one or more accounts based on allocation rules, and consolidate financial results for several subsidiary entities into a single, consolidated organization. What’s more, you can forecast cash flow, and calculate and display currency requirements – and boost the efficiency of all of your financial management efforts.
About the Author - Manoj Nair
Manoj Nair is a seasoned IT professional with over 12 years of experience in Software Consultancy, ERP Implementation, Testing, ISV Development & Client Management. He is a Senior Project Manager at Indusa and is responsible of managing various software programs through cross functional coordination.