Dimensions in Accounting

"Dimensions" I came across this word 101 times while surfing for accounting applications. Does this makes any sense to you? I thought of talking about Dimensions today.

First, think of your business as a cube. You can look at it in different angles. You can see more information than you think of it as a picture. When you look only in one angle, you can't get detailed and in depth knowledge on your business. But if you look at your business in different dimensions, you will definitely find it more interesting and more informative.

The financial statements and reports are the indicators of health of a business. However, a traditional report on monthly expenses informs whether the overall expenses have overgrown the profits or not. Ever wondered having this report on different angles? If you could see your business in different angles, it will give you in depth knowledge on expenses of different angles. We call theses angles, dimensions.

The dimensions takes different forms based on the company structure and policies. Following are some activities you can use as dimensions.

• Projects 

• Jobs

• Cost centers

• Departments

• Sales locations

• or whatever you define 

Projects

Project is a collaborative set of activities carefully planned to achieve a particular aim. This can be conducted in-house or out-sourced. You can consider Project as a dimension, and gain in-depth knowledge on your business from the Project view point.

Ex: suppose you handle multiple projects concurrently. You can separate the cost or profit contribution from each project to the company using dimensions. As a result, you can decide the amount of money to be pumped in without harming the overall revenue generation of the business.

Jobs

Job is an activity performed in a company. The duration of a job can vary from one day to several days. It presents in manufacturing as well as in services. Job as a dimension is ideal for job costing activities.

Example for a job in services is, after sale product maintenance. Further, a job in manufacturing is, designing and manufacturing user defined product like a shoe, food item or an equipment.

Cost centers

Cost center is the division that adds costs to the organization. This does not generate profits directly but support gaining profit in an indirect way. Research and development, Marketing and Customer Service are such cost centers in a company. Monitoring cost centers and having reports based on these can be used in crucial decision making by the managers. As the cost centers have a negative impact on the profit these become the first to consider when cost cutting decisions are made.

Departments

Department is a subdivision of a business/company. Finance, Marketing, HR and Manufacturing are few examples. In order to understand the contribution to the betterment of the company through increasing profits or reducing costs, it is vital to closely monitor these departments.

Sales Locations

It can be within a close proximity or even in distance. You can analyze accounting information as cost and revenue of the locations separately by selecting Sales Location as a dimension.

Those were few examples of dimensions. Still confused? In simple terms maintaining dimensions are a simple way of keeping tracks of the various segments of the company. Further you can analyze accounting information such as cost and revenue based on the defined dimension.

ZoomBA cloud Accounting app supports dimensions. You can select whether to have dimensions or not. For instance, when dimension = 2, you can select, level 1 as department and level 2 as cost centers. This allows you to keep tracks of cost centers inside a department of your company. Suppose you use the default settings, 1 level of dimension (dimension = 1), then you can look at the business with the angles of department or cost center or project inside a company. If you think it is not necessary or complicated to use dimensions, then you have the option to turn off the dimensions by selecting 0.

You can define the level of dimension from setup menu as follows.

1. Go to Setup section from top menu bar
2. Now click on the Company Setup categorized under Company Setup
3. Select the number of dimensions from the Use Dimensions dropdown list (from the left hand side column)
4. Click Update to update the details of Dimension

How to enter a Dimension Entry

1. Go to Dimensions section from top menu bar
2. Now click on the Dimension Entry categorized under Transactions
3. Enter the details of the Dimension you want to update (Name of the Dimension, Type, Start date, etc)
4. Then click Add to add details of Dimension
   

How to view an Outstanding Dimension

1. Go to Dimensions section from top menu bar
2. Now click on the  Outstanding Dimensions categorized under Transactions
3. Dimensions are displayed while overdue dimensions are highlighted in pink colour

In terms of Jobs as a dimension, there is a separate Manufacturing module for the manufacturing jobs in ZoomBA cloud Accounting App. The dimensions are ideal for the service oriented jobs.

Analyzing costs and revenues based on different angles, selecting the number of dimensions, monitoring the outstanding dimensions (ex: information on receivables that were not collected), viewing or inquiring all the records under dimensions and adding tags to enhance the search functionality are some of the benefits of Dimensions. ZoomBA cloud make sure that you are comfortable with your accounting with all these functionalities.

Please leave your views and suggestions on this blog. Stay tuned.

Inventory Management

Whether you are into manufacturing or retail or even service sector, you have to deal with inventory. Managing inventory is crucial for any business as it can help to gain or reduce profit margins. In order to gain profit you should identify the best mix of the quantity in hand versus storage cost. Raw-materials, by-products and finished products are stored as inventory. In-terms of finished products, carrying high inventory ensures high on time delivery as the ordered products are readily available. On the contrary, it includes storage costs, insurance and taxes and also opportunity cost on cost of money tied up with inventory. And that's why you should be concerned on Inventory Management.

Why is Inventory Management so important for any business? Because it lets the business owner (or the respective person) to know, how many products they have in hand, how many sold, how many stolen, how many to buy in special scenarios (when product is running low), and also how much money they are making on the product.

Proper Inventory Management includes tracking of products you sell. This information can be used in identifying trends as in what items are sold most, in which quantities and in which time period. Further you can identify the products that don't sell well. And can make decisions on reducing the amount you order from that particular product next time.

Today inventory Management has improved with many new devices, such as barcodes, scanning devices, IR tags and software to deal with these devices. You have to be concern on all these to successfully beat the competition today. Specially in retail market, in order to keep up with the sales and trends you should know exactly how to order the right amount at the right time, know-how to eliminate products that are not making profits (non selling products) to save your storage space, time and money.

In terms of small businesses, you may not have the highest desire to maintain a separate Inventory Management System. But you can probably look for an inventory control system embedded with another system. For example ZoomBA provides, inventory module under its Accounting app. Following guidelines describes some components in ZoomBA inventory module under Accounting App.

Enter a new item

1. Go to Items and Inventory
2. Click Items under Maintenance
3. Enter relevant data and click Insert New Item

The items can be categorized in order generate informative reports on inventory which can be used for decision making for future purchases.

Adding new item category

1. Go to Items and Inventory
2. Click Item Categories under Maintenance
3. Enter relevant data and click Add New

Define reorder levels

1. Go to Items and Inventory
2. Click Reorder Levels under Maintenance
3. Select the Item and enter the Reorder Level
4. Click Update

Please feel free to leave a comment for more details until the next post.

Beyond boundaries : Multicurrency

Dollars, Euros or your home currency. These shouldn't be the boundaries of your business. That's why nowadays businesses are into multi currency. But the hectic work comes when solving the problems in exchange rates, rounding, revaluations and end of year closings.

Based on your business, you will have to interact with different geographical locations where they use different currencies. For instance, when you buy and sell goods and services, when dealing with overseas checking accounts and foreign assets & liabilities. When you are dealing with multiple currencies, it is vital to stay in touch with the exchange rates. The reports on unrealized and realized gains and losses based on the projected and actual exchange rates can be useful for future decision making.

Multi currency is a choice that you are making. If your business completely run on local suppliers and distributors, then multi currency accounting is out of your todo list. But for the companies that has suppliers, distributors, customers or branches in the places where different currencies are used, you need to focus on this.

Another important section to monitor when using multi currency is the fluctuation of exchange rates. Although you make no change for the foreign currency transactions, its value is changing with the fluctuations of exchange rates. For example if the dollar is valued at a higher level, the sales you've already made will cost you more. However, on the contrary, the purchases you made will give you a benefit.

When transacting with foreign currency there are several methods or rather concepts such as conversion, revaluation, translation and re-measurement. Conversion is converting the foreign currency to base currency at the time of the transaction entry. Revaluation takes place at the end of the period. The foreign currency account balances are re-valuated according to the exchange rates at the end of the period. Translation is mainly applies when reporting in foreign currencies. This also happens at the end of the period. The base currency trial balances are converted into foreign currency based on the exchange rate. Re-measurement is specially for the situations where the base currency is an inflationary currency. And each and every transaction in the base currency is remeasured in the foreign currency at the day's exchange rate.

Handling multi currency in transactions manually results in hectic work loads. The accounting apps which have the capability of handling accounting along with multicurrency, will be very useful for the businesses who connect with the regions with different monetary values. ZoomBA cloud is one such application which provides a hassle free accounting solution for Small businesses. Being based on the cloud, apart from providing high accessibility it facilitates with number of features.

Multicurrency is supported in ZoomBA cloud Accounting app. Further currency conversion can be done automatically or manually. You can define the foreign currencies with this system. In addition, the control of updating the exchanges automatically or manually is also in your hand. As the first step you have to add currencies.

1. Go to Banking and General Ledger.
2. Click Currencies under Maintenance.
3. There you can add, edit or delete currencies.

The next step is adding the relevant foreign currency to the customer.

1. Go to My Customer in Simple Mode or Add and Manage Customers in Sales (Advanced Mode).
2. Assign the relevant currency for the customer.

Similarly you can add currencies to Suppliers from Purchases menu. And assign the relevant currency for them.

Further you can enter the exchange rates manually.

1. Go to Banking and General Ledger.
2. Click Exchange Rates under Maintenance.
3. Select the desired currency from the drop down list. You can get the latest exchange rates by clicking Get button. And click Add New to assign the exchange rate to the currency.

 

Stay tuned for more facts on Accounting.

Cloud Business Apps

"Cloud Computing has become a hot topic!" Little bit outdated, right? Today, it's on the way to become a necessity! Are you on the cloud? Still not? Well, it's high time to make a move, for your business to make a move.. to the cloud.

On this blog I will be focusing on cloud based business apps specially for SMEs. I'm hoping to introduce ZoomBA Cloud biz apps and will include how to simplify IT with the cloud based business applications in time to come.

You probably know about cloud based business apps already. It's a service you can use, similar to electricity, and use the amount you want and pay for what you consume. On the contrary, you don't have to buy and install software in all the devices you are using. Once you step into the cloud with a cloud biz app, you have the accessibility to your data no matter where you are. The simple requirement is, the Internet connection.

Stay tuned to know more about cloud based business applications. See you soon.