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Set up your financial software efficiently so you have valuable decision-making analysis

Writer's picture: Kubilay OzpalasKubilay Ozpalas

To departmentalise your costs on your software, you may go the route of adding a new different account code for each department. E.g. for salary costs, you may have sales salaries, engineering salaries, etc. Now, imagine you do this for every cost (this may be the reality for you currently). You will have an enormous TB comparable to some of the listed entities of the world. Not only does analysis become harder, but it also becomes very time-consuming. Here are some suggestions you can start implementing in your accounting software to tidy it up and make decision making easier:


  1. Set up tracking categories in Xero or Classes in Quickbooks for all your departments

  2. Create a new Chart of Accounts with only one code per cost - this eliminates analysis paralysis.

  3. At each month-end, ensure every cost has a department code so that all costs can be tracked for budget and forecasting purposes.

    1. Don’t categorise your balance sheet items - no need and won’t be meaningful for accounts or internal decision making.

    2. You may want to ignore your revenue too unless you want to know which department it relates to

    3. You may also want to ignore items below the EBITDA

  4. Now to create your P&L, which has each department as a separate column:

    1. In QuickBooks, this is easy. Just run the P&L by class report

    2. For Xero, it needs a bit more work. You will need to edit the P&L and introduce columns for each department.


You now have a P&Lthat isn’t hundreds of lines long and allows you to analyse performance for each department more efficiently.


The above steps can be quite fiddly at times (especially if you have a chart of accounts that’s already a beast), so do get in touch if you need any help.


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