Moderated by Emily, Digital Transformation Consultant at Hyperbots
Emily: Hi, everyone. This is Emily, and I’m a digital transformation consultant at Hyperbots. I’m really pleased to have Dave Sackett, the VP of finance at Persimmon Technologies, on the call with me. So thank you so much for joining us, Dave.
Dave Sackett: Yeah. Thanks, Emily.
Emily: So, Dave, today we’ll be discussing the chart of accounts in Sage Intacct. Let’s quickly dive into the first question. Could you please explain the key components of an effective GL coding scheme in Sage Intacct, and how exactly it benefits financial management?
Dave Sackett: Yep, what you want to do is set up your chart of accounts with logic, using a numerical scheme. One could be assets, two could be liabilities, four for revenue, and three for equity. Having that range, so that all your assets begin with one and all your liabilities begin with two, sets up a logical format for any chart of accounts. This is useful for report writers or using an AI model to categorize your data logically. When creating your chart of accounts, you should have gaps in there, so you’re not just adding one account to the next.
Dave Sackett: As you add new ones, plan for expansion. My suggestion would be to space out your accounts by at least five spaces across. So, whatever your number is—dot 005, dot 010, dot 015—if you need to place accounts in between, you can structure them without having to remap them with a report writer.
Emily: Got it. So apart from what you just mentioned, Dave, are there any other best practices you’d recommend when setting up or maintaining a chart of accounts in Sage Intacct?
Dave Sackett: Yes. You want to avoid miscellaneous as best as you can because people are always asking, “What’s in miscellaneous?” So if you can understand your business and code things to the right place in the chart of accounts, reporting becomes easier. But at the same time, you don’t want to go overboard and capture everything with a separate account.
Dave Sackett: One exception to that might be project accounting, where you want to track all the costs for a specific project. But for prepaid, for example, you don’t need one for every vendor. You want general accounts to cover prepaid marketing expenses or prepaid insurance expenses. Even if you have multiple policies or meetings, you’re still grouping similar assets into one category without cluttering your chart of accounts. You don’t want your chart of accounts to be 40 pages long like they used to be. Today, people prefer a cleaner, more succinct chart of accounts. If they want details, they can extract those from another report if the chart of accounts is set up properly.
Emily: Got it. Now, shifting gears to common mistakes or errors companies make when creating or managing a chart of accounts, what are some of those?
Dave Sackett: One common mistake is taking the existing account structure and trying to force it into a new system without considering future needs. Businesses change—new revenue models emerge. So anytime you have the opportunity to review your chart of accounts, don’t just copy what you did before. Take a new perspective and ask, “What’s my goal with this chart of accounts? What will future reports look like?”I like to think of the end goal and work backward. So, look at the future management reports you want, then figure out what you need to set up in the chart of accounts to achieve that final output. By doing this, you can avoid missing accounts or setting things up incorrectly.
Emily: Understood. So how would you suggest a company build a flexible and scalable chart of accounts to accommodate growth?
Dave Sackett: You need to structure it logically, so automation can assist you. For instance, using ChatGPT to look at examples of charts of accounts might reveal new things like leases or new accounting rules that require new accounts. For example, right-of-use asset or right-of-use liability accounts are now needed due to new accounting rules. Having an eye on both the present and future will help ensure your chart of accounts is flexible and scalable.
Emily: Understood. How can AI help maintain the integrity of the chart of accounts in Sage Intacct?
Dave Sackett: The benefit of AI is that it loves patterns and data. An ERP system structures things in a way that’s easy for AI to understand. It can analyze ranges, and you can train your model based on your logically-kept data. AI can easily find assets, liabilities, and other categories based on account ranges. If your chart of accounts is clean and logical, AI will have a much easier job, reducing errors in your modeling process.
Emily: Got it. Can you provide an example of how a fast-growing company might benefit from using AI to manage its chart of accounts in Sage?
Dave Sackett: AI can provide suggestions and perform flux analysis on the chart of accounts. It can analyze what accounts are missing, what accounts are not being used, or if any settings are wrong. AI can also flag anomalies in the chart of accounts. This can help the company diagnose issues in the account structure, making it easier for AI to assist in improving the system.
Emily: Got it. Is there any advice you’d like to give companies transitioning from a smaller accounting solution like QuickBooks to a more robust system like Sage?
Dave Sackett: Yes, as a company grows, transitioning to a more robust system is essential. Sage offers far more features and is more future-focused than QuickBooks. Using AI to assist in the transition can be a significant time saver. I’m personally transitioning from QuickBooks to Epicor, and similar principles apply.
Emily: To wrap things up, how often should a company review and update its chart of accounts, and what triggers these reviews?
Dave Sackett: Typically, reviews are triggered by changes in the business, such as new revenue models, different departments, or new reporting requirements. If your business changes direction, you need to ensure your chart of accounts is ready. Attend budget and forecast meetings to understand where the business is going, and prepare the chart of accounts accordingly. I recommend reviewing it at least once a year or as needed based on new developments.
Emily: That’s great advice. Thank you so much, Dave, for sharing your insights on managing the chart of accounts in Sage Intacct, leveraging AI, and planning for growth. Your expertise is invaluable for any company looking to optimize its financial management processes. Thank you for being here.
Dave Sackett: Yeah, thank you, Emily.
