Branch and profit centre are two columns, not two names — transcript

Play this as a presentation — one slide per step, with the same narration. Every word of every step is on this page.

This is the decision that produces the biggest charts of accounts in the country, and it is made by people who have been told that a profit centre is a posh word for a branch. It is not. Twelve minutes, and by the end you will have a smaller chart and a cut you could not otherwise get.

Step 1 — Look at what a document line already knows

After this step the rest follows. Every document header and every document line carries the same seven columns describing where the transaction happened, side by side, in the same order. Two of them are structure: the company you traded as, and the branch you traded at. One is physical: the location the stock moves through. The other four are free analysis dimensions you define yourself — profit centre, segment, project and GL dimension. They are seven separate columns, not one column with seven possible meanings, and because they sit on the line as well as the header, one invoice can carry lines belonging to different branches or different profit centres.

Reference: Organization — Branch, profit centre, and the dimensions a document carries

Step 2 — Stop creating a revenue account per branch

After this step your chart is a fraction of the size it was going to be. Every journal line already knows its branch, because the column is there and the posting fills it. So a revenue account per product category per branch is an account you never needed: twenty-two shops by forty product categories is eight hundred and eighty accounts, recreated every time a shop opens, to produce a split a report gives you from a column you already have. Worse, you would have spent a dimension on the branch you already had and still have no way to cut revenue by business line. Keep one revenue account per category and let the branch come from the document.

Reference: Setting Up a Group: What We Recommend — A GL code per branch, or the branch as a dimension

Step 3 — Know the exception, and why it is one

After this step you will not over-apply the rule. Cash and bank accounts do keep a suffix per branch, and that is not inconsistency. A revenue split by branch is a view of one number. A bank account at one shop is a different balance from a bank account at another: it is reconciled separately, against a different statement, by a different person, and it can be wrong on its own. Anything that gets reconciled on its own deserves its own account. Anything that is a slice of one total does not. That single sentence decides most of the arguments you will have about your chart.

Reference: Setting Up a Group: What We Recommend — A GL code per branch, or the branch as a dimension

Step 4 — Understand what a profit centre is actually for

After this step you can tell whether you need one. A profit centre is the second cut, for something the branch cannot tell you: a business line that runs across every shop, a department, a service arm, a project. If your question is which shop, the branch already answers it and answers it for free. If your question is how the repairs business is doing across all twenty-two shops, no amount of branch reporting will tell you, and that is what the dimension is for. Profit centres are not created on the organisation screens — they live in the budgeting applet, where a profit centre is also the thing a budget belongs to.

Reference: Budgetary Applet — Profit Center

Step 5 — Know what nothing will do for you

After this step you will not wait for help that is not coming. Nothing derives a profit centre. It is typed on the document, or supplied by an import row, and from there it is copied verbatim onto the journal line, the stock movement, and any document created from this one. No screen defaults it from the branch, the user, the item or the customer. And no behaviour anywhere keys off which profit centre a line carries — accounts, tax, costing and posting all ignore it completely. Its entire job is to be there when a report groups by it. So a blank one is silent. You find out at month end, when a report is short, and there is one naming trap on the way: the panel holding these fields is usually labelled Department.

Reference: Chart of Account — Chart of Account, Segment, Dimension, Profit Center, Project

Step 6 — Decide whether to use one at all

After this step you have an answer rather than an open tab. Across the tenants we can see, profit centres are used by a handful of businesses and segments, projects and GL dimensions by fewer still — and that is not neglect, it is the branch cut being free and sufficient for most groups. Take a profit centre when you have a question the branch genuinely cannot answer, when somebody will own filling it in on every document, and when you accept that a report can group by one dimension at a time, so branch-by-profit-centre in one grid is not something this reporting does. If none of those holds, leave the column blank and keep the chart small.

Reference: Financial Report — What this report asks the server, and the four ways its total surprises you

How the steps fit together

    flowchart TD
  s1["Step 1 — Look at what a document line already knows"]
  s2["Step 2 — Stop creating a revenue account per branch"]
  s3["Step 3 — Know the exception, and why it is one"]
  s4["Step 4 — Understand what a profit centre is actually for"]
  s5["Step 5 — Know what nothing will do for you"]
  s6["Step 6 — Decide whether to use one at all"]
  s1 --> s2
  s2 --> s3
  s3 --> s4
  s4 --> s5
  s5 --> s6
  

Check yourself

Three to five questions on what you just heard. Every correct answer links to the page that makes it correct, so you can check the source, not just the mark.

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