ERP Logic

The Accounting Code Block in SAP Business ByDesign

One of the topics that I am often asked from customers and prospects is about the Chart of Accounts and “dimensions” in SAP Business ByDesign – the Accounting Code Block. The Code Block is at the heart of almost all financial and General Ledger packages and is critical as it determines their reporting capabilities. Before I describe how SAP ByDesign handles this concept, let’s take a look at the traditional approach and its pitfalls.

The Legacy Code Block

The traditional approach has been to force all the dimensions into the GL Account. Below are examples of what this might look like:

The Legacy Code Block Image

This rigid design was a result of constraints that existed 3 decades ago such as limited storage space. This approach leads to an unnecessarily large and unwieldy chart of accounts. Adding a value to a dimension such as a new department might require the addition of several dozen GL accounts (to account for all the combinations). In today’s environment, where business models change rapidly, reconfiguring an existing code block (for instance, to track a new dimension such as product line) is at best, time intensive. At worst, this could mean a reimplementation of the entire financial system.

SAP Business ByDesign’s Approach

SAP Business ByDesign is an end-to-end cloud ERP solution (SAP Business ByDesign). SAP ByDesign’s code block is extremely flexible and scalable owing to advancements such as in-memory analytics and virtually unlimited storage. Its chart of accounts consists only of natural accounts without any other dimensions. The rest of the “core” financial dimensions such as company, profit center, cost center, and projects are maintained independently of the chart of accounts.

As transactions are posted, they are “tagged” with not only the core dimensions but also with other attributes such as customer and product, depending on the business process. Even document information such as sales order and contract are recorded to allow reporting at the most granular level.

SAP Business ByDesign’s Approach Infographic

The result is a streamlined chart of accounts that is extremely easy to maintain. It also allows reporting and profitability analysis on a number of dimensions regardless of the underlying business models.

Streamlined chart of accounts

If your organization is struggling with lack of visibility and a cumbersome financial accounting system, I urge you to take a look at SAP Business ByDesign. It combines a modern approach to the code block with in-memory analytics to enable small and midsize organizations to gain the same reporting advantages that only large organizations have enjoyed in the past.

By: Harish Toppae, Solutions Director at ERP Logic