Plan your chart of accounts
By asking questions and gathering customer requirements you can plan the chart of accounts that fits the customer needs. In many cases the customer simply chooses to bring in their existing chart of accounts from the legacy system into Finance. If this is the case, all you need is the source data that has been created by data extraction or export from the legacy system in a format such as CSV or Excel.
Then, perhaps after some cleansing and restructuring, depending on what the customer wants, you can use the Data management workspace to import the data to Finance.
For more information regarding Data management see Migrate data and go live with Finance and Operations apps
The following questions are typical examples of what to ask when you interview the personnel in your customer’s finance department:
- What degree of specification is needed?
- How should the chart of accounts must be structured?
- Have external accountants offered any suggestions about the structure of the chart of accounts? And does the customer want to follow them?
- What accounts do they need in the system?
- What information do they need to track financially?
- What accounts and dimensions need to be tracked together?
- Do they need to track the cost center?
- Do they want Finance to create account numbers automatically or do they want to create them manually?
Maybe an accountant has an example of a chart of accounts that you can look at to see if it might be relevant for the customer’s company. Or maybe after you create your chart of accounts, you want an accountant to look at that to make sure that it is relevant from an auditor's standpoint.
To create the chart of accounts, you should list accounts that group well together and group similar revenues, costs, and balance accounts.
Before you create a company's chart of accounts and plan the structure, consider the following:
- Make sure that there is enough space between the account numbers, so that in the future, additional main accounts can be created between the existing main accounts.
- Decide whether operating accounts should come before balance accounts or the other way around.
- The reporting requirements of the country or region where your organization is based.
- The reporting requirements of your legal entity.
- The degree of specification that is required, for both external organizations and for your organization.
To track and maintain financial information in an organization, you set up a chart of accounts, which is a collection of accounts that define a financial framework.
To further track the transactions in these accounts, you can add segments. These segments are known as financial dimensions.
For example, an expense account might include financial dimensions that are named Department, Cost center, and Purpose.
Finance has a relational chart of accounts. When you create your main accounts, you don't have to necessarily worry about adding segments at the account level.
User-defined rules determine how financial dimensions are attached to the main accounts and to other financial dimensions, and how transactions are entered. These user-defined rules are known as account structures and advanced rules.
At the most general level, the accounts are grouped as revenues and costs (operating accounts), and assets and liabilities (balance accounts).
A chart of accounts can be shared and used by any legal entity in an organization. The chart of accounts that is used by a legal entity is defined on the Ledger page.
You can modify the chart of accounts delimiter on the General ledger > Ledger setup > General ledger parameters page.
You create the chart of accounts on the Chart of accounts page. You can create main accounts on the Chart of accounts page or the Main accounts page.
General ledger > Chart of accounts > Accounts > Chart of accounts
Your main accounts shouldn't use any special characters that are used as delimiters for chart of accounts. If you use special characters, you might experience instability, or you might always have to use lookups or the dialog box when you enter combinations of accounts and dimensions.