Common Segments used across Enterprises
Given below are some of the common segment titles that many organizations define with separate account segments:
Company A segment that indicates legal entities for commercial, for–profit organizations.
Fund A segment that indicates a fiscal and accounting entity with a self–balancing set of accounts for governmental or not–for–profit organizations.
Cost Center or Department A segment that indicates functional areas of your business or agency, such as Accounting, Facilities, Shipping, and so on.
Account A segment that indicates traditional “Natural Account”, such as Cash, Current Asset, Accounts Payable, or Salary Expense.
Product A segment that indicates products, such as disk drives, printer cables or magnetic tapes manufactured by a commercial, for–profit organization.
Program A segment that indicates programs, such as, for a university, scholarship program, endowment program, or annual giving program.
Project A segment that indicates projects such as work orders, contracts, grants, or other entities for which you want to track revenues and expenses.
State/District/Geography A segment that indicates geographical locations, such as Northern California, Central Florida or Western New York.
Distribution Channel A segment that indicates the method by which your product reaches your customer, such as Wholesale, Retail, OEM, and so on.
Intercompany A segment that indicates intercompany entities. If your subsidiaries share the same set of books, you can use an intercompany segment to identify subsidiaries involved in intercompany-transactions. This segment usually mirrors your company segment (balancing legal entity segment).
Best Practices for defining Segments
* Determine the segment that captures the natural account, such as assets, liabilities, expenses, and validate whether you need sub-accounts. Use child-parent relationships to define your account hierarchy.
* Define a separate Accounting Flexfield segment for each dimension of your organization on which you want detailed reporting, such as regions, products, services, programs, and projects. For example, you may want to record and report on expenses by project. To do this, your account must categorize expenses by project. Define your account to include a “Project” segment. By doing this, you automatically categorize all your accounting information by project as you enter it, and you can easily report on project information.
* Group similar business dimensions into one segment. This allows a more simplified and flexible accounting structure. For example, you only need one segment to record and report on both districts and regions, as illustrated below. Because regions are simply groups of districts, you can easily create regions within your district segment by defining a parent for each region with the relevant districts as children. Use these parents when defining summary accounts to maintain account balances and reporting hierarchies to perform regional reporting.
* Consider information you track in other accounting information systems. You may not need to capture certain organizational dimensions if another system already records and reports on this information. For example, if you need to report on sales by product and your sales tracking system already provides this information, General Ledger account structure does not need to categorize information by product. If you are a government or not–for–profit agency using a labor costing system which captures work breakdown structure for reimbursable billing, you may not need to capture this in your account structure.
* Identify segments that you might need in the future. Consider future expansion and possible changes in your organization and reporting needs. For example, you may not need a region segment now, but eventually you plan to expand you organization to cover multiple regions. Determine the length of each segment. Consider the structure of values you plan to maintain within the segment. For example, you might use a 3 character segment to capture project information, and classify your projects so that all administrative projects are in the 100 to 199 range, all the facilities projects are in the 200 to 299 range, and so on. If you develop more than 10 classifications of projects, you would run out of values within this segment. You might want to add an extra character to the size of each segment to anticipate future needs.
* If you want to perform multi–company or fund accounting within a set of books, choose a balancing segment. You must define one and only one balancing segment in your account. General Ledger automatically balances all journal entries for each value of this balancing segment and performs any necessary intercompany or interfund posting to the intercompany or interfund account you specify when you define your set of books.
* If you plan to maintain and consolidate multiple set of books, think of common elements among your separate account structures. Consider which segments can share value sets, or where opportunities for rolling up segments from a subsidiary set of books into a parent set of books exist.
Plan your value sets. To reduce maintenance and to maintain consistency between sets of books, you can use value sets when defining multiple charts of accounts. Using the same value sets allow two different sets of books to reference the same segment values and descriptions for a specified segment.
* For example, the values in your natural account segment, such as Cash, Accounts Payable, and so on, may be equally applicable to each of your sets of books. Ideally, when you set up a new set of books you should consider how you would map your new Accounting Flexfield segments for consolidation. When a common natural account segment is used between sets of books, it is easier to map account balances from your subsidiary sets of books to a consolidating entity.
