Innovating the General Ledger: Multiple Books


In my introduction to this series on Innovating the General Ledger [see post], I discussed my passion about the GL and how it desperately needs a facelift. Although much of that post centered on my personal opinions, today begins the presentation of real world stories that back up my position and demonstrate how the innovation I suggest can yield real value for business users. I’ll start with how companies need multiple books – whether they know it or not.

A couple years ago, I met with one of our larger customers who was really pushing Intacct to add a “13th month” to our GL. Intacct does this already – we support odd periods like four / four / five week months in a quarter and we support 13 evenly sized months over a year. But this customer wanted the 13th month to be special. He wanted it hidden and to consist of just a single day – December 31st. Of course we could have accommodated this idea, but I really wanted to understand why.

It turns out that in many industries, accountants accrue liabilities at the end of the year. These accruals actually affect the entire year, but because they can only be determined at the end of the year, they would distort monthly results if they were posted in December. In other words, accountants in these industries need to view yearly or monthly financials with and without these accruals. Years ago, some smart accountant figured the way to solve this was to squeeze in an extra month at the end of the fiscal year. Problem solved. Except that you still couldn’t see accruals when viewing monthly results. Only annual data could be viewed with or without them.

At Intacct, we decided to take a different approach. The problem that intrigued us was accountants needed a way to run a library of financial reports over different “sets” of financial results. I may want to see my financials with and without year-end adjustments; with and without tax adjustments; in both US GAAP and in IFRS; or perhaps using the accrual method and also the cash method. In short, we decided that what accountants really needed was the ability to keep multiple books. Then, based on how they want to see their financials, they choose which journals to include in each book. For example, to solve the year-end accruals problem they could create a “Year End Adjustments” journal that only shows up in the “Accrual Method with Adjustments” book. Now accountants have ultimate flexibility. Voila!

This is one example of taking a customer request to the next level. While doing what they ask might solve an immediate problem for one (or many) users, truly understanding the root cause of the need leads to a better strategy to improve the flexibility of the entire general ledger for all customers. Now you’re meeting needs customers didn’t even know they had and providing them with ways to improve the way they operate. That’s value.

In the next post, we’ll talk about another innovative change in the general ledger: dimensions. I’ll also explain what a real dimension looks like compared to the imposters that some vendors try to pass off as real ones.

Be sure to subscribe to the Intacct blog to get the next installment in this series. You can also follow me on Twitter (@aaron_r_harris) and Intacct on all our social media channels, including Facebook, Twitter, and LinkedIn. To network with other people interested in cloud financial applications, be sure to join the Intacct Cloud Accounting group and the CFOInsights group on LinkedIn.

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