Getting Data for Decision making – It’s not only the Chart of Accounts

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After a very busy 2011 and early 2012, we have begun to notice a common problem appearing now. With many companies seeing their results not hitting expectations, either internally or externally, the demand for data for decision making is increasing dramatically, particularly for benchmarking and planning.

The usual response we see is to ‘quickly’ is to add another account to the chart of accounts in the general ledger or to try to put more information captured in the general ledger. While it seems simple in the beginning, it quickly becomes self defeating as analytical demands for more detail and comparison increase when the results are not as expected.

We won’t discuss the challenges of data capture, data quality and data management with trying to fit all your data requirements into your chart accounts. We will provide a simple of steps we recommend to all our clients when asked to ‘fix’ their chart of accounts.

1. Keep it simple.

Chart of accounts are the core of your financial reporting system. To ensure accurage comparability over time to allow for trend analysis, keep your chart of accounts simple to allow you to understand your consolidated revenues and expenses, regardless of business unit. We have seen some clients have chart of accounts with some 15,000 accounts in it.

2. Move the details to the sub-ledgers.

Properly maintained and designed AP, AR and Fixed asset sub-ledgers in most accounting systems provide more than enough flexibility to capture and maintain the data required for decision making on spending, revenue or capital expenditures.

3. Leverage Data Warehouse Technologies.

In the last 10 years, database and datawarehouse technologies have dropped so much in cost that it has allowed even the smallest companies to leverage their power. On top of that, with the ease and flexibility to now pull data out of various transactional systems other than accounting, companies can create a very strong competitive advantage with a very basic data warehouse (email us for details).


If you need to get and create data for analytics and decision making, don’t automatically default to your general ledger. If you do, you may dramatically increase your accounting costs and reduce your reporting abilities in the future. By keeping in mind the above three points, you can ensure your company lays a strong foundation for analytic decision making and dynamic planning.

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