When creating or restructuring the chart of accounts in IBM Planning Analytics, I am often asked about best practices for account numbering. My typical answer is to comply with GAAP – the generally accepted accounting principles.
Assuming a four digit account structure, a standard set of ranges will include:
- 1000 – 1999 = Assets
- 2000 – 2999 = Liabilities
- 3000 – 3999 = Equity
- 4000 – 4999 = Revenue
- 5000 – 5999 = Cost of Goods Sold
- 6000 – 6999 = Overhead and expenses
- 7000 – 7999 = Other Revenue
- 8000 – 8999 = Other Expense
There are many variations to this structure with each one being dependent on your industry. For example, organizations with many forms of revenue may use 4000-5999 for revenue and organizations without COGS may use 5000-6999 for overhead expenses.
When a numeric format is needed for stats, I also recommend using 9000 – 9999 for statistics and calculated metrics.
This approach can be used for general categorization and can also be expanded to provide more details. For example, 61xx accounts could entail compensation costs whereas 62xx accounts could entail depreciation costs.
In addition to following standard accounting principles, this approach serves other purposes with your planning model:
- New accounts are always added into the same area, so automation can be added to your import scripts
- Account multipliers (e.g., sign flipping) can be calculated based on the first digit of the account
- Formatting of reports can be defined based on the first digit of the account
- Links to other models can be coded based on the first few digits of the account
Want to learn more about accounting structures or recommended best practices? Contact us!
IBM Planning Analytics, which TM1 is the engine for, is full of new features and functionality. Not sure where to start? Our team here at Revelwood can help. Contact us for more information at info@revelwood.com. And stay tuned for more Planning Analytics Tips & Tricks weekly in our Knowledge Center and in upcoming newsletters!
Read more IBM Planning Analytics Tips & Tricks:
IBM Planning Analytics Tips & Tricks: Allocations
IBM Planning Analytics Tips & Tricks: Depreciation
IBM Planning Analytics Tips & Tricks: 445
